Guide to ESRS Governance Requirements

ESRS G1, a pivotal framework in corporate governance and sustainability reporting, outlines crucial requirements for companies' business conduct.

In corporate governance and sustainability reporting, the Environmental, Social, and Governance (ESG) Reporting Standard (ESRS) serves as a crucial framework for companies to disclose their strategies, processes, and performance concerning various aspects of business conduct. ESRS G1, also known as the Topical Governance Standard, is pivotal in outlining the requirements for companies to report on governance aspects. In the ESRS, "governance" pertains to how companies oversee sustainability impacts, risks, and opportunities, involving defining procedures, controls, and decision-making processes. It encompasses responsibilities allocation, communication channels, legal compliance, and maintaining integrity and accountability throughout the organization, with components like risk management, compliance systems, and administrative roles falling under this umbrella. Let's delve into a comprehensive understanding of ESRS G1, incorporating both the initial source and the additional information provided.

ESRS G1 Overview:

ESRS G1, or the Topical Governance Standard, is designed to guide companies in reporting on governance aspects of business conduct. It encompasses corporate culture, whistleblower protection, anti-corruption strategies, supplier relationship management, and political engagement.

The disclosures outlined in ESRS G1 are structured to cover various dimensions of business conduct, including:

1. Corporate Culture: This encompasses a company's strategy and approach towards fostering an ethical organizational culture, including policies addressing anti-corruption, anti-bribery, whistleblower protection, and animal welfare.

2. Protection of Whistleblowers: Companies need to disclose measures taken to protect whistleblowers, including establishing reporting channels, providing training, and safeguarding against retaliation.

3. Animal Welfare: ESRS G1 addresses the company's commitment to animal welfare, although this may not apply to all organizations.

4. Political Engagement and Lobbying Activities: Disclosure requirements extend to activities and commitments related to exerting political influence, including lobbying efforts and political contributions.

5. Management of Relationships with Suppliers: This involves disclosing practices related to supplier relationship management, including payment practices, especially focusing on avoiding late payments to small and medium-sized enterprises (SMEs).

6. Corruption and Bribery: Measures for preventing and detecting corruption and bribery, including training programs, incident reporting procedures, and outcomes of reported incidents, are also covered under ESRS G1.

Objectives of ESRS G1:

The overarching objective of ESRS G1 is to provide insight into how administrative, management, and supervisory functions shape, monitor, promote, and evaluate a company's culture. Specifically, ESRS G1 aims to address the following business conduct matters:

  • Business ethics and organizational culture, including anti-corruption and anti-bribery policies.
  • Effective management of relationships with suppliers, ensuring fair practices, especially concerning payment.
  • Transparent disclosure of activities and commitments related to political influence and lobbying, promoting accountability and integrity.

In conclusion, ESRS G1 is a comprehensive framework for companies to report on their governance practices, particularly in business conduct. By adhering to the disclosure requirements outlined in ESRS G1, companies can enhance transparency, accountability, and sustainability in operations, ultimately contributing to a more ethical and responsible business environment.

Learn about ESRS Cross-Cutting Requirements:

Learn about ESRS Environment Requirements:

Learn about ESRS Social Requirements:

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