ESG & Sustainability Newsletter 01/24

In this edition

1. News from the financial services and insurance sector

2. News around the world – What’s new?

3. White papers, studies and articles

4. Event announcement

5. Let’s get personal – WIACONs short interview

1. News from the financial services and insurance sector

Swiss banks and insurance companies must become "greener" - the only question is how?

Swiss banks are resisting possible new government regulations on sustainability modelled on the EU. However, various NGOs doubt that the banks will be able to regulate themselves effectively. The criticism includes a study by Reprisk, according to which the number of greenwashing cases has risen by 70% in the past year. Criticism of companies that make promises in the ESG area that they cannot keep is increasing.??

For example, the Swiss National Bank has been criticised for fracking investments and Swiss RE for allegedly issuing policies to Brazilian farmers who are illegally deforesting. These cases undermine the ambitious Swiss plans to become a "global leader in sustainable finance".?

Read more:

New WTW study: ESG violations dominate reputational risks for companies?

According to a new study by WTW (Wilson Tower Watson), 375 executives from 20 countries surveyed rate the potential reputational damage caused by a poor ESG reputation as high. This shows that awareness of corporate sustainability and proper reporting has increased. 26% of the companies surveyed see reputational risks as one of their core risks compared to the 2021 survey.?

Read more:

Environmental protection is in the vested interest of insurance companies

?Scientists and insurance companies have been warning about the consequences of climate change for decades. By 2023, the amount of damage is expected to exceed 100 billion euros and the trend is rising. It is assumed that around 66% of the damage is uninsured and that private individuals or the state will have to pay for the damage. The result is constantly rising premiums, some of which appear unaffordable in potential crisis areas, or insurers are withdrawing from these areas. Most insurers currently lack comprehensive strategies for agriculture, including biodiversity, mobility, energy and the building sector to promote environmental goals. Insurers have the levers in their hands to support companies on their way to an ESG-compliant future.?

Read more:

2. News around the world – What’s new?

CSRD and its consequences - sustainability is documented?

Sustainability reports are not yet of great importance to industrial SMEs. As of now, only a few hundred companies are subject to this reporting obligation. However, this is set to change in the upcoming business year 2025; the CSRD (Corporate Social Responsibility Directive) will require around 15,000 companies in Germany to document their sustainability activities every year. To do this, companies must delve deep into their operational processes, says Judith Herzog-Kuballa, VDMA sustainability expert, in the new episode of the VDMA Industry Podcast: "CSRD and the consequences - documenting sustainability".??

The contents of these reports range from an overarching description of company processes in terms of sustainability to circular economy, biodiversity and personnel issues. "However, many of these data points are not even collected in companies yet, which is why companies should get to grips with them immediately," warns Herzog-Kuballa.? ?

Read more:

These laws and guidelines will apply to companies by 2024

Sustainability-related laws and regulations for companies will come into force from 2024. Some of these laws are new, others are expanding their scope.?

One of these laws is the German Supply Chain Sustainability Act (LkSG). The regulation has been in force for all companies with 3,000 or more employees since 2023. From this year, however, the scope of the LkSG will be extended and will then also apply to companies with 1,000 or more employees. This corresponds to around 4,800 companies in Germany. It obliges companies and groups to fulfil their responsibility regarding human rights and environmental standards along the supply chain.?

This year, the CSRD (Corporate Sustainability Reporting Directive) also comes into force for public interest entities with more than 500 employees. The CSRD therefore affects large, listed corporations, insurance companies and credit institutions.?

From 2025, the CSRD will be extended to all other large companies under accounting law, and from 2026 to capital market-oriented SMEs.?

Find out more in this comprehensive overview:?

Ammunition in the depths: insidious danger for people and the environment?

Explosive devices and munitions from the world wars have been lying on the seabed of the North Sea and Baltic Sea for decades. These have been rotting away and releasing pollutants in the process.??

Around 1.6 million tons of munitions are currently estimated. In the North Sea, these are covered by sediment movements and therefore do not rust quickly. The situation is different in the Baltic Sea. Here the problem is more pressing. In the Bay of Lübeck alone, 50,000 tons of munitions are suspected.??

Investigations into the food chain reveal that carcinogenic substances enter the food chain as a result of this pollution. These have already been detected in mussels.??

Federal Environment Minister Steffi Lemke (Greens) commented on this as follows: "Around 1.6 million tons of rusting old munitions in the North Sea and Baltic Sea pose an increasing danger to people and the environment."?

Salvage and disposal of these contaminated sites are planned from 2026. It is expected to take more than 30 years to recover the waste.?

Read more:

The largest e-car manufacturer in the world is Chinese?

Chinese electric car manufacturer BYD has sold more electric vehicles than Tesla. Although Tesla delivered a record 484,507 cars in the fourth quarter of 2023, an increase of 11% compared to the previous year, it was unable to maintain the top position. BYD sold 526,409 vehicles in the same period. Tesla used discounts and incentives to maintain demand after tax breaks ended. At BYD, rebates also led to an increase in sales, and the company increased its sales figures by 62% in 2023. Chinese electric cars are often 20% cheaper than EU models. BYD is also planning its first plant in Europe. Tesla, however, leads in pure electric cars and is aiming for 2.2 million deliveries in 2024.?

Read more:

Elon Musk duels with Mark Cuban over DEI and racism

Elon Musk and Mark Cuban are embroiled in an ongoing dispute over corporate diversity, equity and inclusion (DEI) policies. Musk criticized the corporate actions of the United Airlines flight school. Mark Cuban countered and clarified that the target was for the flight school and not the airline itself. Musk then labelled Cuban a racist. The conflict reflects the broader debate over DEI practices, with Musk and others criticizing this as reverse racism, while Cuban advocates for inclusivity in new hires to find more qualified candidates.?

Read more:

Best practice: Patagonia as an example of an ESG corporate culture

Patagonia recognizes the existential threat of the climate crisis and is committed to drastically reducing CO2 emissions throughout the value chain. The company emphasizes that purchasing carbon offsets alone is not enough and is committed to minimizing its own manufacturing and supply chain emissions. By setting ambitious targets for 2030 and 2040 in line with the Science Based Target Initiative standards, Patagonia is demonstrating its responsibility. The company remains flexible to adapt to new scientific findings. In addition to its own corporate actions, Patagonia also supports fossil fuel-free and conservation initiatives at the community level. It uses its influence to advocate for systemic change in dealing with climate change.??

Read more:

3. White papers, studies and articles

Canada discusses the introduction of a new federal register for plastics

The Canadian government announced that it has launched a consultation to establish a new registry that will require plastic manufacturers to report on the amount and type of plastic they place on the Canadian market and track plastic throughout its lifecycle in the economy, from production to end of life.??

The registry will serve as the basis for measures to accelerate the transition to a circular economy by providing harmonized plastics data across the country and making information accessible to consumers and businesses.?

Read more:

ESG - These challenges await supply chains in 2024

The transparent organization of the supply chain is a fundamental prerequisite for improved traceability, greater resilience and increased sustainability performance. In particular, only comprehensive visibility of the procurement processes, the key players, the dynamics in supply chain relationships and the sustainability risks and measures enables a deeper understanding. These insights are essential to fulfil legal due diligence obligations and make progress in terms of sustainability. IntegrityNext presents itself as an IT solution for managing sustainability and ESG compliance in the supply chain. The company's cloud-based platform enables users to identify ESG risks along the supply chain, fulfil regulatory due diligence and reporting obligations and ultimately improve their long-term sustainability performance.?

Read more:

Sustainable transformation: it all depends on the employees?

If a company is seriously interested in sustainability, this requires a comprehensive transformation. However, the decisive factor for success is to actively involve employees. The focus on sustainability can significantly change existing business models. What impact will this have on employees who identify strongly with existing products? Taking these aspects into account, company managers must ensure that the transformation is supported by employees. Experts in the field of climate psychology are working intensively on such questions. They analyze how climate change affects the human psyche and how we can motivate people to act in a climate-friendly way. In one article, four climate psychologists explain how this can be successfully implemented.?

Read more:

?4. Event announcement?

WIACON will be part of the Akademie3 conference in Vienna, which will take place from 11 April to 12 April 2024.??

Alicia Buss, ESG Compliance Consultant at WIACON, will give an expert lecture on "Successful integration of ESRS into corporate culture"?

Alicia Buss: "The quality of a sustainability report depends on the extent to which a company has integrated environmental protection, social responsibility and exemplary corporate governance into its culture. These values should be an integral part of all corporate activities. In my presentation, I will explain how companies can create a basis for their sustainability report and economic success by consistently applying the ESRS. In particular, I will focus on the comprehensive responsibility of the company, which requires sensitization to new sustainability standards. Careful planning, effective implementation and regular monitoring of compliance with environmental and sustainability regulations create a basis for sustainable business. I will show how companies can establish appropriate structures, including policies, processes, training and awareness-raising measures. An effective monitoring mechanism with regular audits and assessments of environmental, social and governance activities is essential.?

Through increased collaboration and a corporate culture committed to environmental, social and governance, satisfactory reporting results can be achieved, and corporate sustainability can be improved in innovative ways."*? ? *translated from German??

Further information can be found here:?

5. Let’s get personal – WIACONs short interview

To gain an insight into how sustainability and the climate crisis affect WIACONers in their everyday lives, we asked the following question:

Where did sustainability, ESG or the climate crisis (or the absence of sustainability, ESG) play a role for you this month (privately or professionally)?

In this issue, Negin Ajam, Senior Legal Officer at WIACON, reports on fast fashion and the shocking insights she has gained in this context.

Negin Ajam: “This month, I watched some interesting documentaries about fast fashion, and it dawned on me that our clothing choices can contribute a lot to global warming! According to the UN Environment Program (UNEP), the fashion industry stands as the second most polluting factor on Earth, following the oil and gas industry.??

Digging deeper, I found out that the textile industry is responsible for around 10% of global carbon dioxide emissions, 20 % of all global wastewater, and 9% of annual microplastic losses to the ocean making fast fashion a major contributor to global warming. Textiles and clothing comprise at least 7% of the total waste of global landfills. I also came across the fact that in the United States alone, approximately 85% of all textiles annually find their way into landfills. In the EU the statistic is quite similar.??

Fast fashion isn't just bad for the environment; it also uses a lot of natural resources and provides poor working conditions for the people making the clothes The materials in fast fashion often contain a lot of plastic and toxins, making the problem even worse.?

Realizing all this information was a real eye-opener, leaving me greatly shocked and got me thinking about my clothes and how they might contribute. It?made me rethink my clothing choices. I'm now trying to be more mindful and choose sustainable options. It's eye-opening to see how our fashion decisions can impact the planet, and I want to make choices that are better for the environment.???

Here, I found some tips to be more eco-friendly with our fashion choices:?

1. Choose clothing from sustainable brands and local businesses.?

2. Resist the temptation of discounts and buy clothes only when necessary.?

3. Make conscious fabric choices by opting for sustainable materials like organic cotton, linen, and hemp. Steer clear of polyester and nylon, as they can take 20 to 200 years to decompose in landfills.??

4. Embrace second-hand shopping for a more sustainable wardrobe.?

5. Invest in high-quality clothing for longevity.?

6. Instead of discarding well-maintained garments, consider donating them to extend their lifespan.“?

Did you know…?

Facts about linen? ?

The natural material linen, which is made from the fibres of the flax plant, is gradually regaining popularity. The reasons for this are that it is sustainable, versatile and suitable for environmentally conscious people.? ? Compared to cotton, flax requires less water and pesticides. It also grows on less fertile soils and even improves soil health as it contributes to crop rotation and protects the soil from erosion and nutrient loss. As the entire plant is used to produce linen, waste is also reduced.??

Further advantages: ?

• Linen is biodegradable and compostable (no harmful effects on the environment after use)?
• Linen has a smaller CO2 footprint compared to many other textiles?

Source: https://handgemacht-und-nachhaltig.de/wissen/materialien/leinen/

Facts about hemp?

Hemp is a good alternative to cotton. Hemp fibres are robust, durable and have antibacterial properties. The water requirement for hemp cultivation is also low, while the yield per area is significantly higher than that of cotton, for example. ?

In addition, hemp cultivation requires little use of pesticides, which is good for people and the environment.?

Source: https://handgemacht-und-nachhaltig.de/wissen/materialien/hanf-ein-nachhaltiges-material/?

Polyester and nylon?

Synthetic fibres such as polyester and nylon, from which textiles are made, play a large part in the plastic problem. These fibres cannot be biodegraded. ? Around 5.8 million tons of textiles are disposed of in the EU every year. Two thirds of these consist of synthetic fibres such as nylon and polyester. ? So when it comes to environmental friendliness, things are not looking good for these fabrics. In addition to the waste problem, they are made from crude oil and produce high levels of energy consumption and CO2 emissions. They also produce chemically contaminated wastewater.? These fibres therefore cause massive environmental damage - starting with the extraction and refining of crude oil or natural gas, through production and disposal.? ?

Source: https://www.recyclingmagazin.de/2021/01/28/kunststoffe-ein-zunehmendes-umwelt-und-klimaproblem/?,

https://citizensustainable.com/de/polyester-umweltfreundlich/?

Fast fashion and its impact on the environment?

The fast fashion industry is a massive waste of our planet's resources. More and more clothing is being produced, which is then offered at ever cheaper prices. Despite the low prices, many items of clothing remain unsold and are then disposed of in gigantic landfill sites when they are completely new.? The short-lived trends therefore pose a huge problem for our environment.? Highly toxic chemicals are already used in the production of clothing. These not only endanger workers, but also poison surrounding rivers through wastewater. ? But this is not the only problem that the fast fashion industry is causing to nature and people. Read more about this in the following articles:?

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