Whistleblower regulations and ESG principles are increasingly intertwined in contemporary business management. Whistleblowers, individuals who disclose misconduct within organizations, play a key role in promoting transparency and accountability, which are the foundations of ESG. In an era of growing emphasis on sustainability and ethical business conduct, companies must not only care for the environment and working conditions but also provide a safe environment for reporting potential violations.
Issues related to whistleblowers and their protection within ESG are primarily covered by reporting within the area of corporate governance (G), specifically within the ESRS G1 standard, which refers to conducting business activities within the framework of non-financial ESG reporting. The CSRD Directive and Commission Delegated Regulation (EU) 2023/2772, supplementing this legislation, explicitly indicate that, as part of the presentation of organizational culture, it is necessary to identify the mechanisms in place within a given company to protect whistleblowers. Therefore, it will be necessary to specify the actions taken regarding reporting channels implemented within the organization, enabling interested parties to report, the policies in place regarding training and providing information to employees, and the whistleblower protection policy. Ensuring adequate protection against retaliation and an appropriate follow-up procedure are also elements of a strong corporate culture. Whistleblowers can therefore disclose irregularities related to corporate governance, such as illegal activities, corruption, conflicts of interest, or abuse of power.
In the area of ESG reporting on social issues (S), there is also a component related to whistleblower protection – they play a key role in ensuring compliance with ethical norms, human rights standards, and labor law. Their activity is particularly important in the context of monitoring employer practices, employee relations, compliance with social standards, and counteracting discrimination. Entities preparing ESG reports must disclose what actions they take to support whistleblowers and how they promote reporting of social misconduct. It is important to emphasize that whistleblower activity helps ensure a transparent and accountable work environment and enables the rapid identification of issues that could expose the organization to negative reputational consequences.
The environmental component (E) also plays a fundamental role in corporate sustainability, focusing on the impact of corporate activities on the natural environment. Whistleblowers, under both Directive (EU) 2019/1937 on the protection of persons reporting breaches of EU law and national law, are authorized to report violations in this regard, thus contributing to improving environmental standards within companies. Including these entities in an ESG strategy promotes transparency and accountability in resource management and facilitates the identification and elimination of existing practices harmful to the environment. This reporting covers aspects such as waste management, greenhouse gas emissions, energy efficiency, and sustainable raw material sourcing.
Whistleblowers therefore play a vital role in promoting ethics and transparency within organizations. Their actions contribute to improving ESG standards and building trust in stakeholder relationships. To effectively support whistleblowers, organizations must invest in legal protection, create an open organizational culture, and implement policies that promote accountability. Ultimately, whistleblowers are key players in the pursuit of a more sustainable and responsible business world.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of November 13, 2024
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