In our blog series on the European Sustainability Reporting Standards (ESRS), today we are looking at ESRS G1, the standard for corporate governance. This standard defines how companies must report on their corporate governance practices, corporate culture, anti-corruption and bribery practices, supplier management, political influence and lobbying activities.

What is ESRS G1?

ESRS G1 was developed to improve transparency in corporate governance and ensure that companies disclose their commitments to ethical business conduct, integrity and responsibility. The standard covers three key areas:

‍Business ethicsand corporate culture: measures to prevent corruption, protect whistleblowers and promote a corporate culture of integrity.‍

Management of supplier relationships: Focus on fair payment practices and compliance with social and environmental standards in the supply chain.

Political influence and lobbying activities: Disclosure of financial contributions to political activities and their influence on corporate strategies.

By reporting in accordance with ESRS G1, companies can strengthen the confidence of investors, regulatory authorities and the public and at the same time optimize their internal governance processes.

Disclosure requirements in accordance with ESRS G1

Under ESRS G1, companies are obliged to report comprehensively on their corporate policy. An overview of the main disclosure requirements can be found here:

Objective of ESRS G1

ESRS G1 is intended to ensure that companies make their corporate governance practices transparent. Recurring economic scandals in particular have highlighted the need for companies to improve and disclose their internal control mechanisms.

The main objectives of the standard are:

• Promoting integrity and ethical behavior in companies
• Ensuring fair business practices along the value chain
• Transparent presentation of political influence
• Combating corruption and bribery through better control mechanisms
  

Synergies with other ESRS standards:

ESRS G1 overlaps with other ESG standards, in particular:‍

• ‍ESRSS1 & S2: Corporate governance in relation to social responsibility and labor standards‍
• ESRS E5: Responsibility in the supply chain and sustainable procurement‍
• ESRS 2 (GOV-1 & IRO-1): General governance principles and risk management
  

Challenges during implementation

Implementing ESRS G1 can be challenging for companies as it requires comprehensive data on business ethics, payment practices and corruption prevention. SMEs in particular need to prepare to better document and disclose their internal policies and processes.

Another critical point is political influence. Companies must provide detailed information on the financial resources used for lobbying, including the recipients and main topics of influence.

Conclusion & outlook: The importance of ESRS G1

ESRS G1 is a key standard for sustainable corporate governance. It helps companies to protect themselves against reputational risks, strengthen investor confidence and improve their corporate governance processes. In upcoming articles, we will take a closer look at the practical implementation of ESRS G1 and present best practices for companies. Stay tuned for deeper insights into governance reporting and the challenges of sustainability reporting.