PORTUGAL Law and Practice Contributed by: Susana Braz, Jaime Costa and Tomás Simões, Santiago Mediano e Associados, SP, RL
tainability Reporting Standards) and the applica - tion of the European Taxonomy. In today’s world, there is little doubt that com - panies must commit to respecting human rights and minimising their impact on the environment. Sustainability reporting is no longer limited to traditional financial metrics – it must also reflect both quantitative and qualitative information concerning a company’s environmental, social, ethical, and human rights practices, as well as its stance on issues such as corruption. Younger generations, including Millennials and Genera - tion X, place increasing importance on respon - sible investment and believe that it is possible to achieve competitive returns by incorporating ESG factors into investment decisions. The new European regulatory duties have a sys - temic and cross-cutting effect. They focus on information provision but also require strategic definition and rigorous commitment. Decisions based on immediate profits compromise long- term sustainability as well as the longevity of the organisation. To mitigate this risk, companies should adopt governance models that encour - age sustainable investments, linking bonuses to behaviours related to good ESG practices. Companies must find a way to leverage substan - tive sustainable business practices for competi - tive differentiation. This approach will result in a broader vision where financial gains go hand in hand with positive social and environmental impact. The companies that successfully bal - ance purpose and profits through sustainability leadership will be best positioned for long-term success. 2.2 ESG Considerations According to the CSC, the management report prepared by the management body should include not only financial matters but also rel -
evant information on environmental issues and employees’ issues. Furthermore, large companies of public interest must also include in their management report a non-financial statement with information that enables stakeholders to understand the impact of the company’s activities in relation to envi - ronmental, social and employee issues, gender equality, non-discrimination, respect for human rights, corruption and bribery. The informa - tion must include the policies of the company regarding these issues and the results thereof as well as the associated risks. The CSG also encourages the existence of mechanisms within companies for collecting and processing data on social and environmental sustainability. These mechanisms are intended to assist the management body in identifying risks and formulating appropriate strategies to mitigate them. Additionally, companies are expected to disclose how they address climate change and its related challenges. The CSRD imposes several sustainability report - ing obligations applicable not only to large companies but also to small and medium-sized companies deemed of public interest. Only micro-companies are excluded. For this pur - pose, EU law deems of public interest the fol - lowing companies: • with publicly traded shares; • credit institutions; • insurance companies; and • designated by member states as public-inter - est entities. Reporting obligations will include:
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