While ESG and sustainability reports are nothing new, the European Corporate Sustainability Reporting Directive CSRD that has recently been implemented certainly made it a new top of mind item. Georgii Mamontov is part of Reanda Netherlands’ ESG team and we spoke about the recent developments in sustainability legislation and his views on ESG.
Combining finance and sustainability
“Environmental issues have always been a concern for me. I feel that my generation is the first one that was exposed to the topic of climate change while growing up. With the internet and social media we were much closer to and much more impacted by all the news about natural disasters, climate activists’ speeches, and environmental protests.
Although I have chosen economics and finance as my study path, my ecological concerns remained present and whenever I had the chance I took electives that were linked to sustainability. When I joined Reanda I was excited to learn that there is an internal ESG team that I was able to become a part of later on. I am very thankful for this opportunity, as it allows me to continue combining two of my passions: finance and sustainability.”
ESG and the CSRD
“We’re working towards being able to audit not only financial information but also the non-financial one, the sustainability reporting. The new CSRD amends the previous Non-Financial Reporting Directive (NFRD) that was enforced since 2014. It expands the scope of the companies that will have to report and disclose their ESG information, and have it assured by an independent auditor. The main focus of the directive is on the impact that companies have on the environment and society. Besides that, it’s also about how various environmental topics such as climate change and energy use affect the performance of the company. This is called double materiality and is a crucial new concept that makes the CSRD different from the previous sustainability legislation.”
“I believe we live in an era where individuals have the ability to reshape the supply.”
Growing awareness
“Investors and stakeholders are becoming more aware of the effects of climate change. And this is driven not only by their own concerns and views, but also by the consumers’. The demand has shifted. With the huge variety of products that are available today, customers often have the choice to stop buying certain products and opt for a more sustainable alternative. It is exciting to see how environmentally unfriendly or unethical companies that fail to adjust get replaced by competitors, and how empowering this tendency is for people, who are now essentially becoming capable of shifting the supply. We’re now living in this era that finally allows us to hold corporations accountable for what they do.
At the same time, from the auditor’s perspective, ongoing changes in ESG reporting policies in the EU will soon lead us to becoming a party that gives opinion on the reliability of entities’ sustainability information. This means that we will be able to help various stakeholders to make reasonable decisions based on the companies’ ESG information.”
Taking the first steps
“It makes me happy to see that Reanda is also taking steps to get an insight into what impact its operations are having on the environment. Recently, we started working with NetZeroNow, an organization that helps entities to make their operations carbon-neutral. We are currently at the first step, which is gathering and analyzing all the necessary data and information. I think that this is a crucial milestone; an acknowledgement that although we are still a growing firm and our business focuses on providing financial services, we do have an influence on the environment. Step two would be getting advice from NetZeroNow on how we can reduce the emissions that we calculated and bring them to a minimum amount. As it is not possible to completely eliminate the outputs, step three is committing to a plan for offsetting the remaining carbon emissions. That way we will be able to compensate for the impact that our day-to-day operations are having by investing in initiatives that contribute to the reduction of CO2 as an alternative, such as reforestation.”
“As auditors we also get a chance to be a part of the movement towards a more sustainable future”
Opportunities for change
“I think we are living in a time which can easily make one feel frustrated and overwhelmed, but on the other hand, I see it as an exciting time with more opportunities for a change than ever before. I’m glad that as auditors we also get a chance to be a part of the movement towards a more sustainable future. When more companies will be required to make ESG disclosures, we’ll use similar approaches as we currently do in the audit of financial information. This way, we will be able to ensure that their reporting is truthful and not misleading for the stakeholders, for whose decision-making the entity’s sustainability performance is of high importance.”
