The German Council for Sustainable Development (RNE), ESMT Berlin, Board Academy e.V. and the Financial Expert Association e.V. (fea) jointly coordinate the Climate Governance Initiative Germany, the German chapter of Chapter Zero Alliance. The network aims to mobilize non-executive directors and supervisory board members (“Aufsichtsräte”) to align business models with ambitious climate policy and a set of joint Climate Governance Principles.

Key role of supervisory boards in furthering climate action and sustainability

An initiative set up by the World Economic Forum (WEF), Chapter Zero Alliance (formerly known as Climate Governance Initiative) underscores the pivotal role of corporate boards in the long-term stewardship and strategic direction of companies. Through a global network of locally led Chapters, Chapter Zero Alliance equips directors worldwide with the expertise, tools and confidence to lead on climate and nature in the boardroom.

The Alliance seeks to empower board directors to take action on environmental and climate issues by enhancing their knowledge and skills, based on the Guiding Principles for Climate & Nature Governance. The aim is to understand the opportunities and risks that global crises pose for companies and enable board members to implement climate strategies which strengthen long-term organisational resilience and competitive advantage and advance a climate-resilient, nature positive economy. Through a global network of local Chapters, Chapter Zero Alliance creates awareness and fosters collective action to ensure companies’ lasting success and endurance over the long term.

In February 2021, together with ESMT Berlin and the Board Academy, the German Council for Sustainable Development (RNE) founded the German Chapter – Climate Governance Initiative Germany (CGI Germany) – of Chapter Zero Alliance.

Eco- and climate-friendly operation must be embedded in business models

The urgent need to address the current global crises – climate change, declining biodiversity and high levels of pollution – calls for governments and businesses to step up the transition to a new and fairer economic model (“just transition”).

Global crises bring both risks and opportunities for businesses. Companies that lead the way in establishing a circular economy or climate neutrality can secure a competitive advantage, as investors and regulators are increasingly demanding that businesses show responsibility and take strategic action on issues of climate, biodiversity and the environment. Boardrooms face the challenge of integrating risks and opportunities as they develop just transition strategies. As such, supervisory boards must be fully aware of the implications of the environmental crisis and lead their companies through the complex requirements of climate change mitigation. Climate Governance Initiative Germany promotes this development by collaborating with like-minded partners.

Our offerings

Networking opportunities in a worldwide network of supervisory boards

The global network of Chapter Zero Alliance consists of more than 30 local subgroups (local chapters), which are supported in their work by the Global Secretariat. The Global Secretariat promotes the international exchange of experience and shares valuable products and resources with all members. Visit the Chapter Zero Alliance website for more information on the Alliance, local chapters, news, and events. As a member of CGI Germany, you gain access to the expertise of our global network.

Peer-to-peer learning

How do other supervisory boards steer their companies in the transformation towards more sustainability? Which leadership styles have proven successful? Members of the CGI Germany discuss these and other questions in digital events, discussion rounds and round tables together with supervisory boards of German-based companies. You can find a selection of past and future events in the section below. Become part of this exclusive network and register here as a member.

External Advisory Council

CGI Germany is advised in its work by a high-ranking advisory body consisting of supervisory boards of companies domiciled in Germany.

Events

Contact

Dr Werner Schnappauf
Former Minister of State, former board member at Allianz
Member in the Council for Sustainable Development
Potsdamer Platz 10, 10785 Berlin
Phone +49 (0) 30 338424-401
Email climategovernance@nachhaltigkeitsrat.de

Joanna Radeke
Executive Director of the ESMT Institute for Sustainable Transformation and Director of Sustainability
ESMT Berlin
Schlossplatz 1, 10178 Berlin
Phone +49 175 356 6320
Email joanna.radeke@esmt.org

Caspar von Blomberg
Board Academy e.V.
c/o Egon Zehnder International
Promenadeplatz 12, 80333 Munich
Phone +49 89 29 00 69 0
Email caspar.blomberg@egonzehnder.com

Daniela Mattheus
President
Financial Experts Association e.V.
Bertha-Benz-Straße 5, 10557 Berlin
Phone: +49 30 208 88 33 90
Email: geschaeftsstelle@financialexperts.eu

Further links

Developed by the German Council for Sustainable Development (RNE), the German Sustainability Code has been supporting companies in sustainability reporting since 2011.

The Federal Ministry for Economic Affairs and Climate Protection (BMWK) has been funding the further development of the Sustainability Code since February 2024, with the RNE providing advice on further development. Instead of the previous reporting standard, the Sustainability Code will offer a comprehensive range of support for reporting in accordance with CSRD from the start of 2025. The aim is to provide companies with user-friendly sustainability reporting via the new Sustainability Code platform and thus significantly reduce the time and effort required, especially for medium-sized companies.

Find out more about the new Sustainability Code platform: www.deutscher-nachhaltigkeitskodex.de

Further links

A joint press release from the Federal Ministry for Economic Affairs and Climate Action and the German Council for Sustainable Development (RNE)

German Sustainability Code to be expanded to help SMEs in particular report on their sustainability performance.

Berlin, 2 April 2024 – Companies should be able to hit the ground running when they come to implement the new standards for sustainability reporting. With this in mind, the German Sustainability Code (DNK) developed by the German Council for Sustainable Development (RNE) is being updated and expanded with, among other things, a new online platform. The Federal Ministry for Economic Affairs and Climate Action (BMWK) will provide 19,250,000 euros in funding over a three-and-a-half-year period in a bid to minimise the time and effort required for sustainability reporting, especially by small and medium-sized enterprises (SMEs). The move is the German government’s response to the expansion of EU-wide reporting obligations, which will result in some 13,000 companies in Germany having to join the reporting ranks from 2025. The DNK enables low-threshold, legally compliant sustainability reporting by means of free and practical support via, for example, an online platform, training courses and guidelines.

Michael Kellner, Parliamentary State Secretary at the BMWK and the federal government’s SME Commissioner: “We must prevent any additional red tape. Our goal is therefore to take as much pressure as possible off small and medium-sized enterprises in particular, as regards their reporting obligations. These include reporting on sustainable business practices. Companies must be able to supply their contract partners and banks with all the necessary sustainability data in standardised form and also make eco- and climate-friendly economic activity transparent to the public. The German Sustainability Code is the key to this. It will provide free, low-threshold digital support for companies to fulfil the new statutory requirements for reporting on sustainability and due diligence. The standardised, digital, user-friendly format offered by the DNK 2.0 will make reporting a whole lot easier.”

Reiner Hoffmann, Chair of the German Council for Sustainable Development: “Sustainability reporting plays an important part in boosting corporate responsibility for environmental and climate protection and human rights compliance as well as gradually course-correcting towards a sustainable economy. It’s not about sanctions – it’s about transparency. The sustainability report is the product, but much more important is the company’s internal process that results from analysing its own activities and value chain. The companies themselves need this data to configure their business models sustainably and competitively.”

Gerd Röders, President of WirtschaftsVereinigung Metalle and managing partner of the foundry G.A. RÖDERS GmbH & Co. KG: “For our business, the DNK was a valuable motivation to get on with preparing our first voluntary sustainability report. The clear structure and good explanations – in the guide and on the platform – make it comparatively easy for users to write their first sustainability report.”

As well as building an online platform for creating and publishing sustainability reports electronically (by the end of 2024), the expanded DNK offering will include a help desk for companies with technical and content-based questions, as well as support through, for instance, webinars and guidelines. The free service is aimed at both companies that are already obligated to report or soon will be, and those who do so voluntarily, who wish to tackle the increasing demands around the issue of sustainability head on. Added to this are companies which, though not legally obliged to report, nevertheless find themselves subject to the information requirements of their contract partners in the value chain. For these businesses, there will be a simplified entry-level module based on the EU’s voluntary SME standard.

More information

Already since 2014, market-listed companies of public interest in the EU have been required to report on their sustainability performance, as regulated by the European Non-Financial Reporting Directive; in Germany this affects approximately 550 companies. The reporting obligation is being significantly expanded by the Corporate Sustainability Reporting Directive (CSRD), which came into effect in January 2023. As a result, the number of companies across the EU that are required to report will gradually increase from 11,600 to 49,000, estimates predict. In Germany, this will affect around 13,000 companies, starting in 2025, when they will be obliged to submit a sustainability report as part of their annual company report. The criteria within the twelve main areas include, for example, measures to preserve biodiversity at company locations, climate adaptation measures and programmes to protect human rights along the value chain. Reporting on due diligence compliance in supply chains as per the EU’s Corporate Sustainability Due Diligence Directive is likewise required under the CSRD.

The present German Sustainability Code (DNK) was developed by the German Council for Sustainable Development (RNE) and has been supporting companies with their sustainability reporting since 2011. The current expansion of the Code is being conducted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, with ongoing consulting support from the RNE. The purpose of the DNK is to help companies gain low-threshold access to sustainability reporting and meet the corresponding legal requirements. It is already being used by more than 1,200 companies as a reporting tool to publish their sustainability achievements and develop them further.

Press contacts

BMWK Press Office
Scharnhorststraße 34-37
10115 Berlin
Email: pressestelle@bmwk.bund.de
Phone: +49 30 18615 6121 and 6131

RNE Press Office
German Council for Sustainable Development
Office c/o GIZ GmbH
Potsdamer Platz 10
10785 Berlin
Email: presse@nachhaltigkeitsrat.de
Phone: +49 30 338424 529

Further links

European companies are going sustainable – at least that’s the plan, as the EU aims to boost sustainability in business with the Corporate Sustainability Reporting Directive. The regulation presents challenges for many companies, but these can be overcome with the German Sustainability Code (DNK). So what is the secret to the transparency standard’s success?

Having adopted the Corporate Sustainability Reporting Directive (CSRD) in January 2023, the EU is gradually expanding the cohort of businesses that will be obliged to report on their sustainability performance moving forward. In Germany alone, some 15,000 companies are directly affected by this expansion of the reporting requirement. “But many more companies are indirectly impacted, because the bigger ones that are obliged to report will need information from their suppliers and business partners in order to provide their own reports”, point out Stephanie Kopp and Florian Harrlandt, coordinators of the German Sustainability Code (DNK) at the German Council for Sustainable Development (RNE). Even though the first companies will not have to report on the 2024 fiscal year until 2025, businesses are better advised to start preparing now rather than wait until nearer the time.

Low-threshold and free to use

Companies wishing to get ahead can avail themselves of a tried-and-tested tool that is free to use, in the form of the DNK. “The DNK is an established standard for structured publication of corporate sustainability performance. The various offerings of the DNK office are just as helpful for first-time users as they are for companies experienced in reporting”, says Dr Alexander Bassen, professor of business administration at the University of Hamburg, former RNE member and academic advisor on the DNK. Already 1,000 users are taking advantage of the DNK’s services, primarily attracted by the low-threshold access to the topic, according to surveys of participating companies. Another benefit of the Code is the impetus it provides for internal reflection and change – something that is also gaining ground among employees.

Transparent and comparable

The RNE launched the German Sustainability Code back in 2010. The idea for a transparency standard came about during the 2008 financial crisis, which had its origins in the inadequate assessment of credit risks. “It was the perfect moment to start including social and environmental aspects in the core analysis of credit and investment risks”, explains Yvonne Zwick, who was on the DNK development team from day one. The impetus came from the banking metropolis of Frankfurt. “The financial crisis revealed that looking at the financials alone was taking too narrow a view. Both the governance and the overall capital stock have to be examined as well if you want to assess how future-proof an investment is”, continues Zwick. To get an accurate picture of this, sustainability performance must be transparent and comparable. So this begged the question of how better management could make the capital market more sustainability-driven in practice.

The answer soon came: with academic support from Dr Bassen, the RNE adopted the DNK in October 2011. Based on a set of 20 criteria, the Code maps sustainability in the corporate context, allowing companies to report on issues such as climate change and compliance with labour law, but also existing targets and measures.

Since then, it has been constantly enhanced and adjusted to new requirements. Major revisions were carried out in 2014, 2017 and 2020, a database and pool of experts were set up, a training concept for partners was established and a series of industry guidelines on the DNK were published. The RNE office consistently monitors the Sustainability Code for coherence with other  reporting frameworks and responds to current political developments as necessary.

“The DNK can offer a great deal of added value for companies now and in the future, by consolidating new European reporting requirements and making them easily accessible, for SMEs in particular. That will be a huge help with the implementation and funding of the transformation”, says Dr Bassen, emphasising: “The strategic anchoring of sustainability in companies along with transparent reporting are essential for competitive and future-proof positioning.”

Modular and voluntary

An important aim of the DNK is to turn sustainability into a market-relevant criterion, and the growing number of corporate users shows that this is indeed working. “The DNK is a success story. For over ten years now, large and small firms alike have been working towards the goal of sustainable business with the help of the DNK”, beams RNE Chair Reiner Hoffmann. “What sets the DNK apart is its modular approach. Though a voluntary code of practice, it also enables businesses to fulfil their reporting duties. And it will continue to help companies of any size realise different reporting obligations in the same format”, add Kopp and Harrlandt.

The last two years have seen the number of corporate users multiply. “That’s a clear sign of need for the support the DNK offers. Throughout Germany and beyond, companies are using the DNK to evidence their contribution towards achieving shared objectives like the UN’s Sustainable Development Goals or the Paris climate targets. We are delighted to continue incentivising corporate responsibility with the DNK”, confirms Hoffmann.

Nor does the DNK’s success stop at Germany’s borders. International stakeholders too have long shown an interest in the DNK and the experiences of the RNE in this area. The first full national adaptation emerged in 2016 when the Greek NGO QualityNet Foundation produced the Greek Sustainability Code. An English version entitled “The Sustainability Code” was published in 2014 and further translations are available in Arabic, Chinese, French, Greek, Hebrew, Russian, Spanish, Czech and Romanian.

The need for support as SMEs push on with their transformation will only accelerate. “The DNK has already established itself as an orientation guide, and we want to make sure we keep that up and preferably expand it”, add Kopp and Harrlandt. Having proved itself as a reliable companion for businesses, it would appear that the DNK is here to stay for the next ten years and no doubt beyond.

Further links

The issues of sustainable finance, reporting and corporate governance are getting more and more attention in the European Union. Several regulatory initiatives have been published and have sometimes led to fierce debate.

The new podcast series titled Sustainability Made in Europe: A Policy Podcast on Finance, Reporting & Governance picks up on these debates at the EU-level on various sustainability topics. Experts from academia, business and politics provide valuable insights into the most important legislative initiatives. The podcast series is a joint project of the Belgian (FRDO-CFDD) and German (RNE) Councils for Sustainable Development under the umbrella of the European Environment and Sustainable Development Advisory Councils Network (EEAC), implemented and hosted by Colin Bien from Masters of Change. The goal of the podcast series is to make complex sustainability issues accessible to a broad audience while also providing in-depth expert knowledge.

In the first of four episodes, high-level experts such as Sandrine Dixson-Declève, Co-President of the Club of Rome and Udo Bullmann, member of the European Parliament, contribute their knowledge and experience. With a mix of expert interviews and contextual background information, this episode provides a multi-perspective view on the European Green Deal and the EU’s sustainability policy in general.

The focus of the second episode is on the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD) which aims to ensure human rights and environmental protection along global value chains. The directive is analyzed by Anna Cavazzini, Member of the European Parliament for the Greens/EFA Group. Rachel Widdis, Professor of Business and Human Rights, adds her academic perspective to the current initiative.

Two more episodes – on the EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD) – will be released in the coming weeks. Listen to our first two episodes here.

The German Council for Sustainable Development (RNE) is continuing the European dialogue on sustainability: a conference in Athens focuses on the topic of sustainable finance and the reporting of companies’ non-financial performance as well as examining how the Sustainable Development Goals of the United Nations can be integrated into education.

“None of the various stakeholder groups involved will be able to achieve the transformation towards sustainability alone.” In her keynote speech at the Athens Sustainability Outlook, Yvonne Zwick, Deputy Secretary-General of the RNE, highlighted this key philosophy as the foundation for the European conference. This was particularly true, she noted, in times where pressure is being felt from two sides: on the one hand from the younger generation, which is demanding effective action against climate change, and on the other from groups that do not see or want to see the advantages a globalised world provides.

It was against this backdrop that some 120 experts came together in Athens in early April to continue specifically the pan-European stakeholder dialogue on the topic of sustainable development and corporate responsibility and to identify important evolving trends. The results of the conference will be presented to the European Commission with the aim of bolstering it in its drive to achieve the Sustainable Development Goals (SDGs) set out by the United Nations. The two-part event comprised a stakeholder dialogue format with a smaller group of participants as well as a public conference the following day. It was organised by QualityNet Foundation (QNF), a non-profit organisation promoting sustainable development in Greece, and the RNE. Guests in attendance hailed in particular from Greece but also came from Belgium, the Netherlands, France and the Balkan countries

The Sustainability Code as a blueprint for other countries?

As one of the 31 speakers at the conference, Greek Deputy Minister for the Environment, Socratis Famellos, criticised the fact that prosperity is still not measured adequately. He would like to see an increase in indices that also reflect social and ecological aspects. Moreover, approaches of this kind are not yet widespread in the business sector, as was illustrated by the statement from Spyros Lioukas, professor of science & technology management at Athens University of Economics and Business, who gives business schools in general an “F” – the worst possible grade – in the area of ethics.

Thematically the discussions in Athens focused in particular on sustainable finance and the reporting of companies’ non-financial performance. “We talked about other countries’ interest in establishing an instrument similar to the Sustainability Code in Germany,” comments Zwick, who also leads the Code’s office. Some three years ago, following a two-year development process, Greece became the first country in Europe to introduce its own Sustainability Code based on the German example. At the conference, Hellenic Petroleum, Lidl Hellas and the Deutsche Telekom subsidiary OTE-COSMOTE all reported on their practical experiences of using the Greek Code. Most recently, Turkey joined the ranks and is now inviting companies to use the Turkish Sustainability Code as an instrument to support their entry into sustainability reporting and the development of a sustainability strategy.

A sustainable “New Deal” for Europe

Again and again, the participants came back to the question of whether, and how, a sustainable “New Deal” could work for Europe. They put forward that Europe would need to take a leadership role in the areas of circular economy and an inclusive fair market economy. Concretely, they discussed the suggestion that a “sustainability passport” be introduced for enterprises. Further stakeholder dialogue events will be dealing with this topic over the months to come, possibly resulting in the presentation of an initial draft proposal for the European Commission.

Further links

The Hub for Sustainable Finance has concluded its first public convening. Representatives of the finance sector, supervisory authorities, civil society, the sciences and the political arena discussed how the financial system can become more sustainable. Here, you can read a selection of key contributions to the discussion – and about what the Hub will be doing going forward.

In the run-up to the conference, the organisations responsible for the Hub for Sustainable Finance outlined in ten recommendations what it would be concerning itself with on a content level. This served to focus the discussion. In six rounds of discussions, the some 200 participants developed ideas and suggestions that can take practical application and quality in the sustainable finance sector forward. The participants were united in their view of the topic’s urgency.

“All of you sitting here know where the obstacles to sustainable finance lie, where the limits to your business models are and what is preventing you from scaling up your activities,” affirmed Marlehn Thieme, Chairwoman of the German Sustainability Council (RNE), at the beginning of the Summit. “Join us now in working together to take a decisive step forward in rebuilding our financial system!” she appealed to the audience. A selection of the most important ideas and discussion contributions is presented below:

Idea 1: introduce a “green supporting factor” in financial market oversight

The idea was put forward by the French banking association in 2016 with the aim of making it easier to mobilise capital for the worldwide energy transition. The green supporting factor could also be expanded to other sustainable projects as needed, however. In order to effectively assess factors with an impact on risks and opportunities, Klaus Tiedeken, member of the Management Board of Kreissparkasse Köln, argued in favour of applying the German Sustainability Code, which can be used for much more than just public reporting.

Gerald Podobnik, Global Head of Capital Solutions of Deutsche Bank, gave the French idea more concrete form: banking regulations prescribe that banks maintain certain capital reserves in line with the risks associated with various types of investment as security should the investment default. This also applies when banks invest in solar parks or wind farms, for instance. The green supporting factor would allow banks to maintain lower reserves for investments related to the energy transition – because they are contributing to minimising the risks of climate change and thus to stabilising the financial system. The financial market oversight would have to be the body to introduce such a factor as it decides on the capital requirements for the various types of investment.

Idea 2: change accounting regulations

Christian Thimann, Chairman of the European Commission High-Level Expert Group on Sustainable Finance and member of the Management Board of insurer AXA, made the suggestion that accounting regulations be amended to favour sustainable investments. “Financial regulations in recent years were mainly strongly aimed at achieving short-term stabilisation,” explained Thimann. Accounting practice among companies is currently dominated by the mark-to-market method, whereby the value of an investment is determined for a given valuation date and entered correspondingly in the balance sheet.

However, this is often in conflict with the idea that sustainable investments require a longer time horizon to become profitable. Different accounting regulations could weight this long-term potential of sustainable investments higher and thus allow them to positively influence the balance sheet. “How can we allow players to give out more long-term credits? How can we oblige them to control long-term risks with reasonable proportionality?” Thimann commented, summarising the key challenge.

Idea 3: supervisory boards must have sustainability qualifications

Patricia Geibel-Conrad, member of the Supervisory Board of Hochtief AG, argued that the qualifications of supervisory boards should be a starting point. The members of such boards needed to be sensitive to the topic of climate change and have basic knowledge of sustainable development, for instance. Such minimum requirements have long since entered public debate in the Anglo-American context as well as topics like diversity. Geibel-Conrad added that such qualifications for supervisory and management boards were among other things to be discussed at the next World Economic Forum in January 2018 in Davos. In the US, the discussion is centred around the key idea of “proxy access”. This rule gives even smaller-volume shareholders of corporations the opportunity to nominate candidates to board positions – and thereby strengthen representation of the topic of climate change, for instance.

Idea 4: integrate sustainability report and group management report

The topic of integrated reporting, meaning company reporting with an integrated management and sustainability report, was discussed at many different points. Currently, the two reports are usually published separately. As explained by Dieter W. Horst, expert for sustainable finance at PricewaterhouseCoopers, this means for companies that their key systems and processes are not yet tailored to the topic of sustainability.

At 80 per cent of companies, the finance and accounting teams that prepare these key financial indicators comprise a few dozen or even a hundred people. The sustainability department on the other hand sometimes consists of a single individual or perhaps a handful of staff. Kristina Jeromin, Head of Group Sustainability at Deutsche Börse AG, also sees enhancing focus on materiality and the integrated perspective in reporting as a solution to this problem.

Idea 5: re-evaluate EU-wide CSR reporting obligation

Which indicators from a sustainability report are so important that a shareholder would say: I will or I will not buy this stock? This was the question posed by Ralf Frank, Secretary General and Managing Director of the German Association of Financial Analysts and Asset Management Professionals (DVFA). The root of this question is the new EU requirement that as of the financial year 2017 large companies must publish sustainability or corporate social responsibility reports (CSR reports for short). “The main point of interest will be which indicators lastly are so important that they have relevance with respect to the management report and thus for an understanding of the course of business,” explained Frank.

Dieter W. Horst of PricewaterhouseCoopers believes that the CSR reporting obligation could possibly also show that there are no sustainability indicators which are so important that they need to be included in the management report – this would mean the new reporting obligation has missed the mark entirely. Several speakers therefore proposed that the CSR reporting obligation be reviewed next year. Should the indicators determined as a result of the obligation not have relevance for companies’ annual reports and management reports, the regulation would need to be revised.

Idea 6: climate risks could become relevant for banking oversight

Germany’s central bank is considering including the risks of climate change for the finance sector in its supervisory oversight for banks, as presented by Joachim Wuermeling, member of the Management Board of the Deutsche Bundesbank. Two aspects are the main focus: firstly, hurricanes and storms can have direct impact on the financial situation of banks and insurers. Should extreme weather situations increase, the risks would also rise and eventually become uninsurable.

On top of this, according to Wuermeling, transitory risks on the path to becoming a low-carbon economy are a factor: many fossil fuels that are currently listed as assets in companies’ balance sheets cannot be consumed as a result of the climate targets. “One thing is clear: the sooner we become active, the less pressure there will be to act later,” comments Wuermeling. This is why the Bundesbank is expanding its analysis capabilities and striving to achieve a better understanding of climate risks and their impact on financial market institutions. Going forward, climate risks may possibly be taken into account in banking oversight.

Idea 7: the users need to have a voice

Anja Mikus, CEO/CIO of the foundation Fund for the Financing of Nuclear Waste Disposal, called for those who make investment decisions on a daily basis to be better integrated into the discussion on a sustainable finance sector. As she sees it, the problem is that there is no uniform definition of what exactly sustainability in the investment process means. “How is a portfolio manager to treat it? How does sustainability enter into the investment process?” she asked. This question can only be answered if a portfolio manager is sitting at the table too. This would also help reduce scepticism among many managers as to whether sustainable investments can actually yield substantial returns. Studies have shown they can, however, “studies don’t help – actual practice is the deciding factor,” added Mikus.

Idea 8: big data can help, but the “can” needs to be qualified

Big data, artificial intelligence and learning machines will change the financial industry for the better and can help with regard to sustainability as well. This was the thesis of Konrad Sippel, Head of the Deutsche Börse Content Lab. “When it comes to the availability of information and the ability to quantitatively evaluate it in order to explain why sustainability makes sense, more data and improved analysis will be needed,” he says. Other discussion participants suggested that more data does not necessarily equal better data. It always depends on why the data is being collected and the data’s quality.

The future of the Hub for Sustainable Finance

The first task of the H4SF going forward will be to catch up. The financial sector and investors in Germany are lagging behind their European and even global peers. Because it is not the case in Germany that statutory obligations and requirements are quite simply decreed, the initiators will have to help themselves. Via the H4SF, they aim to make discussion on this topic more clearly heard in Germany. The great popularity of the event and the participants’ high willingness to engage in discussion are confirmation for the initiators that the initiative for a more sustainable finance sector should be taken forward.

The aims of the H4SF are to be discussed with the federal government and parliament at the earliest possible opportunity. As Günther Bachmann, Secretary General of the Sustainability Council, made clear in the final panel in this context, the significance of results of the European discussion will need to be debated for Germany. Additional discussion events with expert participation are planned for 2018.

With the pioneers of sustainable finance continuing to be encouraged and bolstered, it is now the turn of the mainstream to be won over for the topic of sustainable finance. Günther Bachmann went on to describe how, in future, professional investors should make decisions not solely on the basis of financial indicators, but also make sustainability a factor in assessing risk and opportunity and thus include it in their investment decisions. Federal action would then take comparable considerations into account.

Through the event, the Steering Committee and the Council for Sustainable Development were given a great deal of cause for thought that will now be taken on board in shaping the Hub. A recording of the Summit covering all items on the programme in full will be available for a period of six months at www.h4sf.de. Updates and concrete next steps will be communicated on the project website and in the Council’s newsletter.

With immediate effect, large companies are required not only to produce financial balance sheets; they are also required to disclose information on their social and environmental actions. Later than originally planned, the German Bundestag has now passed the pertinent legislation. Here is an overview of the main last-minute changes.

It is seen as a milestone on the road to sustainable development. On Friday morning, March 10 at 1.40 am, the German Bundestag passed the law to strengthen companies’ non-financial disclosure in their management reports and group management reports (Gesetz zur Stärkung der nichtfinanziellen Berichterstattung der Unternehmen in ihren Lage- und Konzernlageberichten). The somewhat cumbersomely titled act of parliament makes it mandatory for large publicly traded companies to provide standardised, measurable information on the impacts their business practices have on society and the environment.

The new legislation will apply retroactively as of 1 January 2017, and will thus apply for fiscal 2017. Comparable regulations apply throughout the EU, which adopted a directive on the disclosure of information on CSR accountability in October 2014. Germany has now translated this directive into national law. All EU member states were required to translate the directive into national law by 6 December 2016 but not all of them reached this aim yet. However, in a final step some points required additional discussion and consultation within Germany’s grand coalition government. At the end of March the bill still needs to be adopted by the second chamber of the German parliament, the Bundesrat, but no difficulties are anticipated. The bill is what is known in German as an Einspruchsgestz, or ‘objection bill’, which means that the consent of the Bundesrat is not required, although it does have to option of lodging objections which must then be considered again in the Bundestag.

You will find more detailed information on the new law in the link list below. Here, for affected companies in Germany, we list the most important changes made to the government bill dated October 2016 during its passage through the Bundestag.

• What remains unchanged: The most important provisions remain unchanged. As of fiscal 2017 all publicly traded companies, credit institutes and insurance companies will be required to report on their CSR activities. The obligation applies to capital market oriented companies that on average over the fiscal year have a workforce of over 500 and a balance sheet total of more than 20 million euros or turnover of more than 40 million euros.
• Equally, the options on how a company chooses to disclose non-financial information remain unchanged: the information may be integrated into the annual report, published parallel to the annual report or published later than the annual report, within a defined time limit. Where a separate CSR report is produced, the company must ensure that it is available on the company’s website for a period of ten years.
• Minor changes – auditing obligation: As was the case in the earlier bill, there is no obligation for a company to have an external CSR audit conducted. Companies which do contract an external auditor are, however, obliged to publish the results of this audit along with the report. The obligation to disclose the audit results will apply only as of fiscal 2019 and not with immediate effect, as the earlier bill stipulated.
• NEW – Publication deadlines: The earlier bill stipulated that reports published in parallel must be published six months after the balance sheet date. This period has now been shortened to four months after the balance sheet date, i.e. to the same period that applies for the group management report.
• NEW – Subsidiary companies: The situation of subsidiary companies has been simplified. The earlier bill stipulated that subsidiaries of companies with registered headquarters in the EU were not required to provide nonfinancial information for its own entity. The latest wording extends this to subsidiaries of companies with registered headquarters outside the EU – provided the parent company already publishes nonfinancial information that complies with the EU regulations.
• NEW – Reporting standards: It is up to companies to decide on the standard under which they report. The earlier bill stipulated that ‘national, European and international frameworks’ could be used. The latest wording contains a new provision under which companies must as well provide the reasons for their decision if they decide not to use any of the existing standards.

What about companies that already report under the Sustainability Code? According to a juridical statement published 2015, the Sustainability Code is compatible with the EU Directive. The German Council for Sustainable Development will be obtaining another legal opinion on the basis of the final version of the legislation. We will inform you as soon as it is available.

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