ESG as part of board remuneration: An Overview in DAX-40
Sustainability reporting in Germany is undergoing major changes – keyword CSRD. But how prepared are companies for the basic building block of the CSRD, the materiality analysis?
Justus spent several years in ESG and IR at an established investor relations consultancy, where he helped build and lead the ESG practice.
At Via Tomorrow, he is now fully focused on ESG. His credo: no aimless ESG blah blah, but measurable ESG results for clients.
According to estimates, the fashion industry alone is responsible for around 10% of global CO₂ emissions. To ensure that the industry can contribute effectively to the European Green Deal and its associated climate protection and resource conservation targets, it is increasingly the focus of regulatory measures.
Beyond the regulations of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), companies in the industry are facing a growing number of industry-specific legislative initiatives and regulations:
The production of clothing and footwear is energy-intensive and consumes large amounts of water, especially in the upstream value chain: more than 79 billion liters annually. The production of a single pair of jeans requires almost 8,000 liters. However, greenhouse gases and water consumption are not the only focus when it comes to clothing and shoes – recyclability, waste volumes, and the use of chemicals, e.g., in leather tanning processes, are other relevant factors. Regarding social aspects, working conditions in production countries are often particularly critical.
Initial challenges can also develop into market opportunities: Almost 88% of Europeans believe that clothing should last longer.
Social responsibility from production to sale
The industry faces additional risks due to working conditions in production facilities along the supply chain: fair wages, safe jobs, and international labor standards must be upheld. Credible measures are needed to strengthen the trust of customers and investors.
According to the ESG standard SASB, the following topics and related key figures are particularly relevant for investors in the fashion industry (apparel, accessories, and footwear):
Environmental factors:
And for the social factors:
The industry is increasingly discussing how the transition to a circular economy can be shaped. Recycling initiatives, innovative take-back systems, and the use of closed loop circles – the reuse and recycling of waste – show that, in addition to optimizing production, sustainable product design is also crucial.
In Germany and around the world, there is growing awareness of responsible business practices, which is reflected in the demand for ecologically and socially sustainable fashion. Additional sales potential and cost reductions can also be advantages of production that focuses on greater circularity.
The implementation of ESRS (or VSME for smaller companies) regulations and SASB standards offers companies in the clothing and footwear industry the opportunity to collect relevant data and evaluate it strategically.
ESG requirements in the fashion industry are complex and diverse. We understand the specific challenges facing the clothing and footwear industry and would be happy to support the pragmatic development or refinement of your (initial) sustainability data strategy – please feel free to contact us!
Sustainability reporting in Germany is undergoing major changes – keyword CSRD. But how prepared are companies for the basic building block of the CSRD, the materiality analysis?
Sustainability reporting in Germany is undergoing major changes – keyword CSRD. But how prepared are companies for the basic building block of the CSRD, the materiality analysis?
Our digital lives consume vast amounts of energy – and so does the entire IT