Courage to care for generations to come
Every Group, every business activity, and every colleague is guided by a single shared purpose: to care for people, the planet, and our performance. The courage to care about a better world - both for today and for generations to come - naturally aligns with our approach to Environmental, Social and Governance (ESG). ESG is a framework used to assess an organisation's material impacts on people and environment and the material effects of sustainability matters on the organisation's development, performance and position.
Over the course of the year, we have continued to focus on the three key elements of ESG that we defined back in 2018: DEI (Diversity, Equity & Inclusion), Safety, and GHG (Green House Gas) emissions - all of which will be discussed in more detail below.
We have also started the programme to becoming fully compliant with the EU’s Corporate Sustainability Reporting Directive (CSRD) by 1 January 2025. This regulation is designed to modernise and strengthen rules concerning the reporting of social and environmental information. In response, we have started to plan, implement, and measure a wide range of ESG activities across the Groups.
A small ESG team at SHV Holdings level has been put in place to drive CSRD compliance, coordinate and facilitate Group common initiatives and be an advisor to the EBD. In addition, a core cross-Group sustainability team meets monthly, with a separate safety team holding quarterly meetings.
As prescribed by the CSRD, all Groups have now conducted Double Material Assessments (DMA), identifying the most important areas of focus for ESG reporting. Double Materiality Assessment is a concept which provides criteria to determine whether an Environmental, Social or Governance topic is material and must be included in the annual reporting. Material topics are topics that represent an organisation's most significant impacts on the economy, environment, and people. Double materiality is the combination of impact materiality and financial materiality. Therefore, a topic meets the criteria of materiality if it is material from the impact perspective or from the financial perspective or from both two perspectives (double material).
Topic materiality from an impact perspective (inside-out view) means the company is connected to actual or potential significant impacts on people or the environment over the short, medium or long term. This includes impacts directly caused or contributed to by the undertaking and impacts which are otherwise directly linked to the undertaking’s upstream and downstream value chain. The impact can be either positive or negative.
A topic is material from a financial perspective (outside-in view) if it triggers financial effects on the company, i.e. generates risks or opportunities that influence, or are likely to influence, the future cash flows and therefore the enterprise value of the undertaking in the short, medium or long term but are not captured by financial reporting.
In addition to the topics which we already track with data since 2018 (GHG, DEI and Occupational Health and Safety), new topics which are determined as material based on the DMA process, will be added during 2024. These topics will also be detailed to allow for disclosure and reporting in a comprehensive, transparent, and auditable manner starting in 2025.
The issue of human rights represents another essential CSRD-related topic, while also strongly resonating with our purpose of caring for people. Whilst a robust human rights review across all the Groups did not reveal any material concerns, the outcome will be incorporated in our business processes to ensure we continue to operate in a way that genuinely protects people from any violation of their basic rights and freedoms, wherever they work and whatever they do. This mindset applies not only to our own operations but must also influence our partners in the value chain. Our activities adhere to all OECD guidelines.
We have also taken our first steps towards the investigation and implementation of EU Taxonomy reporting. A mandatory disclosure under CSRD legislation, this classification system is designed to drive transparency by highlighting the percentage of business operations able to be labelled as ‘green’. The measure is becoming increasingly important to a wide range of stakeholders from banks and investors to suppliers and customers, as well as for attracting new talent.
As we move into the new year, we will continue our work on GHG abatement curve development for Scopes 1, 2, and 3 to prepare our carbon strategy, which will be ready in 2024. We will also move ahead with translating the outcome of the DMAs into processes, structures, and IT systems. At the same time, we expect to obtain pre-assurance on the key focus areas by performing a test audit to identify any remaining gaps or issues. This will allow us to take any action required before 2025. We will reset our baseline from 2018 to 2022 and restate our 2030 targets for GHG emissions in line with the Paris Agreement. Finally, we plan to fully integrate ESG into all business processes and decision making, to ensure they take account of DMA-related topics and non-financial KPIs.
Double Material Assessments (DMAs)
Human Rights
EU (European Union) Taxonomy work stream
Planning for 2024