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Sustainability report, ESG and due diligence

The sustainability report - one of the most widespread commitments nowadays in the Italian food industries - can fulfill many other objectives than communication and marketing, in the perspectives of ESG e due diligence. A deepening.

1) Sustainability report. Context

The idea to account for the favorable interactions of an organization with the community and the external environment dates back to the times of the so-called Corporate Social Responsibility (CSR). The giants of the financial industry, in the last quarter of a century, have thus tried to paint the best-known brands green - or socially. However, this paradigm is drowned in greenwashing which still characterizes most of the CSR 'budgets', as we have seen (1,2,3).

The corporate structure it can in turn be adapted to socio-environmental objectives that complement those of profit. Transforming a company into a benefit company (also in view of certification B-Corp) is the simplest operation, at least in appearance. Among other things, Italy was the first EU country to have introduced this opportunity, through the reform of the civil code (4,5). The risk of contingent liabilities linked to the greenwashing however, it remains a widely underestimated criticality, despite rare but exemplary sanctions (6).

2) ESG (Environment, Social, Governance)

Il Sustainable Finance Disclosure Regulation (SFDR), reg. EU 2019/2088, obliges financial and insurance market operators to provide transparent information on investment products that:

- promote environmental or social characteristics (Article 8),

- are presented as'sustainable investments'(Article 9). (7)

Financial investments cannot ignore the application of 'good governance practices' is 'regulatory technical standards'by the recipient companies. Which in turn must communicate the so-calledsustainability factors' – 'environmental, social and personnel issues, respect for human rights and issues relating to the fight against active and passive corruption'- and the management of the related risks (Article 2, points 22,24).

2.1) Sustainable investments

The reg. EU 2019/2088 refers sustainable investments to the two areas of economic activity that contribute to:

to) 'an environmental goal, measured, for example, by relevant resource efficiency key indicators
- the use of energy and the use of renewable energies,
- the use of raw materials and water resources and the use of land,
- the production of waste,
- greenhouse gas emissions as well as - the impact on biodiversity and the circular economy’,

b) 'a social goal, especially an investment that

- contributes to the fight against inequality, or that

- promotes social cohesion, social integration and industrial relations, o

- an investment in human capital or in economically or socially disadvantaged communities.

Provided that such investments do not cause significant damage to any of those objectives and that the companies benefiting from such investments comply with good governance practices, in particular with regard to sound management structures, relationships with personnel, remuneration of personnel and compliance with tax obligations ' (SFDR, article 2.17).

3) Corporate Sustainability Reporting

Corporate Sustainability Reporting is the new meaning of the acronym CSR, introduced on 21.4.21 in the proposed EU directive on corporate sustainability reporting. In reform of the Non-Financial Reporting Directive (NFRD), dir. 2014/95 / EU. (8) The new proposal:

- extends the scope of application to all companies and companies listed on regulated markets (excluding micro-enterprises),

- introduces the obligation to follow the EU sustainability reporting standards, under preparation, (9) in the drafting of the 'sustainability report',

- prescribes the audit on the reports,

- provides for the digital recording of report, in view of the capital markets union (CMU). (10)

4) Taxonomy

'Sustainable finance' it is then subject to the limits defined in reg. EU 2020/852, the so-called 'taxonomy regulation'. Where the taxonomy of economic activities considered sustainable is defined, taking into account the so-called European Green Deal and Sustainable Development Goals (SDGs). (11)

Environmental objectives indicated in Taxonomy Regulation relate to the mitigation and adaptation to climate change, the protection and restoration of biodiversity and ecosystems, the sustainable use and protection of water and marine resources, the transition to a circular economy, the prevention and control of pollution . (12)

5) ESG e Urban plannning due diligence, technical and legal analysis., works in progress

The agri-food chain it is also considered both in the draft EU directive on Corporate Sustainability Due Diligence ESG, (13) and in the proposed EU regulation on due diligence in supply chain palm, soy, coffee, cocoa and timber. (14) Both legislative projects aspire to guarantee the socio-environmental sustainability of critical supply chains through reporting obligations and the responsibility of their economic protagonists.

This approach it is in hindsight consistent with the Guiding Principles on Business and Human Rights'(2011), in the framework program'Protect, Respect and Remedy' of the United Nations. In addition to the OECD Guidelines for Multinational Enterprises (2011), with a specific variation on agri-food chains (15) and child labor.

6) Provisional conclusions

Il greenwashing has the hours counted for companies with even potential interest in being able to turn to the financial market (which includes institutional investors and pension funds). Exposes traders to increasing risks of class action and draconian sanctions on the various markets (eg UK, USA. See notes 16,17), as well as those to be excluded from vendors' list strategic customers and suffer even serious damage to reputation.

The strategy it should therefore be consistent with the requirements of applicable international standards and involve all company functions. In a medium-long term perspective which in itself does not postulate higher costs, but rather a different allocation of resources. So that the substance precedes the form and the facts - perhaps guaranteed by blockchain public and incorruptible (18) - confirm the words.

Under the sign team DO is available to those who intend to undertake this path.

Dario Dongo


(1) Dario Dongo. Expo 2015 Milan, brands and sustainability. Looking for a new paradigm, from CSR to CSV? GIFT (Great Italian Food Trade). 18.3.16,

(2) Dario Dongo. Coca-Cola, false propaganda on health and well-being aimed at teenagers. Scientific study. GIFT (Great Italian Food Trade). 22.12.19,

(3) Dario Dongo. Coca-Cola, obesity and the right to water. Scientific study. GIFT (Great Italian Food Trade). 19.7.20,

(4) Dario Dongo. Wiise srl benefit company, the 2019 Impact Report. GIFT (Great Italian Food Trade). 16.8.20,

(5) More complex configurations provide for the transfer of asset companies to foundations and other third sector entities, often established and following the best practices with stated philanthropic goals and important tax benefits

(6) Dario Dongo, Giulia Caddeo. Palm oil biodiesel, Antitrust condemns ENI. Égalité, 8.2.20,

(7) EU Reg. 2019/2088, relating to disclosure on sustainability in the financial services sector. Consolidated text as of 12.7.20 on https://eur-lex.europa.eu/legal-content/IT/TXT/?uri=celex%3A32019R2088

(8) Proposal for a directive amending directive 2013/34 / EU, directive 2004/109 / EC, directive 2006/43 / EC and regulation (EU) no. 537/2014 with regard to corporate communication on sustainability
(COM / 2021/189 final). https://bit.ly/3PjIX9E

(9) European Commission. Reports on development of EU sustainability reporting standards. https://bit.ly/3oeBjBG

(10) European Commission. Capital markets union 2020 action plan: A capital markets union for people and businesses. https://bit.ly/3ctyN7C

(11) EC. EU taxonomy for sustainable activitieshttps://bit.ly/3B3Hyjc

(12) 'Environmentalists' have fought in vain to exclude natural gas and nuclear energy from the EU taxonomy. Not as many rumors have been spent on heavy weapons and nuclear devices. V. Erik Assadourian. Nukes Are Environmentalists' Problems Too. Earth Island. 22.4.22, https://bit.ly/3ofQnPu

(13) Dario Dongo. Due diligence and ESG, social and environmental sustainability of companies, the proposed EU directive. GIFT (Great Italian Food Trade). 20.4.22,

(14) Dario Dongo. Due diligence, the draft EU directive on socio-environmental responsibilities in the value chain. GIFT (Great Italian Food Trade). 27.7.21,

(15) Dario Dongo. FAO, China in command. GIFT (Great Italian Food Trade). 27.6.18,

(16) Dario Dongo, Giulia Orsi. Green claim vs greenwashing and misleading advertising, UK Antitrust guidelines. GIFT (Great Italian Food Trade). 25.6.21,

(17) US District Court - Southern District of California. Renee Walker v. Nestle Usa Inc. Case No. 3: 19-cv-723-L-DEB. Class action. Order denying defendant's motion to dismiss. 28.3.22, https://bit.ly/3zfhhx5

(18) Dario Dongo. Public blockchain and agri-food chain, sustainability for those who produce and those who consume. GIFT (Great Italian Food Trade). 28.2.21.

+ posts

Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.

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