Name: Balancing Business Priorities: US Political Shifts & EU Requirements in ESG in 2025
Uploaded: 2025-03-06T16:16:09.956Z
Duration: 1 h 16 s
Description: Balancing Business Priorities: US Political Shifts & EU Requirements in ESG in 2025

Transcript for "Balancing Business Priorities: US Political Shifts & EU Requirements in ESG in 2025": On your, call yesterday. We had a couple hundred. Yeah. I was one of them. Okay. We are live. We'll give everyone a moment to roll on in. I know we have an international crowd joining us. Good morning. Good afternoon to those who are joining us. We will get the conversation started quickly. We'll just give everyone a little bit of time to roll in and get settled. And I see the number of participants is growing quickly. For those of you who just joined us, know we are not frozen or muted. We're just waiting for people to roll on in. We have an international crowd joining us, so we'll give everyone, one more minute, and then we can dive on in. Okay. Okay. We have a good number of participants who have joined us. So thank you. Good morning, good afternoon from wherever you are calling, perhaps an early morning for those on the West Coast like one of our participants, Cheryl. So today, we are here to talk about what I am sure many of you are talking about within your organizations. How do we balance business priorities in light of changing, regulations and political sentiment across The US and The EU. We'll focus in on these two territories for today since there is a lot of activity happening. And we have, pretty brilliant, panelists to join us and talk about that to share different perspectives from a policy making, a legal, and a business point of view. I already mentioned what we'll cover, but today's focus is really to think about how can we provide some practical guidance to you corporate leaders as you have these discussions internally with your own executive teams, your own board. Just a quick note on housekeeping, we are recording this event, so we will share the recording with you after the event as well as all of the content and slides discussed. Should you have any tough technical difficulties, please email my wonderful colleagues over at marketing@datamuran.com. And any questions that you have, please submit those to us through the q and a function. We'll be looking at that throughout the conversation. We will ensure dedicated time towards the end to address these, but feel free to post them as you go, and and we'll we'll try to include them in our conversation points. Now before we get into the the meat of it, we really wanna understand who is here with us today. And I'm sure that this scenario is something everyone is experiencing. Welcome to the ESG crisis room. We are going to imagine that we work for an organization, and our board has called an emergency meeting. They're asking, what do we do with this ESG regulatory storm? What is our next move? So we want to hear from you, and we'll load a poll in a second. With the current changes in the market and ESG regulation, how is your company currently responding? A, full speed ahead. No delay in our approach. B, we're gonna wait and see what our peers do. C, we'll wait for some more regulatory clarity, so we're monitoring the policy landscape. D, unsure. I need more guidance. Let's just give the audience a moment to respond. Okay. So I am looking at the responses. We've got quite a few in and, unsurprising, they are kind of mixed. So we can see that it looks like a decent amount of you are moving full speed ahead, which is encouraging. Some are going to wait and see what your peers do. Another chunk, the majority, are waiting for regulatory clarity, and then very few of you are unsure and seeking more guidance. So so that is encouraging to see. Alright. With that in mind, as we know, just to give a little bit of context setting, what we're gonna be diving into today, I'm sure you have all heard of this omnibus and know it is not the magic school bus. It is the EU simplification package, which is a proposal, a very important word that was published last week. Essentially, the intention of this simplification package is really to help simplify sustainability reporting for companies. So there have been some key changes proposed to two key regulations, CSRD, corporate sustainability reporting directive, and CS triple d, corporate sustainability, due diligence directive. And some of the key changes that we've seen is that there are delayed reporting deadlines. There are higher compliance thresholds. There's a much more streamlined framework, so no sector specific standards to help simplify materiality assessments. There's a reduced value chain burden, and there's some EU taxonomy flexibility. What does this really mean for business? Obviously, there are different opinions and we'll get into those today. But, you know, the the few ones that we at Datamaran have been talking about with our clients is, you know, there's really now this push to more strategy over compliance checklists. Materiality remains business critical because you have to know what to prioritize as a company with fewer prescriptive requirements. And then, obviously, you have to take a much more tailored approach depending on your company dynamics and size and context in which you operate. But what's happening in the EU is just one of the many regulatory dynamics we're experiencing. We're also seeing a lot of changes over here in The United States where some of our speakers are including me. We can see sort of a federal retreat overall from sustainability and ESG type regulations, but we do see that there are state level advancements happening particularly in relation to climate regulations. So we have some summaries of what's happening across the omnibus, across, the state level regulations on climate, and these are resources that we'll share with you for deeper reading. But just, you know, to focus today's conversation, we decided to do a survey with our global community to understand really what is the value of CSRD, at the end of the day. Is it really a compliance exercise? And the results that we found, which we'll we'll also share with you, reinforce that for most companies, aligning with CSRD really is about strengthening governance internally. So the exercise of looking at impacts, risks, and opportunities from a wider enterprise point of view has really just been helpful to level set internally, get the right stakeholders thinking about these issues, and just to have a deeper understanding of how you as a company should be moving forward given this tumultuous landscape. So with that, I didn't introduce myself yet. I'm Suzanne Katas, SVP Market Leader at Datamaran, and I've been part of the founding team. So I've been with the company for almost eleven years now, and I'm oftentimes in these executive and board level conversations with our clients to to kind of think through, okay, when we see, there are changes in regulatory requirements, what do we as a company do? But ultimately, clients that we work with leverage our AI powered platform to help prioritize what are the most material issues that they should think about, use that process to comply with regulation, but also more importantly, changing disclosure practices, changing stakeholder sentiment. Now, I'm going to move on to our panelists today. So we have a lot to talk about. We have with us Rhys Davies, who is a partner on ESG and Impact at Kirkland and Ellis International. So we'll get some really good insight into, the legalities of everything. We have Greta Koch, who is the parliamentary assistant, to the Europe in the European Parliament, who has been pivotal actually in the formulation of some of these key regulations in the EU. We have Charles Scott, who is Senior Manager of Corporate Sustainability at Unity Software, and we have Evan Williams, Vice President at the US Chamber of Commerce Center for Capital Markets Competitiveness. So as you can see, we really have an array of perspectives here that are relevant to today's conversation. I am going to stop sharing so we focus on our panelists today. And I'd love to start with you, Shaul. Just we saw the poll responses. It seems like there's sort of a mixed bag of of sentiment right now. A lot of companies going full speed ahead, some waiting for more clarity. Curious, you know, how does that land with you, and and what's the perspective now at Unity? Yeah. We're in a similar position. We're talking a lot to our external councils and our internal councils, both ways to figure out, the applicability for unity, to figure out what's the next step for us. However, we are going to continue to pursue the double materiality assessment, which we have started, mainly because we still find great value understanding the financial materiality aspect of it, especially. And not to mention that, in our previous voluntary reporting exercises, we still have conducted a single materiality assessment and found a ton of value just aligning, like, what's really material for our business in terms of, impact creation and etcetera. So we will continue to do that, but also, wait and see a little bit of what others do and also try to find out whether we're still in scope or not and what do we do next. Yeah. And I'm I'm curious, Reese. You know, you've got the the legal eye here. How does that land with you? What are you advising your clients to do? Thanks, Susan. Thanks for having me today. Look. I think the responses to the poll and the diversity of responses there, reflect exactly what I would expect to see in situations like this. We have quite dynamic environments in a number of different jurisdictions, and the decisions that then fall to be made are ultimately strategic decisions for each individual business based on their priorities, their knowledge of their stakeholders. And so that's why we see, I think, such a spread of responses. And that is, broadly speaking, a a healthy thing. I mean, from a structural and certainly from a legal perspective, if you're faced with fluidity dynamic environments, the decisions should be strategy led. If we think then about how businesses make decisions, that's where governance really comes to the fore. And that for me is the criticality of governance. It's having that architecture in place so you know, who has oversight of this particular component of the decision making. If there are delegated authorities that's in place, there's a robust evidence base. So we can answer questions like, what are the decision what's the decision we need to make? What's the evidence base before us? Who's making the decision? Who do we need to consult in relation to making the decision? And, ultimately, how do how do we document it? And, absolutely, the regulatory and policy environment is part of that, and baseline and compliance is an important constituent part of that. But ultimately, compliance should be an output of that exercise rather than an end in itself. And I think where we've seen some challenges for businesses recently is that perhaps compliance had felt so overwhelming that it had become an end to itself. And so we step into this more fluid regulatory environment, and folks are feeling perhaps a bit more untethered than they previously were. And in those circumstances, we're really encouraging folks to go back to basics, make sure those foundations of governance are solid. Look at the evidence base before you. Absolutely, as Charles said, take the advice you need, but then making a decision with reference to strategic priorities and general direction of travel almost on a jurisdiction agnostic basis. Put the regulation to one side for a moment, figure out where you want to be, then bring the regulatory and policy piece back into the picture and see if that makes a difference to direction of travel. Yeah. So it brings up a good point, Rhys. You know, this idea that governance should definitely be adaptive, but it should never be reactionary. And it feels like because a lot of new disciplines within companies were now in more heavily involved, I would say, than in the past on understanding ESG or sustainability issues, you know, it led to this sort of uncertainty. And, Charles, I saw you nodding along as well, you know, just thinking about you're you're gonna keep going because double materiality offers strategic value. Could you unpack that a little bit more? What kind of value? Who's involved in that process, in line with what Reese was saying about, you know, you need to have a strong foundation. You need to have that strong governance architecture. Yeah, absolutely. Those are great questions. When we when I think about double materiality, the biggest shift in sustainability reporting is that it used not to consider financial materiality, but ultimately, for businesses, their focus is on profit made making and be successful in our business. So we can never ignore financial materiality, but that was not really, under our radar for sustainability folks, unfortunately. And double materiality, what's great about is it's starting to really consider, embedding that into, strategic planning for sustainability. So, as a business, I think you should find still ton of values just aligning with your business values. And in times like this where politically it's very volatile, regulations are changing, especially, like, what is your core business trying to achieve there? And, therefore, how can sustainability support that? If you find the two really aligned well, then even when the regulations change, I think you can still have your business pretty resilient and, not having to change too much of your strategies. Yep. And I I think to your point, the balancing act is, you know, from a a disclosure perspective, how do we position ourselves as companies in The US while still pushing forward? You know, I've been in this space for quite a long time, and I feel oftentimes there's a war on semantics. Right? How do we label these issues? How do we talk about these issues? Are we talking about a clean energy transition or are we talking about resiliency? But with that said, there are very significant distinctions in the direction of travel across The US and The EU and we've got Greta here who has been in the thick of it in the EU. So, you know, I'm just curious your perspective. What should companies do now? Yeah. That is a very good and fair question. Of course, this omnibus is quite a political shift because we're talking about laws. I myself have negotiated the CS triple d for a couple of years, and this is a law that we have just passed less than a year ago, and now we're already reopening it. And I think you can see a shift in direction coming from the European Commission when it comes to putting competitiveness high on the agenda. So first, it was the Green Deal. Now it's competitiveness, which in the economic situation that we're in is a fair assessment. But the question is, how does that feed into CSRD and CSDD? And here, the main problem is the bureaucratic burden of it, which is difficult to assess since these laws are quite new and not all of them. The CSDD itself, for instance, hasn't been implemented yet. And so this assessment of what is bureaucratic burden, what is simplification, and what is alignment of definitions is quite difficult. When we talk about aligning several definitions across laws, I would think about definitions such as the supply chain itself, because we talk about the chain of activities in CS stability. We talk about value chains and other regulations. And I, would have expected that simplification and alignment of these laws means that you align these types of definitions, but this is not what we're seeing right now. Instead, we have two packages, essentially. One which is called the stop the clock mechanism, which basically means that you stop implementing the CSRD for two years and the CSDPD for one year. And at the same time, you have quite extensive changes to the content of those two laws. The stop the clock mechanism was envisioned in order because as you also saw in the poll, there's a lot of uncertainty around it, to give legal certainty in a way that we give the parliament and the, other institutions now time to figure out in which direction we're going, why companies don't have to continue working off laws that we passed previously. Somebody put it, in in a in a way to say you shouldn't change a wheel while the car is driving. So, basically, we stop everything for companies and, give them legal certainty in the way that we still have to figure out what is coming in the future. It's debatable whether that's the right strategy, but this is what the commission envisioned for now. Okay. And as as we can see, right, it's a complicated process. It's gonna be taking some time. But that word competitiveness, I mean, Evan, you work, right, for the, the Center for Capital Markets Competitiveness of the US Chamber of Commerce, and I know that these are questions you are currently navigating with your members. So what's your perspective on that in light of also what's happening here in The United States? Yeah. So first and foremost, I I I wanna thank Greta, for all of her hard work, on, you know, both, the the legislation, prior to the omnibus package and also, you know, sort of now in the omnibus era. I think the the work of her, of her boss and, of of, you know, Greta individually, has improved conditions for companies all around. So, Greta, thank you for for your work there. You know, I do I do want to say that, you know, if if you were feeling, a little anxiety about the current regulatory moment, kind of from a global perspective, you might be forgiven. You know, you've got, DE and I, executive orders coming from president Trump. You've got the SEC announcing that it's walking away from, the the climate disclosure rule. You've got, you know, another executive order pulling out of the Paris Climate Agreement from The US. You've got, companies leaving net zero climate agreements, and the Federal Reserve walking away from the network for greening the financial system. Right? You've got the the omnibus news, you know, is there are we making substantive changes? Are we are we just pausing the the sort of CSRD CS triple d requirements? You've got ISSB regulations coming online in The UK and Australia and Japan, in China even. And, you know, all the while you've got, individual states here in The United States, you know, taking a look at, you know, maybe having different perspectives on, you know, sort of ESG type policies. Right? You've got, California with its climate disclosure law. You've got, New Jersey, New York, Colorado, Illinois, Oregon, Washington, all looking at, their own, you know, sort of bespoke individual idiosyncratic regulation as well. And so, you know, you've you've kind of got this this fractured picture, I think, at at present. And, it's really calling out in my mind. It's really calling out. Businesses are really calling out for one solution. And and to be clear here, you know, I don't think that, you know, sort of we're in the end of, the sort of sustainability movement. I think we might be at the end of what we colloquially have agreed to call ESG, just at least in The United States because ESG has become an overtly politicized term. But, you know, I think the constituent parts of ESG will continue to exist and will continue to be priorities for investors. Right? You're not gonna see investors walk away from, requests for climate related information if, you know, over the past eight, ten years, you've incorporated those, you know, sustainability systems into your governance mechanisms and have become, you know, what you have determined to be material. Right? You're not gonna see investors stop looking for that information. What I do think might change is, you know, the way in which the, at least The US regulatory structure, The US, enforcement structure, looks at some of the the information that's released. So, you know, you might see the the SEC sort of move, towards a shareholder proposal system that's less, that that that's that's less conducive to individual investors advancing, proposals requesting information related to, climate or DEI, you know, other kinds of things. And you may see, fewer enforcement actions across the board on ESG type issues. But that doesn't mean that, you know, companies are gonna walk away from the commitments that they've made, and it doesn't mean that investors are going to stop being interested in that information either. Yeah. It's a really good point, Evan. Right? And, Reese, you brought this up too. Compliance should never be the driver of your strategy, and there are other consumers of this information, like investors, like employees, that want to understand you've got a backbone. Right? Like, you've made these commitments. Let's not backpedal on that now. If anything, what we're seeing is a maturity in this space. It's very much about being smarter on these issues, being much more focused. Right? Not trying to do it all, but really trying to do what matters most, which gets back to what Cheryl, you were saying, the importance of a double materiality assessment. But I'm just curious, Cheryl, you know, responding to Evan there, what do you see resonates most with these different disciplines that are now involved like finance, like legal? How are you able to influence their decision making on these issues through that double materiality assessment? Yeah. I mean, before, when sustainability reporting was mostly a voluntary exercise, I don't think many sustainability teams had to even interact with those teams. So sustainability strategies tended to be developed in silos in some ways from the strategic business decision making, which is not great, as a business because you ultimately you get the most value out of it when you integrate with business decisions. And the the concept of double materiality assessment because it considers the financial materiality. So now I work a lot with legal, finance, procurement, and sourcing, and almost all of the teams, at the company, which I think, drives synergy. And you get tighter on your sustainability strategy in many ways, which I think ultimately helps companies. And the processes might be difficult and time consuming because you're now working so much with, internal stakeholders, almost in every way. But at the same time, I think through those painful processes, you have your business really aligned together. So I see a great value in that. Yeah. It's it's getting getting everyone in lockstep, which is even more important, I would say, with Evan, what you were pointing to. Right? There there are so many competing perspectives on these issues, some of which could get quite heated like d d e and I. But I wanna go back to the audience, and I saw, Manuel, that you wanted to see the results from the first poll. Sorry we didn't share that, my faux pas. But we're gonna move on to the second poll, and then we'll share the results with you of that. So we would like to hear from the audience now, what is the greatest ESG governance challenge in your organization? And ESG, yes, it's a politicized term, but let's use that as a framing for sustainability issues as well. The greatest ESG governance challenge in your organization is that unclear accountability between departments and teams, limited executive engagement on or interest in these issues, difficulty tracking evolving regulatory requirements, inconsistent ESG data collection and verification, balancing regional compliance with global standards. So we got quite a few on there. I'm sure all of you feel that each of these could present a challenge, but we'd love to see what's really top of mind for those who are joining us today. So just give it a second. I see the votes are rolling in. And for those of you, you should see the poll under your poll tab. K. And I'm gonna share those results. Okay. So we see them coming in. It looks like they're spread across. So unclear accountability, limited executive engagement, difficulty tracking evolving reg requirements. That's a big one, which makes sense. I mean, I think, Evan, you know, when you were rattling off, I thought, is that all? Inconsistent ESG data collection and verification and balancing regional compliance with global standards. Okay. So it looks like the majority are having difficulty with tracking evolving regulatory requirements, which makes a lot of sense. So as we we've been talking about, these changes are building momentum, but they're not necessarily new. There's always been sort of this pendulum swinging in this space. So, Rhys, I wanna get back to you, and I want to focus in on something you said around it was more around this idea of the distinction between compliance and strategy. So in light of this fear of litigation, could you unpack that a little bit more on what you mean? So happy to. And I think that for me, there's a couple of elements to this. And I I think Evan did a very good job of of reeling off a number of regulations that are in the mix across jurisdictions at the moment. But one of the things that it's important to to bear in mind is that these rules fall into a couple of different baskets. A number of them are directed towards certain mandatory behaviors behaviors, and they do require certain measures to be put in place. But a lot of them are disclosure oriented. And in a number of cases, it's in a classic complier explaining paradigm that we've seen in a number of jurisdictions over the years, where you're being asked to disclose what your, for example, policies, actions, and targets are, but the rules themselves don't necessarily mandate that you have those things in place. And in a lot of circumstances, it can be an acceptable response to say, well, we're aware of that issue, but we don't have a policy on it, or we don't have a particular target on it, or whatever the case may be. And from a disclosure perspective, you're then fully disclosed. Why do I raise that? Because for me, that is another element that helps draw this distinction between compliance on the one hand and strategy on the other. And faced with this sort of fluidity we're seeing, faced with an increasing number of disclosure and other other rules. Yes. There is inherent uncertainty in the in that, yes, there are jurisdictional quirks in some of these requirements, but you can also manufacture quite a lot of your uncertainty through having new governance mechanisms, through having clarity in relation to your strategy, knowing what the risks and opportunities are, knowing which ones you prioritize. I think importantly, which ones you don't. I mean, Suzanne, one of the things you raised before, which I think is critical and so often missing in sustainability oriented conversations is the reality of trade offs. There are decisions to be made in all of this. Anytime you're identifying risks and opportunities, you simply can't prioritize them all at the same time. The question then becomes, how do we decide what we do now? How do we decide what we do later? And that is again a strategic question. So I think, I mean, I'm sure I noticed this, and you certainly heard me say this before, but others may well have heard me say it before. You never want to be in that situation where you've got the regulatory tail or the compliance tail wagging the strategy dog. You've got to be able to invest in that understanding of what your priorities are and then come to the question of how do we distill that into these different jurisdictions so we can meet these disclosure requirements? If there are additional compliance objectives we need to pick up, then then so be it. But if at any point in time, the answer to the question is why are we doing the answer to the question, why are we doing this, is only because because we think a disclosure rule is telling us to do so, that's when something's gone wrong. And we have seen that a bit too often in the recent circumstance. It's completely understandable because this is overwhelming and fluid, but policy is not a function of a disclosure requirement. You decide what your policy is, and then you disclose whatever you have. That's that's needs to be borne in mind throughout this exercise. Yeah. That's a good point. And I know, Charlotte, Unity, you are leveraging more data, and technology to support those types of conversations that Rhys was saying. Right? You need to be able to explain why something matters. So just curious there too. You know, how how are you leveraging data and technology to stay aligned with these changes, but also kinda keep an eye on where things are going? Yeah. I mean, obviously, we're a software company, so we definitely want to be in tune with, where software in general is going. And there's a lot of, AI leverage, that I see in software scenes, especially for sustainability. So we, leverage some software tools that leverage AI, in different ways. Like, first of all, carbon accounting, double materiality assessment, which happens to be Data Moran, and then the ESG management software. So those all, in some ways, leverage AI technology. And data Moran is interesting because, it really makes the IRO process easy. As a small team, IRO assessment can be really, really daunting. When you look into it, you have to look at what regulations are out there in terms of risks and what are the other peers doing in terms of volunteer reporting, where are the policies going, like, how does the media perceive on certain topic. So there's many, many considerations, and AI can really simplify that process, for an ease of assessment. You can see the full spectrum of it, so that's great. And when you think about carbon accounting, you're dealing with messy big data. So you almost need AI to kind of, simplify that process, like, in terms of data ingestion and processing. So there's a lot happening, in terms of how you manage your, messy data, and AI can really help you in that journey. And it it reminds me of a well, it relates to, I should say, a question that we have from someone in the audience, which is talking about when we think about what's material in this new time as they're saying, is it more important to use accurate terms like DNI and climate resilience or to broaden our lens thinking more about culture, supply chain risk, resiliency? Evan, I'm curious. I think this is a good question for you. Right? Just where you stand with your your organizations, and you mentioned investors still want to see this information. And, obviously, the way that it's framed and the way that it's disclosed matters so they can do comparisons and they can access this information. So I'm curious if you have any thoughts on that. Yeah. I think ESG has turned into, at least in Washington, DC, turned into a political lightning rod. You've seen, you know, pioneers of the ESG movement like, Larry Fink make express statements that they're going to stop using, the the ESG moniker moving forward. Does that mean that Larry Fink and, his organization have walked away from, the ideas from the investment ideas that drove them to those, to to to sort of house all of those functions under ESG in the first place? Absolutely not. You know, and and it's and it's for them to make a market determination about what is and is not good in investment strategy. Right? And it's for, their clients to decide that that's where they want to continue to have their assets managed. But, you know, the the individual pieces, just because Larry Fink has stopped using ESG, the moniker, doesn't mean that the individual pieces of ESG are not still in priority in those, investment decisions that that they're that they're making as a as a company. And so, you know, I do think that, while you'll continue to see, ESG especially here, you know, in in congress, from, maybe the administration take on, you know, you'll see the US government take on more of a skeptical view of, the concept of ESG as a whole. Right? You know, when you actually break ESG down into the to the different pieces, you get far less of a, you know, a meaningful reaction to the to the concept. Yeah. You know, I think we heard this before. ESG is not a thing. I mean, just to give some context and color to that, Datamaran tracks over 400 different ESG and technology factors. So things related to climate, but also to the ethics of AI. Charles, you mentioned that. Right? So it's a it's very complex landscape, and it gets back to that point that Reese was saying. You need to know what matters, but you also need to know what doesn't matter because you can otherwise just spread yourself so thin. I wanna get back to Greta on this idea of, right, materiality focusing on what matters. You brought up this idea of competitive competitiveness over sustainability. And in light of the fact that the legislative process is going to keep keep taking time, do you feel that companies who continue to just move forward as Unity and Charlotte are doing are those that will ultimately be more competitive in this volatile market? I think, also personally, and then my boss would say the same competitiveness and sustainability always go together. It's just a shift in the agenda of topics that the commission is tackling because the last mandate that we have seen, it was all about the green deal. We have seen the CSRD and the CS triple d, but we've also seen the taxonomy. We have seen deforestation. We have seen a forced labor ban. But the problem is that when you look at competitiveness, bureaucratic burden is a huge part of that picture, and the regulatory overlaps are quite extensive. So CSR and CS stability are not even fully aligned. But if you look at all the sector specific laws, they are definitely not aligned either. And, so this is something that needs to be tackled. So any company that continues to do their work, I mean, in the end, sustainability leads to competitiveness. It's just the question of, how compliant do you need to be with, regulatory laws that we have passed last year that might be changed in the next two years or three years or however it's got long it's going to take. And so I would say, I would take the shift of the stop the the clock mechanism seriously. So if you are in scope under wave two or wave three, this means that your reporting will be delayed. That is quite certain. Also, for due diligence, I do expect that this will be delayed. But that doesn't mean that you should, you know, keep your investments to zero. There is still, as Evan has also outlined, there is movement on ESG frameworks worldwide. There are fantastic international standards you can stick to. Also, having worked on due diligence, I always say if you are uncertain, just look at the OECD framework because this is what we have kept the due diligence close to. And even if this due diligence directive that we have passed is now watered down into a German supply chain act point two, that doesn't mean that you shouldn't stick to international guidelines as such. So I think it's definitely worth it to keep on going. Yep. That's a really important point. Right? This isn't coming coming out of, you know, thin air. These standards, these frameworks have been around for quite some time. There's been a lot of momentum on that before helping to build data, Moran. I was at Global Reporting Initiative, GRI, for instance, which is still very much, a standard that companies can use, and reference when thinking about, how do they want to position themselves on these issues and how do they wanna integrate that into their strategic frameworks. Now I see some questions rolling in, so we will get to those. But I'm curious to hear again from the audience. So we talked a bit about technology. And as we know, the the ESG tech landscape is really starting to, explode. It's an an a landscape that we are proud to be part of for the past eleven years. And, Sharl, you said it very well. Right? Technology is there to enable. It's there to support. It's there to help you do your job better. Right? So you can ultimately make smarter decisions. So I want would like to hear from the audience here. If you are using technology or even if not and you're looking into it, which ESG technology capability would add the most value to your organization just given the complexity of everything that you have to do. So we have automated regulatory tracking and alerts. We have automated benchmarking, AI powered double materiality assessments. I saw there was a question from someone. How do we get started? We can share some resources with you there. Looking at emerging issues and risk insights and then ESG data collection and validation. So I see the votes are rolling in. Reminder, just go to the poll section, and you'll be able to respond. Just give it a second to see how this comes in. K. So it looks like there's more attention being placed to, ESG data collection and validation as well as double materiality. And it's interesting, right, because regulatory tracking, is something that came up as an as the biggest ESG governance challenge in our last poll. So we'd be curious to know how companies are overcoming that challenge. So feel free to to put that in the q and a as well if you have questions there. Okay. I'm gonna stop sharing that. Alright. So I am going to look at the q and a, just to see if there are questions that we've yet to respond to. So I do see a very practical question, Greta. We've got about fifteen minutes remaining. If you do fall out of scope for CSRD and want to look at the VSME, how much is likely to change from the version currently out for consultation? And when do we think final VSME will be adopted? That's a very good question, but, honestly, very difficult to answer. If you look at to into the parliament process, the one thing that is certain is there will be a stop the clock in some form when it comes to all the content changes. So the scope, the amount of data points, all the changes that were now made to the CS triple d with regards to, tier one approach, liability. Those are still completely open, for question because the commission made a proposal, but this will now go to the parliament. And the parliament can technically change anything in the CSRD and the CS triple d, and then they will negotiate that. If you look at what happened with the CS triple d, we had 2,000 amendments back then, so you can double that looking at the fact that we have to work on CSDPD and CSRD. And so this will take time, and so unfortunately, there is no certainty except for the fact that this will be delayed. Content wise, there is no certainty at this moment whatsoever. Okay. So I think that connects back right to Evan, Reese, Sharl, and, Greta, what you were saying. Right? There there are other standards and frameworks that you can look at now, and that relates to Sharl. There was actually a question about how can a company best start with their double materiality assessment. So I don't know if you have any reflections there. Reese, I'm sure you do as well. So I'd love to hear from the both of you. I can go first, from company perspectives. So software like double, DataMaran is a good place to start because it really helps you with the light touch double materiality assessment very quickly. Once you input, company information and, downstream, upstream related information, it it kind of digest you that right away. But at the same time, first timer double materiality assessment participants might need a little more hands on support. So you might wanna hire a consultant who's deeper in knowledge and work with them, to walk each and every step of the journey, be it, stakeholder engagement or or IRO assessment. And the documentation part of the double materiality assessment is gonna be really important, especially if you're gonna, align with CSRD at some point. You need an assurance from third party. So, that requires a rigorous amount of documentation and just evidence collecting. Your team entirely can take on, and I'm not sure how many companies are able to do that, but start talking to consultants or legal advisors. I would say that. And, yeah, I'll pass it to Rai. Yeah. A legal adviser. Thanks. Thanks, both. Look. I I think from a practical perspective, one of the things we quite often suggest when thinking about getting started with the double materiality assessment is to start with what you've got. So businesses will have, in some form or another, some type of existing risk register enterprise risk management approach. That gives you a starting point from which to say, well, we have an identified set of, at very least, financial risks. There are probably some of those financial risks that have environmental and social elements in them. So we can start to use that as a jumping off point to think about what a broader set of risks might look like. You shouldn't be completely reinventing the wheel in in that respect. And at very least, you should start with an understanding of the financials of business. The second component, which again should be preexisting in some form or another, is some type of stakeholder map. You you should be able to articulate in a relatively meaningful way who your key stakeholders are internally and externally and the folks you might then want to speak to if you were trying to think about a more expansive set of risks and opportunities. So anytime a business is feeling somewhat anxious about getting started, let's say, look, do take an inventory of what you already have. There will be material you have internally that you can then use, which will at least anchor the approach. The, the third piece then is just bearing in mind that a dog materiality assessment is not one size fits all. It should always be proportionate to the business. They are infinitely scalable. They're also dynamic over time as well. So it's really a question again, without wanting to harp on too much at this point, but there is a strategic element to this as well. What's the right size, the right type of materiality assessment, for our business. I would completely echo Charles comment that particularly in the CSRD context, but just generally can be helpful to have a third party to document the process. And equally, there always needs to be one eye on what is the evidence base we're we're using here. There's absolutely a place for technology in that. And, you know, platforms such as Dataman do enable you to have that quantitative evidentiary base that then factors into the decision making in such a critical way. And if we think about it from a litigation risk perspective, you've got that evidence base, combine that with good governance, you can show why you've made the decisions you made, the evidence you use at the time, and that's the sort of thing that provides legal robustness over time. Great. Thanks. And, Reese, I I'm glad you brought up the connection with risk, because oftentimes when we start working with companies, we'll say, okay. So what's in your risk register already? And more often than not, you might see ESG as a topic in the risk register. But as we've already discussed, right, it's not a singular thing. And, Evan, you brought that up. Right? We have to unpack it. So this is where going through that materiality analysis, you can start to bring more color and context to the different issues that actually fall under that wider umbrella to then beefing up the risk register simultaneously and ensure continuity there. And with a lot of our clients, what we've seen is, through the outputs from Datamaran, they've now been presenting jointly to the board and executive teams with their risk counterparts to, again, show that alignment internally in terms of, you know, where are we gonna prioritize mitigating risks, but also looking at opportunities in the future. You know, Evan, I'm I'm not sure if you have a perspective on this too because as we know, I mean, just like ESG, materiality in itself can be a political term in The United States just given the SEC definition of it. You know, what do you have any advice for companies moving forward? Yeah. I mean, there will be, I think, a continued focus on materiality here in The US. You know, it's not the SEC's definition of materiality. Right? It's the Supreme Court's definition of materiality that governs, what is and is not, material information. Right? And and I think that the important thing to remember here is that, you're not looking at, under the supreme court definition, you're not looking at large asset managers and what they're telling you is material. You're not looking at idiosyncratic investors information. And if that individual, says without this particular aspect of information about this company, I wouldn't be able to reach a reasonable conclusion about an investment decision, then that is material information. Right? So, we have a definition of materiality in The US that is, you know, a little bit different than the perspective that's employed, in the ISSB. You know, IFRS one and s one and s two, certainly then is different than is that is deployed in, you know, CSRD. But I would again, you know, point you back towards the purpose of the disclosure of that information. Right? The SEC's, entire climate disclosure process was predicated on the idea that investors are asking for information, and therefore, that information should be standardized. Right? That is an investor, quote, unquote, investor driven process, according to the SEC. Right? In the EU circumstance, the or in California, right, the purpose of disclosure is to reduce emissions. The purpose of disclosure is not is not about the allocation of capital, the deployment of capital per se, under those frameworks. And so, you know, I think that, you've got sort of an inherent conflict in, in in sort of what is, useful information or what the purpose of information is in The US marketplace versus in other places. And it makes sense. Right? When you look at, US capital markets. Right? Our our US capital markets are the deepest and most liquid in the world, and, you know, a lot of EU, investment is deployed through, institutional banks, not through, you know, going to individual investors and asking them for money. So in in a public market context. So, you you know, the the the the differences are also intuitive, and I think it just you you you have to think you have to bear in mind who your audience is, at the end of the day when considering what kinds of information to disclose. Yeah. That's a good point. Right? And and disclosure is just a vehicle, ultimately to communicate what your strategy is. I think the resounding feedback from everyone on this call has been, you know, know what's important to your business, have evidence data to back that up and justify why it is, and don't backpedal. If if you found something is relevant and presents real risk opportunity, you know, keep keep going forward, and be considerate about that. If anything, use these regulatory shifts as an opportunity to become much more, diligent about what is important to your company. We have just five minutes remaining. So we have one more question to the audience. I want to leave time for that. Rapid fire hearing from the audience members here. What do you think ESG governance will look like in the next two years? And I'll start with Greta. I think that, while we do see probably a a reducing of, the tasks itself, I think we will see a shift in the focus and also reducing the amount of data to be reported. And my wish would be thereby to focus on the things that matter And when you look at your diligence to look at risks that companies themselves have caused and therefore mitigate rather than trying to focus on over compliance and reporting, that would be my wish. And I do hope that this is also what, ESG will look like in the future. Alright. Try not to overcomplicate. Evan, I think you gave some feedback earlier, but would love for a summary. Yeah. I mean, I think ESG, reporting and reporting requirements is gonna become, more more fractured, more splintered in the the sort of coming four years, just based on where the federal government is going in The United States versus where, you know, the Europeans are going versus where individual states might be going. But I I think, a, you know, fragment fragmentation also presents opportunity. Right? It also presents opportunity to rally around one set of disclosure that, creates, you know, a sort of passport between the different places, which is why we've, you know, advocated on behalf of the the ISSB framework in The EU in particular, to to gain, you know, sort of more than interoperability but equivalency, with, with CSRD for ISSB because, I do think that it's the logical outgrowth of SASB and, you know, that's what was deployed in The US that creates, real real opportunities, for, one framework going forward. Yep. Absolutely. So, again, getting back to to the company needs to know what matters most and then align with the relevant framework from there. Rhys? Yeah. I I expect what we'll see is increased what I call solidification and and and embedding of, let's call it ASG governance for current purposes. And and and what I mean by that is I think we'll see a move away from some of the labels and the shorthand that we've traditionally used and more granular language of issues that can be taken into account on a day to day basis. I think what all this fluidity shows us, in different jurisdictions is the value of really having a grip on this yourself as a business. Great. And, Charl, in the last minute, last but not least. Yeah. I think, temporarily, it'll continue to fracture, but ultimately, I think the state and, the countries will realize it's better to have it in some ways universal. I think we're in the transition period where everything is kind of coming together. So I just recommend everybody to look at, like, where the global globe is headed towards and try to stay resilient amongst all these crazy changes that you're seeing. Great. So I've got twenty seconds to wrap this up. We will definitely be sharing key takeaways with everyone. We would love to hear from you. What is your first post webinar action? This will shut down in about eight seconds, so feel free to post on LinkedIn or email us. We will also be sharing the resources discussed. Thank you very much. We can go backstage now.