There is no doubt that sustainability is nowadays a crucial issue in the European Union's regulatory framework. On March 10th 2021, the European Parliament made public the draft Directive on “Corporate due diligence and accountability”, followed, on April 21st 202, by the European Commission draft Directive on “Corporate Sustainability Reporting” (a further draft Directive on “Sustainable governance” is expected by the second quarter of 2021). These measures follow the 2014/95 "NFRD" Directive on non-financial reporting and complement and extent the ESG regulatory framework through on specific ESG topics.
Pending the definition of the scope, the recipients and the measures that companies will have to adopt with regard to ESG issues, it is nonetheless possible for the company directors to take into account interests other than those of the shareholders to build on the sustainable side of their organisation. The increasingly popular "B models” (i.e. B-Corps and benefit corporations[1]) are an example of how “stakeholderism” can be integrated into corporate strategy. Indeed, sustainable and innovative businesses operating in a responsible, sustainable and transparent way towards people, communities, territories and the environment are characterised by a lower degree of risk and higher long-term profitability.
This is even more evident when an "ESG Due Diligence" is carried out to monitor the impacts along the value chain, as envisaged by the draft Directive on “Corporate due diligence and accountability”. The due diligence process enables the identification and assessment of potential or actual negative impacts on human rights and the environment through the adoption of policies and measures to cease, prevent or otherwise mitigate the related risks. It is important to note that the draft Directive, as well as the other legislative initiatives in progress at the EU level, underline the key role of human rights which are related not only to social issues "S" (for example to workers' rights, religious, ethnic, sexual and gender discrimination, etc.) but also environmental issues, as understood and declined in the right to a healthy environment and a dignified life.
Therefore, directors of major European companies are required to a substantial rethinking of the company strategy. Sustainability is a challenge and an opportunity that can no longer be seen as mere compliance but requires strategic choices and decisions that impact the mission, governance, organisation and products. This enables companies to improve their market positioning and anticipate compliance obligations by integrating the generation of social and environmental value into their corporate strategy.
