Political environment for sustainability

In the past, there were only a few people who were concerned with the preservation of the earth.  In Germany, this role has mainly been assumed by the state since the 1970s. In recent decades, the European Union (EU) has enforced stricter policies and laws than was the case in Germany. At international level, the institutions have now agreed on a large number of ecological and social standards which are introduced in this section. The political room for action relates mainly to the formulation of limit values, the enforcement of taxes and the linking of the allocation of public funds to ecological and social standards. The EU-green paper, stated by the European Commission in 2013, defined a 2030 framework for climate and energy policies. It integrates different policy objectives such as reducing greenhouse gas (GHG) emissions, securing energy supply and supporting growth, competitiveness and jobs through a high technology, cost effective and resource efficient approach.

The three pillars of sustainability

The three pillars of sustainability – society, environment and economy – provide a solution-oriented framework to help companies tackle complicated sustainability issues. The included aspects of the three dimensions are shown in the following figure.

Social sustainability includes environmental justice, human health, resource security, and education. While the ecological pillar focuses the well-being of the environment including water quality, air quality, and reduction of environmental stressors (e.g. greenhouse gas emissions), economic sustainability focuses the well-being of the company including job creation, profitability, and proper accounting of ecosystem services for optimal cost-benefit analyses.

Three pillars of sustainability, Source: Own figure (CC-BY-SA)

Triple Bottom Line

There are different perspectives on the dimensions of sustainability and how they relate to the limits of the planet’s environment. The Triple Bottom Line is a concept for sustainable management. The economic principle is supplemented by ecological and social factors. This means that companies should act in such a way that they offset or at least minimize their ecological and social impact. By taking social and ecological aspects into account, a company offsets its ecological and social footprint and thus contributes to sustainability. This also ensures long-term economic success. An exclusive focus on profit maximization harms the company in the long term, as social and ecological factors are neglected.

Non-financial reporting requirements and standards in the area of logistics

The relevance of sustainability reporting continues to increase due to new regulations. The following figure “Milestones to more sustainability in logistics” shows you important standards and reporting requirements for logistics from the past and coming years. The Greenhouse Gas Protocol established the first standard for greenhouse gas accounting and reporting in 1998. Several standards and reporting requirements were defined in the following years. The calculation standard for GHG emissions ISO 14064 from 2006 was followed in 2013 by the reporting requirement DIN EN 16258, which is specifically aimed at logistics companies. These regulations formed the basis for the GLEC framework, a guideline for logistics companies for calculating and reporting their greenhouse gas emissions. ISO 14083 from 2023 is based on this framework and replaces DIN EN 16258. The new standard covers all lifting activities and refrigerant losses. It covers the entire transport chain and all relevant modes of transport (for both passenger and freight transport). It also includes direct emissions as well as upstream emissions from the provision of fuel and electricity. After 2025, the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) will come into force in the EU member states; the two directives contain the requirements for sustainability reporting (CSRD) and due diligence with regard to human rights and environmental protection in supply chains.

With the growing importance of sustainability due to for example the climate change or politic regulations., the sustainable impact on companies has also increased. The following aspects must be considered in this context:

One big milestone in the reporting requirements for companies is the Corporate Sustainability Reporting Directive (CSRD). In the following all the relevant aspects concerning the CSRD will be explained to you.

Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is the EU directive on corporate sustainability reporting. With this directive large and listed companies are required to publish regular annual reports on their social and environmental risks and explain how their activities affect people and the environment. This affects

• for financial years beginning on or after 1 January 2024: public interest entities with more than 500 employees
• for financial years beginning on or after 1 January 2025: all other large companies under accounting law
• for financial years beginning on or after 1 January 2026: capital market-oriented SMEs, unless they make use of the option to defer until 2028

With the implementation of the CSRD in January 2023, over 50,000 organisations worldwide are obliged to disclose details of their Environmental, Social and Corporate Governance (ESG) practices. In general, this information should help investors, civil society organisations, consumers and other stakeholders to assess the sustainability performance of companies.

CSRD reporting areas and key requirements

Reporting area 1: General requirements and disclosures

Reporting area 2: Environmental

• Climate change
• Pollution
• Water and marine resources
• Biodiversity and ecosystems
• Resource use and circular economy

Reporting area 3: Social

• Own workers
• Worker in the value chain
• Affected communities
• Consumer and end-user

Reporting area 4: Governance

• Business conduct

Read more about CSRD: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464

As there is a broad spectrum of quality in corporate sustainability reports, the Ecological Economy Research (IÖW) and the business initiative future e.V. are ranking the sustainability reports from major German companies since 1994. Since 2009 the reporting is accompanied by the evaluation of German small and medium-sized enterprises (SMEs). In 2021 Deutsche Telekom AG, Rewe Group and Merck KgaA got the highest ranking.

Ranking Sustainability Reporting, Source: Institut für ökologische Wirtschaftsforschung und future e. V. – verantwortung unternehmen (2021) (CC-BY-SA)

In the following, you will be introduced to some other theories, agreements and standards in the concept of sustainability that have been developed over the years.

Limits to Growth

The Limits to Growth is a report by the Club of Rome, an association of scientists and decision-makers founded in Rome in 1968 (today: 80 personalities from 50 countries), on the state of humanity from 1972 (published in 12 million copies and translated into 27 languages).
The statements in the book build on research conducted at Massachusetts Institute of Technology (MIT) on the so-called “world model”, which uses system dynamic modelling. The target group of the report was primarily political decision-makers. The 30-Year Update was published in 2004.

Concept of Sustainable Development (Brundtland-Commission of the EU)

The World Commission on Environment and Development published the Brundtland Report (also called Our Common Future) in 1987, which introduced the concept of sustainable development as follows:

Global Report Initiative (GRI)

The GRI was formed with the support of the United Nations Environment Programme (UNEP) in 1997 and provided the first global standards for sustainability reporting on a range of economic, environmental and social impacts. The GRI Sector Program, which was approved by the Global Sustainability Standards Board (GSSB) on 7 February 2019, is a new program in which standards will be developed that are specific to certain sectors. Those GRI Sector Standards will identify and describe a sector’s impacts and stakeholder concerns from a sustainable development perspective.

If you want to learn more about the current status of the GRI Sector Program, check this website: https://www.globalreporting.org/standards/sector-program/

Global Report Initiative: Universal Standards and Topic-specific Standards, Source: Global Sustainability Standards Board (2021) (CC-BY-SA)

The Ten Principles of United Nations Global Compact

The United Nations Global Compact defined in 2004 ten principles that provide companies strategies, policies and procedures to follow their sustainable responsibilities and setting the stage for long-term success. The areas of responsibility are human rights, labour, environment and anti-corruption.

Human Rights

Labour

Environment

Anti-Corruption

Sustainable Development Goals (SDG) (United Nations)

In 2015 the United Nations General Assembly defined the SDGs. It is planned to achieve all the 17 goals by 2030. They should demonstrate a “blueprint to achieve a better and more sustainable future for all.” Furthermore, the goals are defined to address the global challenges and are related to poverty, inequality, climate change, environmental degradation, peace and justice.

Read more about the individual goals: https://www.undp.org/sustainable-development-goals

After this overview of the evolution of sustainability, the following sections will introduce the different dimensions (social, ecological and economic) and show their influence on the movement of goods.

Sources