EEA Releases Corporate Sustainability Evaluation Checklist

In its effort to help organizations avoid overpaying for corporate sustainability reports or racial equity analyses conforming to the new European Union Corporate Sustainability Directive, the Enterprise Engagement Alliance is releasing a framework based both on the law and on International Organization of Standardization 30414 Human Capital and ISO 10018 People Engagement standards that any organization can use to create and implement a meaningful disclosure strategy involving all stakeholders—customers, employees, supply chain and distribution partners, and communities in a way that provides a full picture of diversity, equity, and inclusion.

By Bruce Bolger

In the open and collaborative spirit of the International Organization for Standardization, the Enterprise Engagement Alliance is sharing the framework it has developed to help organizations of any size create meaningful corporate sustainability reports including racial equity audits consistent with the new Corporate Sustainability Reporting Directive. Any organization can use this framework to conduct a self-assessment and to create an outline for a meaningful stakeholder management and reporting process aimed at supporting organizational purpose, goals, and objectives.

The European Union “anti-greenwashing” law will require over 3,000 US companies, many of their supply chain and distribution partners, and at least 60,000 around the world to publish sustainability reports with up to 82 metrics. While subject to some modification before final implementation, the law is in effect now in that companies with over 500 employees will have to begin reporting in 2025 using metrics comparing 2024 with 2023 results. Companies with 250 or more employees will have to report in 2026. It will set a new standard on stakeholder management and environmental disclosures that, while demanding, has the potential to not only help organizations improve performance and lower their risks, but provide a single acceptable way to report on their management activities around the world in a way that provides at least some manner of legal safe harbor.

Click here for a comprehensive game plan for creating a meaningful corporate sustainability report consistent with the new EU law by the only people who have created ISO conforming audited human capital management reporting.

Considered to be a game-changer by legal firms and management consulting firms, the new European law will put pressure on all companies that publish annual sustainability reports to provide more specific information on their organizational purpose, goals and objectives, and the ways they engage stakeholders and affect society and vice versa. The reporting process can be used to address most demands for racial equity audits through an auditable, internationally accepted process.

The purpose of a Corporate Sustainability Report is to clearly articulate to your organization’s investors and other stakeholders how you keep your promises; how your organization affects its stakeholders and society, and how it in turn is affected by stakeholders and society. This includes how your organization bakes DEI (diversity, equity, and inclusion) into your business processes. To have maximum value and avoid “greenwashing” criticisms, a corporate sustainability report should include:

A clear definition of the purpose, goals, and objectives of the organization, ideally with a regularly updated stakeholder communications platform and e-newsletter, with clear accountability of who oversees the process. This includes precisely how your organization bakes DEI into each business process.
The key stakeholder management issues addressed, including the goals and objectives of each initiative, the metrics by which they are measured, and the steps taken to make improvements, including on all DEI-related goals.
The specificity and comparability of metrics reporting, i.e. ISO, GRI, SASB, UN, IFRS Foundation, etc. or an internal process that can be succinctly explained and is auditable.
How the metrics align with stated goals.
The explanation of tactical methodology to encourage stakeholder engagement. As encouraged by the European Union CSRD, the EEA uses widely recognized ISO 30414 Human Capital reporting and ISO 10018 People Engagement standards because they address all stakeholders, are auditable, and address most of the metrics in the EU CSRD.

A recent survey found that 80% of corporate sustainability reports would not meet EU CSRD standards today.

Click here for Corporate Sustainability Reports from large companies audited for conformity with ISO 30414 Human Capital standards. Click here for the corporate sustainability report of an SME (small- to medium-size enterprise) that was independently audited according to ISO 30414 Human Capital and ISO 10018 People Engagement standards that largely aligns with the new EU CSRD law. This company specifically had its report independently audited to enhance its credibility. The EU law is designed to “level the playing field” by requiring all companies to have their reports independently audited and to disclose the same information in a digital format consistently tagged by topic to ensure easy comparisons between companies on a publicly available database.

Metrics
Under the EU Corporate Sustainability Reporting Directive, there are about 82 or so metrics in the disclosures. Click here for details on the metrics required by the new law. While SMEs will not be required by EU law to publish corporate sustainability reports, organizations that believe their stakeholder management strategies provide a competitive advantage will publish these reports to appeal to their stakeholders and to the large companies they do business with. The EU CSRD will require disclosure of:

Employee turnover;
Gender diversity;
Gender pay disparities;
Executive pay ratios;
Worker voice and representation;
Unionization rates;
Incidents of discrimination;
Programs to access skills development; .
No. and nature of performance reviews;
Injury rates.

Corporate Sustainability Reporting Topics
Here are the issues to be addressed in an auditable Corporate Sustainability Report based on ISO 30414 Human Capital and ISO 10018 People Engagement standards aligned with the new EU Corporate Sustainability Reporting framework. Please note that while even large corporations don’t have to disclose all this information under the law, and SMEs even less so, this is all useful information for more effective stakeholder management.
Category Methodologies Metrics against previous year Improvement
process

1. Leadership	Definition of organization purpose, goals, objectives, and operating system for people management, and how DEI fits into the strategic plan across the enterprise.	How is alignment with purpose, goals, and objectives measured. How is the impact of leadership development measured, including ability to broaden the diversity of talent, customers, supply chain partners through community development.	Plans to improve the results.
2. Compliance	What processes are used to ensure conformity with laws and regulations.	How is such compliance and impact measured; i.e., regulatory incidents, including discrimination.	Plans to improve the results.
3. Costs	How does the organization measure the costs of stakeholder engagement and ROI of efforts.	How are these costs measured, reported, and managed against productivity and quality.	Plans to improve the results.
4. Diversity, Equity, Inclusion	Goals/objectives; how does DEI align with purpose; how is it implemented. How does it ensure equity in all basic practices. How is DEI baked into all the other engagement processes listed here.	How is DEI measured and what are the results in actual demographics and how people actually feel. How is DEI reflected in all the other metrics.	Plans to improve the results.
5. Occupational Health and Safety	Goals/objectives; processes used to achieve them. Includes health, safety, wellness, and work-life balance across all demographic groups. Pay and benefits policies.	How are the goals and objectives measured and results. What measures are used for work-life balance, safety, wellness. What discrepancies, if any, exist between different demographic groups and how are they addressed.	Plans to improve the results.
6. Organizational Culture	How does organizational culture align with purpose, values, goals and objectives. What is done to ensure there is pay equity and that people earn a living wage. What specifically is done to ensure a fully inclusive culture in which the feelings of inclusion mirror demographics.	What metrics are used to track alignment of culture with purpose and impact; employee engagement; referrals. What metrics are used to evaluate wage fairness and equity. What measures are used to evaluate truly effective inclusiveness.	Plans to improve the results.
7. Productivity	Goals/objectives; processes used to achieve them across the enterprise and all demographic groups.	Metrics used to assess productivity and quality impact, broken down by region and even demographics.	Plans to improve the results.
8. Recruitment, Mobility and Turnover	Goals/objectives; strategies to achieve them in a manner that draws from the most diverse talent pool possible.	Metrics used to measure results in terms of recruitment effectiveness, mobility, turnover, referrals, by demographic group.	Plans to improve the results.
9. Employee Bench Strength	Processes used to replace key people in the event of departure and measures taken to ensure the most diverse supply.	Metrics used to measure effectiveness of having succession plans for key roles, including demographic factors.	Plans to improve the results.
10. Skills and Capabilities	Processes used to ensure that people have the professional development needed.	Metrics used to measure effectiveness of professional development by demographic group.	Plans to improve the results.
11. Workforce Availability	How is the organization monitoring and managing access to talent. How is it nurturing new talent from the most diverse sources.	Metrics to measure effectiveness of talent acquisition, including efforts to diversify sources of talent.	Plans to improve the results.
12. Customer Engagement	Who are the customers; what are their key interests; how does the product or service add value; how are its promises explained, kept and risks disclosed or mitigated; the risks posed by customers to the organization. What customer variables can affect or create risks? What is being done to recruit customers from the broadest demographic groups applicable to the product.	Processes used to measure customer engagement; such as revenues/costs per customer; referrals, by demographic group if possible. Customer complaints, suits, etc., including those based on alleged discrimination. Impact of actions taken to mitigate risks.	Plans to improve the results.
13. Supply Chain and Distribution Partner Engagement	Describe supply chain and distribution partners; how their workplaces are evaluated to meet the above standards; pricing and commission principles; maintenance of ethical practices, and impact of supply chain/distribution practices on the organization. What supply chain and distribution partner variables can affect or create risks? What is being done to find and developed the broadest source of supply chain and distribution partner expertise.	Processes used to measure supply chain and distribution partner effectiveness, including minority supply chain and distributor recruitment. Metrics on key information disclosed by supply chain and distribution partners about their treatment of employees and other stakeholders. Metrics related to the diversity of supply chain and distribution partners and their effectiveness.	Plans to improve the results.
14. Community Engagement	What are the goals of community engagement; which communities are directly or indirectly affected by the organization; how do the communities affect the organization; what is done to engage communities in value creation and to mitigate risks. What community variables can affect or create risks? How does the organization affect the environment and vice versa?	Metrics used to assess effectiveness of community engagement practices. Metrics used to measure impact of the organization on the community. Metrics used to measure the impact of the community on the organization.	Plans to improve the results.