On 1 January 2025, companies across the world will face a new dawn as new Corporate Sustainability Reporting Directive (CSRD) being enforced by the EU will require all large companies to report on sustainability, including non-EU companies in London if they generate over €150 million on the EU market.
Conceptionally, citizens, employees, suppliers, workers should benefit. But since this scheme is so untransparent, it will only line the pockets of shareholders of big corporates including Consultancy firms who will jump on an opportunity to sell glossy brochures with emotional pictures that act as another ‘rubber stamp’ tax without a proper plan or philosophy behind it.
It will certainly not benefit creative, sports or educational infrastructure for the local community. People talk about Greenwashing – we are now about to enter a period of ‘Social Smoothing’.
Instead of presenting an issue that they need to solve, the EU could present companies with incentives in exchange for companies contributing capital to meet societal ESG needs. Then CSRD would encourage companies to connect with local councils, consider their needs, and create, build or run football pitches, museums, libraries and other facilities to boost social and cultural sustainability.
But for this to happen, cities and local authorities, who know what’s needed and lacking in their cities, have to set the agenda and communicate what they need, rather than the private sector. They also need to be able to present actionable data to de-risk social impact investments for big companies.
If they measure the impact and deliver data using market leading tools such as Apollo Impact Compass, in exchange for investment, that will be the way forward to unlock the full potential of ‘S’ in ESG and trigger mass innovation in the public sector.
