Over 100 C-level stakeholders from +70 organisations attended the CSR Europe Conference 2023 - A Caucus to Forge Alliances for Just Transition. The event, which took place on 20th June at the Toyota Motor Europe headquarters in Brussels, contributed to shaping the future collaboration between regulators and businesses on the EU Just Transition agenda 2024-2029:

SUSTAINABILITY COMPLIANCE & INNOVATION FOR A MORE INCLUSIVE GROWTH

**Maravillas Espin Saez,** *General Director of Self-Employment, Social Economy, and Corporate Social Responsibility,* **Spanish Government**

Maravillas Espin Saez, General Director of Self-Employment, Social Economy, and Corporate Social Responsibility of the Spanish Government, stressed the crucial role of companies in the Just Transition and the EU and the Spanish government’s commitment to prioritizes the well-being of people and the environmental.

The development of collective intelligence was deemed a priority, with Ms Espin calling for collaboration between organizations, policymakers, companies, and civil society to ensure a Just Transition. She also highlighted the priority of social dialogue and social economy during the Spanish Presidency of the Council of the EU.

Lastly, Ms Espin emphasized that investing in social and environmental sustainability is an investment in securing Europe's competitiveness in the global market and the future.

HOW TO MAKE JUST TRANSITION WORK FOR BUSINESS?

Renata Mele, Senior Vice President Sustainability at Leonardo, said:

For Leonardo, sustainability is an integral part of its business strategy, accelerating technology evolution to boost competitiveness and mitigate risks through the design and development of technological solutions that can bring the company and its customers towards sustainable business models. Companies such as Leonardo, that invest heavily in R&D, are increasingly aware of how fundamental it is to integrate skills into a wider interdisciplinary context that links them to sustainability and value creation.

Wouter Vermeulen, Senior Director of Sustainability & Public Policy Europe at The Coca-Cola Company, said:

Enabling policy frameworks are of utmost importance to accelerate the business agenda and create a conducive environment for sustainable practices. However, the key to success lies in the active involvement of society. As consumer-centred businesses, it is our responsibility to bring society along on this journey. Without their support and engagement, the transition will not be successful. Therefore, we must strive to involve communities, farmers, and especially young people in our efforts.

Wilfried Remans, Head Sustainability Network at BNP Paribas, said:

The European Commission should "keep going" with the European Green Deal. In a recent survey on the Just Transition, we asked 10,000 Europeans who they thought was acting on the energy transition and the fight against global warming, and the EU came out second, behind the scientists. Also on the question of who should be in charge to achieve a Just Transition, the EU came out second, among national and local politicians.

Adina Relicovschi, Principal Advisor of Sustainable Finance at the European Investment Bank, said:

When it comes to the twin - digital and green - transition, we need to address the economic and social challenges associated with climate change and environmental degradation. By 2025, 50% of our lending will be directed towards sustainability. Around 3 trillion should be invested in climate action and more. To make this achievable, the Climate Bank Roadmap for 2021-2025 will undergo a mid-term review and update.

RESEARCH & INNOVATION FOR SUSTAINABILITY

**Peter Dröll**, *RTD Director for Prosperity, Industry 5.0 DG Research & Innovation,* **European Commission**

Peter Dröll, RTD Director for Prosperity, Industry 5.0 DG Research & Innovation at the European Commission, highlighted the need for further efforts and collective action from EU member states and industry alliances to address nowadays environmental challenges, as the deadlines associated with nature are non-negotiable. In addition, he stressed the need for social cohesion plans that focus on reducing income disparities and inter-generational inequalities.

Mr Dröll also emphasized the importance of integrating sustainability with a human-centric and resilient approach that fosters an industry based on a regenerative economic model that incorporates both social and environmental dimensions.

To achieve the goals of Industry 5.0, the Commission introduced Industrial Technology Roadmaps and the Industry 5.0 Award 2023. While the roadmaps aim to accelerate the transfer of research and innovation results for the green and digital transformation of industries across the EU, the award has been set up to recognize and promote exemplary initiatives.

SUSTAINABILITY ROUNDTABLES on people, materials, and markets

PEOPLE ROUNDTABLES

1) WHAT DO YOU NEED TO GET READY FOR THE JUST TRANSITION?

Participating stakeholders highlighted the need to make a compelling case for Just Transition and effectively communicate its significance to corporate boards. While a lot of focus is currently placed on the word “transition” - whose meaning differs across companies as it is tightly linked to corporate purpose - the focus should be on the meaning of "just" within each company's context and how it can be translated into local communities and societies at large.

Moreover, while vulnerable groups are often at the forefront of discussions on Just Transition, participants emphasized the need to extend the conversation to anticipate and include future vulnerable groups. Companies should thus consider a broader range of stakeholders who may be affected by the transition and actively involve them in the decision-making process. By looking ahead and including diverse perspectives, companies can ensure a more comprehensive and effective approach to a Just Transition.

Additionally, participants highlighted the key role that CSR Europe’s National Partner Organisations could play in implementing Just Transition assessments locally. To this end, they encouraged the establishment of partnerships between companies and NPOs to facilitate collaboration on the topic.

At the Roundtable, CSR Europe presented the tools developed by companies for companies within the framework of its People Leadership Hub to advance on the Just Transition:

2) HOW DOES YOUR BUSINESS EMPOWER THE YOUNG GENERATIONS FOR A SUSTAINABLE FUTURE?

Today's education system emphasizes knowledge acquisition, but the skills and competencies needed to enter the work environment are rarely addressed.

Recognizing this gap, participants of the roundtable agreed that schools should integrate skill-building into the curricula, equipping students with problem-solving abilities, leadership qualities, adaptability, empathy, entrepreneurial skills, and more. Unfortunately, the strong reliance on certificates and qualifications as initial filters in the hiring process perpetuates a stigma that places greater importance on academic credentials rather than skills. To overcome this challenge, some companies have adopted a "skills-first" approach to hiring new talent.

To bridge the gap between industry needs and the education system, it is crucial to facilitate a two-way exchange. While educators should ascertain the skills demanded by industries and align curricula accordingly, companies should engage with them to facilitate the process.

Moreover, supporting initiatives for youngsters is vital. Focusing solely on university students overlooks the fact that they have already undergone a significant portion of their educational journey, making fundamental change more challenging. Instead, efforts should be directed towards primary and secondary school students and focus on gaining real-world experiences.

3) HOW CAN YOU INTEGRATE MULTICULTURAL DIVERSITY & INCLUSION INTO YOUR BUSINESS PRACTICES TO ENHANCE SUCCESS AND STAKEHOLDERS’ ENGAGEMENT?

The roundtable brought to light the many challenges faced by employees with diverse backgrounds in the workplace. While some are free to embrace their culture without judgment or criticism, others have to hide aspects of themselves in order to fit in with their colleagues and the company culture.

Participating stakeholders highlighted the need to:

Secure dedicated resources and expertise in addressing diversity challenges. HR departments most times are lacking either the necessary time or skills to tackle workplace challenges related to diversity and inclusion.
Foster psychological safety - deemed a crucial element of any inclusive environment. Employees should feel supported and safe in expressing themselves without fear of retribution or judgment.
Have the right to collect and keep data on diversity and inclusion. In Belgium, for instance, such data collection is currently difficult, hindering efforts to track progress and implement targeted strategies.

MATERIALS ROUNDTABLES

4) HOW DO YOU RECEIVE AND DEAL WITH COMPLAINTS ACROSS YOUR VALUE CHAIN?

In light of the recent national and international regulatory developments on human rights due diligence, such as the Corporate Sustainability Due Diligence Directive (CSDDD), grievance mechanisms are a key tool to ensure compliance and foster sustainability.

While some of the participating companies updated their Human Rights policies or established internal grievance mechanism systems, all are still struggling to frame the support to their supply chain.

Stakeholders agreed that the first step to take in this regard is to proactively raise awareness of the availability of these mechanisms and promote a speak-up culture so that the process is transparent and accessible. Then, they emphasised the need to place a stronger focus on employees’ rights and working conditions and collaboration with trade unions, for instance, including it in the auditing process of the suppliers.

At the roundtable, CSR Europe also presented its Grievance Management Assessment. The tool was developed to empower companies in strengthening human rights due diligence by establishing a robust and effective system for managing grievances in line with the global supply chain due diligence frameworks.

6) SECTOR, CROSS-SECTOR AND STAKEHOLDER COLLABORATIONS FOR SUSTAINABLE SUPPLY CHAINS

Europe is currently struggling with an insufficient supply of truck drivers due to poor working conditions. To be able to meet the present and future demands, it becomes crucial to safeguard and improve the rights and well-being of truck drivers.

Roundtable participants suggested conducting questionnaires or surveys among drivers to gain valuable insights into the specific issues they face, helping companies to make the job more appealing.

To avoid price dumping and maintain fair competition within the EU, stricter regulations on adequate wages for truck drivers are necessary. Clear guidance on wage standards should be widely published and readily accessible to both drivers and employers.

Another point addressed during the discussion touched upon multimodal transport (trucks + train) and its potential to lower the need for long-distance trucking and, as a consequence, partially answer to the shortage of drivers and improve their conditions. This should therefore be higher on the agenda of the EU.

MARKETS ROUNDTABLES

7) HOW CAN THE NEW GENERATION OF EU SUSTAINABILITY REGULATIONS CONTRIBUTE TO YOUR BUSINESS TRANSFORMATION AND SUSTAINABLE GROWTH?

When it comes to complying with upcoming EU regulations, the biggest challenge companies face is the difficulty in exchanging information internally, among different teams and departments. If each department has to contribute effectively to the reporting of sustainability information, a new corporate culture based on learning and sharing and the collection of data is needed to establish a common sustainability language internally. At the same time, participants recognised that it is acceptable to refuse to report certain information when resources are lacking.

For Small and Medium-sized Enterprises (SMEs), an additional challenge is posed by the lack of resources. In light of this, it was suggested that companies should start sharing best practices from different regions and countries to overcome these resource limitations.

Another concern addressed at the roundtable was the tight timelines associated with reporting requirements. While many companies have been reporting for years, they are still unprepared for the increased volume of information required from 2024 onwards. Additionally, the lack of software available on the market to address the challenges of reporting according to new regulations was highlighted.

Furthermore, roundtable participants remarked on the conceptual shift in the internal narrative on sustainability, with the sustainability office often being perceived as a “compliance office”. This shift reflects the increasing complexity of legislation, with new initiatives emerging weekly, making internal coordination difficult.

External coordination also presents challenges, as there is inconsistency among different reporting regulations and requests from international institutions such as the European Union (EU) and United Nations (UN).

During the roundtable, CSR Europe presented its new EU Alignment service. With the EU Alignment, CSR Europe aims to provide companies with insights and recommendations to meet the upcoming requirements, including the Corporate Sustainability Reporting Directive, the Country-by-Country Reporting Directive, the Corporate Sustainability Due Diligence Directive, and the European Sustainability Reporting Standards.

8) HOW TO ALIGN MATERIALITY PRIORITIES WITH SOCIETAL & ENVIRONMENTAL EXPECTATIONS WHILE INCORPORATING SUSTAINABILITY INTO BUSINESS STRATEGY?

Stakeholders’ engagement is key to ensuring a correct materiality assessment and thus the identification of the most relevant environmental, social, and governance (ESG) issues. At this session, participating companies shared their experiences and challenges in the implementation of effective stakeholder engagement.

In particular, attendees highlighted:

The importance of a pre-educational phase to equip stakeholders with extensive knowledge and awareness of the topics before engaging in substantive discussions.
The risks posed by the rapid transformation of stakeholders’ priorities for companies, as strategies cannot be modified yearly to align with these changes.
The key role played by language and how finding the right one to address different types of stakeholders will impact the quality of the feedback received.

At the same time, participants remarked that companies should focus on the bigger so that the materiality assessment does not become a mere tick-the-box exercise.

Furthermore, internal cooperation is crucial to leverage the opportunities presented by double materiality and align financial and sustainability reporting seamlessly. In this sense, double materiality requires organizations to develop new sets of skills and degrees of internal cooperation. The financial team, for instance, with its expertise in financial reporting, impact monetization, and target-setting, should take the lead in ESG reporting.

Finally, at the roundtable, CSR Europe presented its Materiality Assessment. This tool enables companies to identify and prioritize the most material sustainability issues that directly impact their business.

NEXT STEPS TOWARDS A SOCIAL GREEN DEAL 2024- 2029

**Nicolas Schmit,** *Commissioner for Jobs and Social Rights***, European Commission**

In his closing speech, the European Commissioner for Jobs and Social Rights, Nicolas Schmit, that the European Green Deal is not merely a nice-to-have initiative but a matter of survival and civilization.

Convincing citizens will be crucial to driving the Green Deal forward after the 2024 European Elections: “We have to show to the wider population the advantages of the transition and address their needs and concerns now”.

According to the Commissioner, the green and digital transition must commence with companies, as they have played a significant role in climate change and can likewise have a substantial impact on improving our conditions. Mr Schmit called for a change in the way companies operate, stating that while profit remains essential, it should not be their sole objective. He emphasized the need for companies to take responsibility for their employees, the environment, and the communities they serve, as these factors are essential for their own business continuity.

Finally, he remarked how investing in sustainability is necessary to innovate and ensure Europe’s competitiveness on the global stage, especially vis-a-vis the United States and China, which have already accelerated their efforts.

Takeaways from the CSR Europe Conference 2023