Navigating Regulations Around Sustainable Marketing

Are Your Sustainability Claims Putting Your Company at Legal Risk? Recent research reveals a startling shift: Corporate sustainability commitments, once primarily a reputational concern, are increasingly becoming grounds for litigation. A comprehensive analysis published in Harvard Business Review highlights how the landscape of environmental, social, and governance (ESG) communication is fundamentally changing. The data is compelling: With over 2,500 active climate litigation cases globally, companies face unprecedented scrutiny not just for their environmental impact, but for how they communicate their sustainability efforts. The research points to a critical emerging pattern in corporate liability. A pivotal case study illuminates this trend: The 2024 legal action against JBS USA Food Company challenged their "net zero by 2040" commitment. What makes this case particularly significant is that it targeted a voluntary sustainability pledge, questioning not the missed targets, but the viability of the implementation plan itself. The research identifies an emerging corporate response: "greenhushing." Companies are increasingly withdrawing from public sustainability discourse to minimize legal exposure. However, the analysis suggests this strategy carries significant risks: - Market position erosion as competitors maintain transparency - Reduced ability to attract investment and talent - Missed opportunities for industry collaboration - Non-compliance with emerging regulations like the EU's Corporate Sustainability Reporting Directive Evidence-based strategies for risk mitigation: 1. Integration of legal and communications functions in sustainability strategy development, supported by clear governance structures 2. Research-backed implementation plans preceding public commitments 3. Transparent progress reporting: Studies show 80% of stakeholders respond positively to organizations that acknowledge challenges while presenting clear remediation strategies 4. Active policy engagement to help shape the regulatory framework The research conclusively demonstrates that strategic sustainability communication isn't optional - it's a core business imperative. Success depends on balancing transparency with robust risk management protocols. Question for fellow leaders: How is your organization adapting its sustainability communication strategy in response to this evolving legal landscape? #sustainability #leadership #supplychain ___________ 👍🏽 Like this? ♻️ Repost to help someone ✅ Follow me Sheri R. Hinish 🔔 Click my name → Hit the bell → See my posts. ___________ References based on HBR analysis and current market research in corporate sustainability communications.

Many companies do not fully appreciate the impact that the new European Union ESG regulations could have on their business, even if they are not located in Europe. The EU Corporate Sustainability Reporting Directive (CSRD) requires reporting on 12 European Sustainability Reporting Standards: ✅ Two overarching standards ✅ Five environmental standards ✅ Four social standards ✅ One governance standard. Under the new legislation large companies will have to file an annual sustainability report in addition to their financial statements. Non-compliance can lead to financial penalties and exclusion from doing business in Europe. The legislation also applies to non-EU companies that generate more than 150 million Euros in Europe. So, you probably let out a sigh of relief if you do not meet this threshold. Oops! Compliance is not limited to the companies themselves, but includes their entire supply chain. If you are a small supplier to a large European company, guess what? Many European companies are already putting their American and Asian suppliers on notice that they will be dropped if they do not comply. Companies are required to file their first sustainability reports in 2026. The reports have to be based on their documented activities from 2025, and companies that are not laying the foundation this year may not have the processes and information needed to meet the deadline. This new legislation adds another costly administrative burden on companies that are already struggling to remain profitable, but for many of you non-compliance will not be an option. One likely outcome is an accelerated investment in digital transformation to 1) drive improvements across the ESG scorecard; 2) automate the data collection and documentation needed to show the improvements; and 3) integrate with the systems their large customers are putting in place.

ESGinThree: Building sustainability reporting agility: market practice continues to emerge As companies continue to invest in preparing for the rapidly evolving sustainability regulatory landscape (99% of companies are, according to our recently released 2024 Sustainability action report (https://lnkd.in/gwEw4sqN), the complexity of the requirements, the organizational commitment, capacity & reporting infrastructure needed is front and center.  The most recent market insights published last week by #EFRAG State of play as of Q2 2024 | Implementation of European Sustainability Reporting Standards (ESRS): Initial Observed Practices from Selected Companies (https://lnkd.in/e7FsAi9r) (not official guidance) reflects early stages of implementation of #ESRS in Q224 & reinforces some important early considerations for global organizations as they navigate differing sustainability regulation around the world, specifically related to 𝗺𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝗶𝘁𝘆. Many companies have yet to fully integrate #DMA outcomes into their gap analysis of datapoints to be reported, potentially leading to the inclusion of more datapoints than required &risking obscuring the relevant information.  As many US-based companies are in the process of performing a #DMA, some helpful considerations from this recent @Deloitte article: 1. Given many global organizations report on consolidated results at a parent level, the initial reaction might be that the same can be done for #CSRD reporting so subsidiaries may seek the exemption from jurisdiction-specific reporting requirements. However, in the absence of legal equivalence that allows alternative reporting provisions, this will often mean that the parent will have to comply with multiple jurisdictional requirements.  Reporting at the non-EU parent level in accordance with full ESRS would require companies to identify #IROs across the whole value chain for the entire group’s activities. The DMA would need to follow ESRS, be based on appropriate thresholds for determining material matters & the process itself will be subject to assurance. 2. For financial statements, reporting on consolidated results at the parent level is normally performed at a higher level of materiality. However, impact materiality works differently because when assessing impacts, the point of reference is the effect on an affected stakeholder. This is based on an assessment of severity which includes whether the impact can be remediated. 3. Getting assurance ready means having robust governance and internal controls over the DMA process & the systems to obtain high-quality data. This can be a multi-year process. With the complexity in applying & preparing for CSRD, & broader sustainability regulatory requirements, the time to act is now! #deloitteesgnow 

🌿 𝐍𝐚𝐯𝐢𝐠𝐚𝐭𝐢𝐧𝐠 𝐆𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐌𝐚𝐧𝐝𝐚𝐭𝐞𝐬 𝐨𝐧 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐢𝐥𝐢𝐭𝐲: 𝐀 𝐏𝐫𝐚𝐜𝐭𝐢𝐜𝐚𝐥 𝐆𝐮𝐢𝐝𝐞 🌿 As sustainability regulations tighten, companies are facing new challenges in supply chain management. Here's how to stay ahead of the curve: 𝟏. 𝐔𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝 𝐭𝐡𝐞 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬 📚 • Thoroughly review all relevant mandates • Break down complex requirements into actionable steps • Consider consulting with legal experts for clarity 𝟐. 𝐌𝐚𝐩 𝐘𝐨𝐮𝐫 𝐒𝐮𝐩𝐩𝐥𝐲 𝐂𝐡𝐚𝐢𝐧 🗺️ • Create a comprehensive overview of your entire supply network • Identify potential sustainability hotspots and risks • Prioritize areas for immediate action 𝟑. 𝐂𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐞 𝐰𝐢𝐭𝐡 𝐒𝐮𝐩𝐩𝐥𝐢𝐞𝐫𝐬 🤝 • Establish open lines of communication with all suppliers • Set mutual sustainability goals and KPIs • Provide support and resources for improvements 𝟒. 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐞 𝐃𝐚𝐭𝐚 𝐚𝐧𝐝 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲 📊 • Implement robust data collection and analysis systems • Utilize AI and blockchain for enhanced traceability • Ensure accurate and timely reporting capabilities 𝟓. 𝐈𝐧𝐧𝐨𝐯𝐚𝐭𝐞 𝐟𝐨𝐫 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐢𝐥𝐢𝐭𝐲 💡 • Explore eco-friendly alternatives in materials and processes • Invest in renewable energy and efficient transportation • Consider circular economy principles in product design 𝐊𝐞𝐲 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬 𝐟𝐨𝐫 𝐒𝐮𝐜𝐜𝐞𝐬𝐬: • Develop a culture of sustainability across your organization • Invest in employee training and awareness programs • Stay informed about evolving regulations and industry best practices • Engage with industry peers and sustainability networks for insights 𝐑𝐞𝐦𝐞𝐦𝐛𝐞𝐫: Compliance is just the beginning. True leaders in sustainability go beyond mandates, creating value and competitive advantage. How is your company tackling supply chain sustainability? Share your experiences and best practices below! Let's build resilient, sustainable supply chains together. Your insights could be the key to someone else's success! #SupplyChainSustainability #ESG #CorporateCompliance #GreenBusiness #SustainableOperations #SupplyChainManagement #RegulatoryCompliance