The CS3D Digest #8
Ripple Research
Ripple Research works at the intersection of data science, behavior change, and social impact.
Welcome to the eighth 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.
You can read our previous editions to catch up, and remember to subscribe!
In today's roundup, we look at the EU Council's mandate on ESG ratings, implications of SFDR implementation, KLM's greenwashing lawsuit, sustainable transition of the Indian textile industry, and new provisions for e-waste recycling under EU waste directives.
Let's dive in!
What are we reading?
We've employed our proprietary AI tools to curate the most engaging news about CS3D. Our focus extends beyond what's trending at the moment to showcase headlines that are fueling meaningful conversations around the world.
To enhance investor confidence in sustainable products, the European Council has agreed on its negotiating mandate for a regulation on environmental, social, and governance (ESG) ratings. The proposed rules focus on authorizing and supervising ESG rating providers through the European Securities and Markets Authority (ESMA) to ensure transparency, comparability, and the prevention of conflicts of interest. The Council introduced exemptions, clarified the scope, and outlined a temporary registration regime for small ESG rating providers, with interinstitutional negotiations expected to commence in January 2024.
The introduction of the Sustainable Finance Disclosure Regulation (SFDR) has led to a significant reduction in the average portfolio emissions of EU funds claiming to be sustainable. Article 8 and 9 funds experienced more substantial decarbonization compared to other groups, according to a study by University of Navarra researchers using a sample of around 4,000 active equity funds. These findings suggest SFDR has prompted tangible changes, including exits from high-emitting companies, highlighting the link between transparency regulations and sustainable claims.
India's textile industry anticipates a shift towards sustainability with the impending enforcement of the European Union's ESG standards, including the Carbon Border Adjustment Mechanism (CBAM). With implementation set for 2026 under the EU's ambitious European Green Deal, Indian textile exporters are redefining their practices to view sustainability not just as compliance but as a strategic initiative to strengthen their role as global suppliers. While challenges like compliance costs and labor variations exist, industry stakeholders, along with the Ministry of Textiles, are exploring supportive measures to navigate this sustainable transition.
Dutch airline KLM is currently facing allegations of "greenwashing" allegations over its "Fly Responsibly" campaign with environmental group Fossil Free contending that the ads are misleading. The lawsuit reflects growing scrutiny of airlines' environmental claims, with regulators and advertising authorities in Europe recently challenging similar assertions made by various carriers. Fossil Free has argues that flying cannot be responsible given aviation's significant contribution to GHG emissions. KLM counters by pointing to its sustainability efforts, including fuel-efficient planes and plans for biofuel incorporation.
British households will witness improved routes for recycling electronic goods from 2026, as the UK government unveils plans to have producers and retailers pay for household and in-store collections. The initiative builds on EU waste directives and aims to address the growing issue of almost half a billion small electrical items ending up in landfills annually. It also aligns with?the principles of Extended Producer Responsibility, wherein the producer is responsible for design to end-of-life management of their products, including waste collection and recycling.
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Voices from this Week
?? Juliana Nascimento , Senior Executive Risk Advisory Solutions at KPMG , talks about the increased focus on sustainability disclosures and climate-related reporting prompted by the implementation of the Corporate Sustainability Reporting Directive (CSRD) and International Financial Reporting Standards (IFRS).
??In light of the provisional agreement on CS3D, Elizabeth Garland, Chief Program Officer at Verité , underscores the need for companies to integrate responsible practices throughout their operations to ensure global corporate accountability.
??Amanda Koefoed Simonsen, ESG Manager at ESG Implementation , argues that CS3D goes beyond mere reporting requirements, and imposes stringent ESG accountability norms across entire value chains. Companies will now have to establish robust due diligence measures to actively prevent environmental harm or face potential legal repercussions for non-compliance.
??William Crane, Cofounder and CEO at OrbAid , discusses the evolving corporate sustainability landscape, and underscores the impact of new SEC regulations on 'greenwashing'. Additionally, he highlights the strategic advantage of adopting standardized sustainability project management practices for accurate reporting and reduced risk.
??Matthew Bell, Global Leader in Climate Change and Sustainability Services at 安永 , shares the concerning indicators of the ongoing climate crisis while also providing reasons for optimism in 2024 owing to climate action initiatives.
??Jenny Vaughan, Managing Director of Human Rights at BSR , welcomes the provisional political agreement on CS3D, and looks forward to driving positive outcomes for people and the planet in line with global standards.
?? John Morrison , CEO of the Institute for Human Rights and Business , reflects on the shocking revelations surrounding the UK Post Office scandal, and emphasizes an urgent need for accountability and corporate responsibility.
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Ripple Research works with policymakers, researchers, businesses, and philanthropies to build resilient societies. We apply large-scale behavioral and cultural insights uncovered through big data analysis and machine learning to design solutions for impact-driven organizations. Our contributions have earned recognition from international global media outlets, including The New York Times, POLITICO, Vox, Fast Company, and Forbes.