Sustainable Business Practices
Your company's sustainable business practices require you to think differently about the consequences of your operations. In addition to ethical reasons to focus on sustainability, there are also (multiple) strategic reasons as the basis for wanting to shift to a more sustainable and responsible way of doing business.
For example, it can improve your company's reputation (and we see a strong preference for sustainable companies and products, especially among younger consumers), it is possible to reduce operational costs, for example by using energy more efficiently, and financial institutions and investors are increasingly looking at the sustainability performance of companies in their investment decisions.
If the CSRD and CSDDD do not directly prompt you to focus on sustainable and responsible business practices (for example, because your company is not large enough to fall directly under the scope of this legislation), what other sustainable (legal) options can you pursue as a company?
ESG in Corporate Law
Within corporate law, we see that ESG is playing an increasingly important role in the governance of companies. Sustainability is increasingly being officially anchored in the company. Think, for example, of including sustainable provisions in articles of association, including sustainable agreements between shareholders in shareholder agreements, and the compliance-related matters associated with them.
But also: the trickle-down of obligations and risks arising from CSRD and CSDDD legislation to smaller companies. If you do business with large companies that fall directly under the scope of this legislation, you have certainly already noticed this in negotiations and any contract changes that large companies (try to) implement.
And, there are plenty of (international) examples of activist shareholders who make it clear that sustainable business practices, in their view, cannot go fast and far enough.
Companies need to take into account that the way of working and implementing sustainable principles are under scrutiny. With all the (corporate law) consequences that entails.
Sustainable HR
Sustainable HR focuses on creating a work environment that promotes the health, well-being, and development of employees. Think of flexible and/or hybrid working, diversity and inclusion, and offering training and education focused on sustainability.
Also, consider that especially the younger generations place sustainability high on their wish list when it comes to employers to work for. In the current labor market, it is a priority for a company to focus on sustainability and to keep a close eye on developments. Within our employment law practice, we have seen this turning point for some time, and legally this is therefore a point of attention.
Conscious Contracting
Conscious contracting, also known as sustainable contracting, is about incorporating sustainability principles into negotiations and agreements. When executing sustainably drafted contracts, various considerations are taken into account. This includes not only looking at economic benefits but also considering the impact of the agreements made on people and the society. Contracts are characterized, among other things, by the use of simpler language (and are therefore also easily readable for people who have not completed a full law degree).
Employment contracts are particularly suitable for this form of contracting, but in our opinion also other contracts and relationships benefit well from this way of contracting. Later this year (2024), we will publish a white paper on this subject. Here we will delve deeper into the benefits of conscious contracting.
Sustainable Tax
In addition to legal considerations, there are also various tax reasons for your company to focus on sustainable operations.
Sustainable tax is about applying tax strategies that not only comply with legislation but also contribute to sustainable development. This can be done, for example, by encouraging investments in green technologies or by supporting social projects through tax benefits.
Concluding
The above examples of being legally sustainable are certainly not complete. Sustainability and ESG also play an increasingly important role in consumer law and international trade law. The importance for your company to act proactively and develop strategies that promote sustainability is paramount. Thus, your company and your willingness to implement sustainability play a significant role in the shift we as a society are making in the field of sustainability.
It is clear that sustainability and ESG encompass more than just compliance with regulations such as CSRD and CSDDD. It is about integrating these principles into all aspects of business operations and recognizing the responsibility that companies have towards society as a whole and the climate in particular.
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