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28.06.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: ESG and employment law

Sustainable corporate governance is increasingly becoming a legal obligation. The HR department is also affected. Because “sustainable” also includes social aspects. Accordingly, companies have numerous obligations in relation to their own staff. Much is already regulated in German labor law, for example the right to equal pay, the right to equal treatment and occupational health and safety. The reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) have now been added for around 15,000 German companies.

Companies should scrutinize their remuneration systems with regard to ESG

Employers should take a look at the European Sustainability Reporting Standards (ESRS) in particular. These specify in detail what companies have to report on.

Employers will be faced with a further regulation in the form of the recently adopted Pay Transparency Directive. Companies should therefore review their remuneration systems as early as possible in order to be well prepared for both CSRD reporting and any claims for information. They should also take care of the data required for the CSRD as early as possible in order to avoid errors in reporting.

However, companies can and should also create incentives for management to operate sustainably. One way of doing this is by agreeing targets and linking them to variable remuneration.

Employers should also bear in mind the co-determination obligations of the works council for all measures. Often it is not the decision on the introduction of a measure that is subject to participation, but its design.

The contents of the podcast are:

  • From minute 1:00: What needs to be considered in employment law with regard to ESG?
  • From minute 1:20: What the CSRD means for companies
  • From minute 2:00: Companies should first look at the ESRS
  • From minute 3:50: What the CSRD means for remuneration
  • From minute 4:50: Linking targets to variable remuneration
  • From minute 5:58: Equal pay and gender pay become more relevant
  • From minute 8:22: Companies should put their remuneration systems to the test
  • From minute 9:01: How companies should prepare their data for CSRD reporting
  • From minute 11:13: Which departments in companies are involved in reporting
  • From minute 13:22: ESG compliance officers are increasingly controlling the processes
  • From minute 14:00: The role of the works council
  • From minute 15:00: What are the chances of good sustainability management?
  • From minute 15:44: Errors in the CSRD report and liability
  • From minute 16:26: Why companies with ESG could be more successful in the long term

All “KPMG Law on air” episodes can be found here.

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