EEA Analysis: Well-Meaning Johnson and Johnson Reports Fall Far Short of EU CSRD Requirements

An analysis of the corporate sustainability reporting of Johnson and Johnson, arguably one of the most stakeholder-focused multinational companies in the world, demonstrates that it will fall far short of the requirements it will have to meet to comply with the EU Corporate Sustainability Reporting Directive. This suggests that many other companies may be in the same boat.

The Purpose of a Corporate Sustainability Report
EU CSRD Metrics
Johnson and Johnson Findings
Johnson & Johnson 2022 Reporting Score

When a company with such fine reputation as Johnson and Johnson for people management publishes a corporate sustainability report that does not come close to the standards required by the new “anti-greenwashing” Corporate Sustainability Reporting Directive, one can imagine the challenge facing many companies to elevate their disclosure practices.

The new law is intended to reduce greenwashing by mid-size to large private and public organizations by requiring them to make detailed disclosures in a comparable format on a publicly available database their purpose, goals, and objectives; practices and metrics related to the management of employees, supply chain and distribution partners, customers, communities, and the environment; the risks created by organizations for its stakeholders and vice versa, and what the organization does to improve results.

The new 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 companies will have to report in 2026. The reports must be independently audited, which can include the same companies that audit financial reporting.

Considered to be a game-changer by legal firms and management consulting firms, the new 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. Reporting following the new EU CSRD law should address most reasonable demands for human capital and racial equity audits through an auditable, internationally accepted process. Click here for a comprehensive report on the new law and the best strategies based on whether your organization views the law as a compliance issue or business opportunity.

The Purpose of a Corporate Sustainability Report

Based on the new law, the corporate sustainability report is no longer an issue for public relations or corporate communications. It is designed to clearly articulate to an organization’s investors and other stakeholders how the organization keeps its promises; how it affects its stakeholders and society, and how it in turn is affected by stakeholders and society. This includes how and organization bakes DEI (diversity, equity, and inclusion) and environmental, stakeholder, and governance issues into their 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 an organization bakes DEI and ESG (environmental, stakeholder, governance) 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.
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 purpose, goals, and objectives.
The explanation of the tactical methodology used to encourage and measure stakeholder engagement across the enterprise. 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, a conclusion supported by this analysis.

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, not for compliance purposes. 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.

EU CSRD Metrics

Under the EU Corporate Sustainability Reporting Directive, there are about 82 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. In addition, may be asked by big customers to answer general questions on stakeholder and environmental sustainability and governance issues. 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.

Johnson and Johnson Findings

Ranked No. 101 in the JUST Capital 1000 index based on a survey of what Americans looks for in corporations that largely aligns with stakeholder capital, Johnson & Johnson’s multiple stakeholder management disclosures nonetheless leave large holes that it will have to address as soon as 2025, with metrics including 2024 and presumably 2023 when comparisons are required.

Johnson & Johnson can be credited for having a very clear purpose, values, and commitment environmental, stakeholder, and governance and DEI baked into its organization and probably provides more information than most corporate sustainability disclosures, but its reporting would neither pass a voluntary ISO 30414 Human Capital Audit nor would comply with the mandatory EU Corporate Sustainability Reporting Directive.
J&J provides almost none of the workforce metrics that will be required under the law to disclose as outlined below and provides insufficient information on the management practices of its distribution and supply chain.
The report fails to address one of the primary principles of the EU CSRD—double materiality; that is, how the company both creates value and risks for all its stakeholders and the environment, and how in turn all its stakeholders provide risks for J&J.
The report does not consistently state the way it seeks to improve outcomes as required both in ISO standards and in the new EU CSRD.

J&J provides the information in multiple documents, making it more difficult to locate information. The EU CSRD will require that all information be submitted in a comparable manner for access in a single report on a publicly accessible EU database.

J&J reports analyzed:

https://www.jnj.com/esg-resources
https://www.jnj.com/suppliers
https://www.jnj.com/caring
https://www.jnj.com/healthcare-products
ESG strategy: www.jnj.com/about-jnj/policies-and-positions/esg-strategy
https://www.jnj.com/health-for-humanity-goals-2025

Issues covered by ISO 30414 human capital and ISO 10018 people engagement standards consistent with EU CSRD. Please note that while even large corporations don’t have to address the entire ISO framework information under the law, and SMEs even less so, this is all useful information for more effective stakeholder management. Here is a link to an article that explains how to use this form.

Johnson & Johnson 2022 Reporting Score

Category	Methodologies	Metrics against previous year	Improvement process
1. Leadership	Clear purpose statement and “credo.” Page 2 of ESG strategy. General implementation process is articulated on page 3. Diversity is clearly included in its strategy, goals, and objectives. There is little to no mention of the risks that J&J creates for its stakeholders nor of the risks its stakeholders or environment create for it, as required by the EU CSRD law.	17 metrics are highlighted to support its Health for Humanity Goals 2025 covering its key stakeholders. Few of the metrics disclosed include those expected to be required by the EU CSRD. See below.	There is little discussion of the process used to address continuous improvement throughout the report.
2. Compliance	Page 9 of the ESG report provides an outline of the areas of compliance, governance and ethics addressed by the company.	No metrics could be found on the number of legal actions for any purpose, including discrimination lawsuits, as required in the law. Information on compliance is required by the law.	None cited.
3. Costs	No information is provided on the strategy to manage human capital costs.	No information is provided on human capital costs, return on investment, value add, or other metrics of workforce productivity. This information is not required by the law.	None cited.
4. Diversity, Equity, Inclusion	The ESG strategy explicitly bakes DEI into the operating system across the enterprise on page 7. DEI also is clearly included in its customer and community strategies in separate reports. The company publishes an extensive DEI impact report that provides details on the measures taken to increase diversity across the entire enterprise.	Metrics are disclosed in DEI impact report for diversity in management but not in the rank-and-file workforce as required by the law. While the company appears to have positive diversity scores, according to third party reports, that information is not made readily available on its web site.	There is no information provided on what the process is for addressing goal shortfalls.
5. Occupational Health and Safety	The ESG strategy report includes strategies and goals related to employee wellness and safety.	No metrics on employee safety incidents could be found, which will be required under the EU CSRD law. The company does publish information on its employee wellness goals.	None cited.
6. Organizational Culture	The organizational culture is thoroughly covered on page 2 of the ESG report. The company provides detailed information on employee benefits.	The report is missing the following information required by the EU CSRD: Employee turnover; Gender diversity; Gender pay disparities; Executive pay ratios (required by the US SEC of the CEO); Worker voice and representation; Unionization rates; Incidents of discrimination; Programs to access skills development; . No. and nature of performance reviews; Injury rates.	None cited.
7. Productivity	No information could be found on how the company manages or tracks productivity.	This information is not required in the new law.	None cited.
8. Recruitment, Mobility and Turnover	Information is provided on recruitment and mobility related to diversity but none on turnover or on the general workforce population.	No meaningful metrics are disclosed except in the domain of DEI recruitment. The new law requires information on turnover.	None cited.
9. Employee Bench Strength	No information is provided on what the organization does to ensure the ability to replace key people.	This is not required in the new law but is useful information for all stakeholders.	None cited.
10. Skills and Capabilities	Little to no information is provided on what is done to develop skills except for in the area of strategic philanthropy—helping to increase the number of healthcare workers.	We could find no information on general participation in training or professional development programs. The law does require disclosures on what is done to develop skills and capabilities.	None cited.
11. Workforce Availability	We could not find information on how the company specifically ensures that it has access to the workforce that it needs other than its investment in activities to increase the number of trained healthcare professionals.	None that we could find. The law does not require information; this is one of the guidelines in ISO 30414 standards.	None cited.
12. Customer Engagement	Priorities, goals, and general strategies are clearly stated on page 6 of the ESG strategy. The report does not address the risks the company creates for customers and how they are mitigated, as required by the law.	The specific metrics are outlined in its Health for Humanity Goals 2025. There are no metrics on customer engagement, or on how risks are mitigated.	None cited.
13. Supply Chain and Distribution Partner Engagement	The company publishes a separate report on supply chain management. The report articulates how it bakes DEI into its supplier development efforts. It outlines the various programs it uses to development effective supply chain relationships.	No clear metrics are provided on outcomes of supplier diversity efforts.	No information is provided on what specifically is being done to address any goal shortfalls.
14. Community Engagement	Page 6 of the ESG strategy clearly shows how community development is aligned with the practical goal of helping to create more health care workers, especially in areas of greatest need. Strategies are outlined in a separate document on community impact showing the strategic approach to philanthropy. All the efforts are aligned with the organization’s Credo.	The specific metrics are outlined in its Health for Humanity Goals 2025. It is not directly clear how the company’s community engagement goals align with its own purpose, goals, and objectives of having sufficient bench strength and access to talent.	No information is provided on any shortfalls on goals and what is being done to improve.

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