The CS3D Digest #38
Ripple Research
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Welcome to the 38th edition of The CS3D Digest, a dedicated newsletter by Ripple Research and your weekly compass for navigating conversations that matter in the corporate sustainability landscape. Our goal is simple—to keep you informed about the latest developments in the Corporate Sustainability Due Diligence Directive (#CSDDD) space as we further our understanding of it.
Read our previous editions to catch up, and subscribe for future updates!
Today's focus: Australia's new bill mandating climate-related disclosures for companies, Dutch asset manager's exit from clothing industry over sustainability concerns, South Africa's ruling against TotalEnergies' "misleading" green claims, ESG integration on the rise amid data quality challenges, and U.S. oil and gas industry embracing emissions reporting ahead of SEC rules.
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What are we reading?
We've employed our proprietary AI tools to curate the most engaging news about CS3D and related regulations. Our focus extends beyond what's trending at the moment to showcase headlines that are fueling meaningful conversations around the world.
The Australian Senate has passed a bill requiring climate-related financial disclosures for large and medium-sized companies in a broader effort to reform financial markets and support the transition to a net-zero economy. The reporting standards will be set by the Australian Accounting Standards Board (AASB), with assurance standards developed by the Australian Auditing and Assurance Board (AUASB). As per the bill, mandatory climate reporting will be phased in based on company size and emissions levels. Initially, large public and proprietary companies with over 500 employees, revenues over $500 million, or assets over $1 billion, as well as asset owners with more than $5 billion in assets, will be required to begin reporting from 2025. Medium-sized companies will follow two years later, with smaller companies starting one year after that.
ASN Impact Investors, a Dutch asset manager with a portfolio of approximately 4.2 billion euros, has become the first Dutch investor to completely exit the clothing industry due to concerns over human rights and environmental sustainability. According to ASN's director, San Lie, major clothing brands such as H&M, Zara, and Asics are succumbing to pressure from ultra-fast fashion competitors like Shein and Temu, which prioritize rapid production at the expense of sustainable practices and ethical labor standards. By divesting, ASN loses influence as a shareholder to push for improvements, however, insufficient progress in addressing these issues has prompted the asset manager to conclude that more drastic action was necessary. ASN's exit signals a call for more robust government regulation to address the industry's environmental and social challenges, as market forces alone are not enough to drive the necessary change.
TotalEnergies, the world's 19th largest greenhouse gas emitter, has been found guilty of greenwashing by South Africa's Advertising Regulatory Board (ARB). The complaint, filed by the advocacy group Fossil Free South Africa through its Fossil Ad Ban program, challenged a partnership between TotalEnergies and South Africa National Parks that promoted the #FuelYourExperience competition. The advertisement claimed the company was “committed to sustainable development and environmental protection,” which Fossil Ad Ban argued was misleading given TotalEnergies' ongoing fossil fuel activities. Fossil Ad Ban highlighted TotalEnergies' extensive involvement in exploratory drilling, and its 62% stake in the East African Crude Oil Pipeline, actions that contradict the stated environmental commitments. This ruling follows South Africa's recent passage of the Climate Change Act, underscoring the country's increasing commitment to addressing climate change and holding companies accountable for their environmental impact.
Companies are forming cross-functional ESG working groups and increasingly appointing specialized roles like Chief Sustainability Officers (CSOs) to drive sustainability efforts ahead of global due diligence regulations. According to Deloitte’s 2024 Sustainability Action Report, 98% of executives report progress toward their sustainability goals, highlighting the deep integration of ESG initiatives into corporate structures. More than half of the companies surveyed expect to achieve greater efficiencies, reduced risks, and enhanced stakeholder trust through ESG reporting. However, challenges persist, as 57% of companies face significant data quality issues, with 88% ranking it among their top concerns. As a result, despite regulatory pressures, only 15% of companies are currently disclosing Scope 3 emissions.
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5. U.S. oil and gas industry embraces Scope 1 and Scope 2 emissions reporting in light of new SEC rules
In 2023, the US oil and gas industry managed to increase production and maintain shareholder value despite significant drops in commodity prices. Another key development was the industry's heightened focus on environmental, social, and governance (ESG) practices. Despite evolving regulatory requirements, including the SEC’s climate disclosure rules finalized in March 2024, an EY study found that 80% of the companies voluntarily reported Scope 1 and Scope 2 greenhouse gas (GHG) emissions, with 42% providing external assurance. EY concluded that while the US oil and gas sector remains rooted in traditional energy production, it is increasingly positioning itself for a sustainable future as companies invest in digital infrastructure to support carbon reporting and sustainability initiatives.
Voices from this week
??Coty Jeronimus, ESG Manager at CALIDA AG , discusses ASN's decision to divest from the clothing industry, emphasizing the need for stricter regulations, like those in France, which could raise fast-fashion prices by up to 10 euros each.
??Dr. Jawaria, Head of Sustainability & Climate Change at Tti Testing Laboratories , explains how aligning ESG metrics with the UN SDGs provides a robust framework for businesses to tackle global challenges while driving growth and enhancing stakeholder trust.
??Amanda Koefoed Simonsen, Board Member at Dj?f , argues that while sustainability regulations set a baseline for accountability to ensure companies adopt more ESG-friendly business models, there is always a risk that political shifts will change corporate priorities.
??Jeffrey Vogt, Rule of Law Director at Solidarity Center , analyses EU's CSDDD from a trade union perspective, with clear recommendations to member states to overcome these limitations in the transposition process.
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