Climate and sustainability services

Setting up measurable sustainability targets and indicators while engaging with internal and external stakeholders has always been important for managing complex sustainability topics and integrating sustainability into business strategy. This continued to be one strong focus area where we helped our clients during this fiscal year.  

After the commitments to addressing climate change were made in the Paris Agreement, the EU set the goal to be climate neutral by 2050. The EU’s Green Deal provides the overarching strategy with aims to reach the 2050 goal, and it includes a series of strategies and action plans (i.e. climate neutrality, a circular economy, biodiversity and sustainable finance). As a result, a massive set of new sustainability reporting requirements have become a reality. 

The aim of the EU’s new reporting directive, the Corporate Sustainability Reporting Directive (CSRD), is to create more transparent reporting, focusing on sustainability matters that are material in terms of their impacts on people and the environment and their financial impact on the company. We helped our clients to assess their impacts on people and the environment, and helped them in regard to how sustainability matters generate financial risks and opportunities, which influence the client’s financial performance and position (e.g. they influence cash flows, the cost of capital or access to finance). This inside-out and outside-in concept is called double materiality. 

The new CSRD reporting requirements will gradually start to apply to a large number of listed and non-listed companies from the year 2024 onwards. Companies subject to the CSRD will have to report according to the European Sustainability Reporting Standards (ESRSs). The ESRSs cover extensively detailed reporting requirements, asking companies to report fully on their ESG topics based on the outcome of the double materiality assessment, as well as extending the disclosure requirements so that they cover the company’s entire value chain.  

For many companies, the new CSRD reporting requirements mean an increase in the amount of content they need to report and the need to develop even more efficient and reliable reporting processes for producing quantitative and qualitative sustainability data. Amidst all the changes, keeping the focus on sustainability matters that are important to the company’s stakeholders and business from the double materiality perspective is key. We helped our clients in navigating through this transition in their reporting. 

Initiatives, such as the Task Force on Climate-related Financial Disclosures (TCFD), continue to have a strong relevance to transitioning to a low-carbon economy. We helped our clients to develop climate-related disclosures according to the TCFD framework, as well as the Carbon Disclosure Project (CDP). In addition, carbon footprint calculations, the creation of roadmaps and tools for transitioning into renewable energy and reducing emissions were high on our clients’ agendas. We also saw the importance of biodiversity, circularity and value-chain risks’ rising importance throughout the fiscal year in which our clients faced new challenges from legislation or stakeholders. We assisted our clients in facing these new challenges. 

Companies face an increasing amount of stakeholder expectations and binding regulations on the responsibility to respect human rights. We advised clients to respond to the human rights due diligence requirements set in the national legislations of Europe. As the interpretation of these national-level legislations is still developing, collaborating with experts of the Deloitte network firms across borders proved to be a strength. Currently rising on the human rights agenda are the minimum safeguards of the EU taxonomy, in addition to the human rights’ due diligence requirements found in the Corporate Sustainability Due Diligence Directive proposal, which is under negotiation within the EU. Furthermore, as the legislation is developing, the awareness of human rights issues of key internal and external stakeholders is increasing.