How to report sustainability - for making sense and being succesful

The concepts behind the ESG and CSRD are the same; chasing figures that associates to sustainability performance. The standards are however approaches, without even defining sustainability and sorting out the complexity in a structured way. This means that companies will be chasing ghosts, avoiding and reducing without understanding how to win the game of sustainability. Sorry to say, but the situation does not look good for the planet or the involved companies. This can however be solved by a better approach.

What are the flaws within the actual guidance in CSRD and ESG, and what can be done about it?

The fundamental flaw is actually the lack of definitions and structure.

This is very sad because there is already a published scientific method (https://doi.org/10.1016/j.jclepro.2015.10.121) for both defining sustainability as a framework that embrace the complexity and how to stepwise decouple from unsound and unsustainable business.

A lack of definition has led the sustainability community to desperately grasp something to hold on to measure performance; CO2. To measure CO2 is very significant in many areas ie scope 1 and 2, but not for the most important part; scope 3. There are two big problems here:

1/ CO2 emission does not cover other serious areas like biological diversity, chemical pollution, overfishing, mismanagement of soils etc.

2/ CO2-emission is almost impossible to control and measure in scope 3, where the major impact is taking place. There is a lot of data in databases, but it is almost useless.

So why are the "experts" so stubborn in developing ESG and CSRD in wrong corners that just give companies and organisations headache?

Within the Limebook concept, we have a completely another approach that is far more relevant for the purpose of CSRD, far more relevant for both the users and the sustainability issue. Why not make it simple and cost-effective instead of walking around the purpose and goals?

The idea to cover scope 3 is to control the very most significant part of a product life cycle/value chain. The most cost-effective way is actually to look on your transactions; you become what you buy. The accounting is actually already designed to be the tool for controlling and verify transactions, so why don't apply accounting to sustainability?

Connect accounting to upstreams activities that involves transactions can be verified by a third party. This is the only way to make sustainability to become a core part of business. The responsibility, risks or opportunities should follow the transactions and the ownership.

The whole idea for CSRD is actually to understand if companies are a part of the solution or of the problem. There are some attempts within the taxonomy to manage the complexity. You might be good in one aspect but not by doing "significant harm" on the others:

 The Taxonomy Regulation establishes six climate and environmental objectives 

1. Climate change mitigation 
2. Climate change adaptation 
3. The sustainable use and protection of water and marine resources 
4. The transition to a circular economy 
5. Pollution prevention and control 
6. The protection and restoration of biodiversity and ecosystems 

As you can see from the Taxonomy, the headlines disclose a non-structured way of describing relation between consequences and causes. The Limebook has solved this issue by identifying the root causes of the consequences and created KPIs that using credible certifications and identify circular products and services that is verifiable and easy to understand for investors, employees and stake holders.

The transition is needed now, and the companies need better and quicker guidance. Do not overdo things that does not really takes you to the success. The strongest companies let smart ideas rule, the losers let politics rule. (Steve Jobs)