Regulation as an opportunity

What are the reasons for the CSRD?

Scientific facts demonstrate why we must prioritize the development of a sustainable economic and finance system. Across the world, we are living beyond our means and will soon be consuming the resources of three Earths each year. As a result, the natural cycle is unable to regenerate quickly enough to survive in the long term. Another frustrating fact is that the existing voluntary commitment to sustainable living and management has shown too little effect, despite all individual efforts. That is why the European regulator is seeking to accelerate the development of a sustainable economic and finance system by introducing a range of new directives and guidelines.

What is GETEC doing specifically?

We formally established ESG as a topic within our organization in 2017. However, GETEC had implemented a sustainable strategy long before there were regulations requiring companies to operate sustainably. To put it very simply, we are attempting to replace “dirty” technologies in our plants with “clean” technologies. In the case of new construction projects, we aim to use the most sustainable solution from the start. And because we never lose sight of cost-
effectiveness, we were and still are particularly attractive to those investors looking to invest in sustainable companies. We believe this balance is the key to our success.

What is the CSRD?

One of the most important EU regulations is the new Corporate Sustainability Reporting Directive (CSRD), which aims to place sustainability information on a par with financial reporting. The goal of the CSRD is to achieve a high degree of transparency about the way companies operate, their commitment and the assumption of responsibility for the transformation of the economy. Through the CSRD, the European Parliament requires companies to disclose their sustainability targets and transitional plans in accordance with the Paris Climate Agreement in a manner that ensures comparability.

In the future, sustainability information is to be disclosed in a company’s management report on the basis of a uniform EU reporting standard. On behalf of the EU Commission, the European Financial Reporting Advisory Group (EFRAG) has adopted cross-sector European Sustainability Reporting Standards (ESRS) by means of a delegated act.

In parallel, EFRAG is preparing sector-specific EU reporting standards as well as standards for publicly listed SMEs affected by the CSRD and third-country companies for implementation by the end of June 2024.

What is GETEC doing specifically?

As a result of the CSRD, the principle of double materiality is gaining importance in relation to sustainability management. A double materiality analysis gives companies and their stakeholders a complete picture of the impact of a company and its operations from several perspectives. It is a robust and widely used tool for determining the significance and relevance of sustainability issues to a company. In the first instance, a company should focus on the topics it considers to be material. But what does material mean exactly? There are a number of different interpretations which also affect the reporting standards.

What is GETEC doing specifically?

The materiality analysis is nothing new for GETEC. However, the principle of double materiality requires the switch from a monodimensional to a multidimensional analysis. This process is already ongoing and will be completed by the end of 2023. We will present our double materiality in the 2024 report.

Materiality as a strategic tool

The relevance of the materiality analysis has increased massively. It has now become the starting line that every company must cross before it can start its reporting. The materiality analysis is highly complex and the assessment of impacts on and by the company are closely linked with risk management.

The materiality analysis process not only creates an understanding of what needs to be done with which priority but also represents a simplification because it clarifies what justifiably does not need to be done.

GETEC’s conclusion

The CSRD sounds complex and it is. But the effort is worthwhile. The intensive analysis of sustainability aspects and their impacts on and by the company will strengthen our future viability, highlight the dependence of our own business model on certain topics and deliver sound strategic impulses. The analysis provides the company with clarity as to which sustainability topics actually impact its own business model, where negative impacts of its business activities must be reduced and where it can deliver a positive impact for the environment and society. As a result, the company can set clear priorities and implement effective measures. Therefore, GETEC does not see the CSRD as just a reporting tool but as an indicator of fields of action that need to be addressed and of strengths that can be built on.