Responding to ESRS G1
Ethical Business Conduct at a glance
11th December 2024
Insights
Contents
- What is ESRS G1?
- What Does the ESRS G1 Cover?
- G1 and Sustainability Reporting
- What Could ESRS G1 Mean for You
- How Does ESRS G1 Drive Action?
- Anthesis Support
- How To Get Started with ESRS G1
- Contact us
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Mike Thompson shares reflections on ESRS G1, including what it encompasses, its impacts on your business and how to take action to align with the regulation.
Two cross-cutting ESRSs and ten topic-specific ESRSs (5 environmental, 4 social and 1 on governance) will require disclosure on governance, strategy, and impact, risk and opportunity management.
| Number | Subject |
| ESRS 1 | General Requirements |
| ESRS 2 | General Disclosures |
| ESRS E1 | Climate |
| ESRS E2 | Pollution |
| ESRS E3 | Water and Marine Resources |
| ESRS E4 | Biodiversity and Ecosystems |
| ESRS E5 | Resource Use and Circular Economy |
| ESRS S1 | Own Workforce |
| ESRS S2 | Workers in the Value Chain |
| ESRS S3 | Affected Communities |
| ESRS S4 | Consumers and End Users |
| ESRS G1 | Business Conduct |
What is ESRS G1?
ESRS G1 Business Conduct at a Glance
ESRS G1 is one of the ten topical European sustainability reporting standards (ESRS) that form part of the Corporate Sustainability Reporting Directive (CSRD). It focuses on the strategy, processes, procedures and performance of business conduct by large companies operating in the European Union.
What Does the ESRS G1 Standard Cover?
G1 requires a company to make six business conduct disclosures, each with unique detailed assessment criteria:
- Corporate culture and policies on business conduct
- Management of its relationships with its suppliers and its impacts on its supply chain
- Corruption and bribery prevention and detection system including whistleblowing protection
- Information on confirmed incidents of corruption or bribery
- Political influence activities
- Transparency on its payment practices especially with respect to SMEs
ESRS G1 and the ESG Governance Reporting Landscape
ESRS G1 provides application guidance to ESRS 2 General Disclosures. It outlines governance and business conduct disclosure requirements, including management’s role in the governance processes, controls and procedures used to monitor, manage and oversee impacts, risks and opportunities. These governance requirements overlap with several other reporting requirements, such as:
- The SEC Rule on Climate-Related Disclosures (US): This rule requires listed companies to disclose how their board of directors oversee climate-related risks and risk management processes.
- The IFRS S1 and S2 standards: Launched by the ISSB in 2023 and endorsed by the International Organization of Securities Commissions (IOSCO), these standards provide a global framework for capital markets to develop the use of sustainability-related financial information.
- The EU Corporate Sustainability Due Diligence Directive (CSDDD): Expected to be implemented by EU member states in 2026, this directive requires companies to conduct rigorous risk-based due diligence in their operations and ‘chains of activities’ and to report on adverse impacts on human rights and the environment.
What Could ESRS G1 Mean for Your Business?
ESRS G1, and related disclosures on the quality of governance and business conduct (ethics), are significant for investors and play a crucial role in indicating a company’s overall ESG performance.
For your business, this could mean scrutiny of your governance practices, from board diversity and executive pay to anti-corruption measures and stakeholder engagement. Adopting ESRS G1 should go beyond mere compliance. It’s an opportunity to show your commitment to accountability and strong leadership. By proactively aligning with these requirements, your business can build trust with investors, employees, and customers while standing out in a marketplace increasingly focused on transparency and sustainability
How Does ESRS G1 Drive Action?
ESRS G1 encourages businesses to elevate their governance practices and critically evaluate how decisions are made. Effective governance involves cultivating the capacity for sound decision-making that supports sustainable performance. According to Dr Ali Intezari, a research specialist in decision-making at The University of Queensland Business School, this is the “extent to which the organisation is willing to make and is capable of forming sound judgments that lead to sustainable performance”. By aligning with the ESRS G1, businesses can build stronger operations and position themselves for long-term success.
For example, this might require a review of your board’s diversity and skill set to ensure balanced decision-making or introducing robust anti-corruption policies and training programs. It could also involve setting clear executive pay policies linked to sustainability goals or enhancing how you engage with stakeholders, such as through regular consultations with employees or community groups. These practical changes not only help you meet reporting requirements, they build business resilience and foster trust among stakeholders.
Anthesis Business Conduct and Governance Services
Anthesis partners with clients on the regulation and the practice of business conduct and the governance of ESG. We support business leaders in:
- Navigating the compliance and practice challenges of embedding policy setting and business conduct-related impacts, risks, controls and opportunities.
- Advising on policies and integrations linked to business conduct, ESG and enterprise risk and controls to improve oversight and assurance of ESG performance and reporting. The solution enables efficient, assurance-ready disclosures through proven systems that minimise risk, providing governance and auditability.
- Turning ESRS G1 requirements into actionable governance improvements, by embedding governance into your systems and operations, to become a natural part of how your business runs.
- Supporting best practice business conduct through top team ESG training and facilitating ethical leadership development and culture change.
Examples of Anthesis Governance Advisory Support
- Major Swedish financial institution: We were instructed to review the institution’s anti-bribery and corruption, anti-money laundering and counter-terrorism financing management system. We assessed their policies and processes, including questionnaires, use of third-party indices, risk rating tools, desktop research and third-party data providers. Based on our findings, we issued 20 recommendations to improve their management system and develop technical capacity.
- International baked goods company: Collaborating with the group board to enhance understanding of governance implications under national and transnational regulatory frameworks while identifying opportunities for value creation through ESG initiatives. We reported on a board survey covering ESG governance, finance, engagement and innovation and facilitated a board workshop to demystify the ESG compliance landscape and opportunities to move beyond ESG compliance to enhance sustainable performance in the sector.
- Global law firms: We collaborate with global law firms to support investors and corporates in pre-transaction due diligence. Using open-source research and discreet intelligence, we help identify and mitigate financial crime, reputational, and ESG risks tied to counterparties and investment targets. Our work spans workplace culture assessments, fraud investigations, and more, aiding clients in navigating risks across global jurisdictions.
- Global technology company: We supported the creation of ESG governance to oversee the development of corporate ESG policies, structures and processes. This included integrations with enterprise risk and controls to strengthen internal oversight and assurance of the implementation and reporting activities.
- French manufacturing company: The board of directors asked us for training on the governance-related implications of the CSRD and ESRS G1 and to discuss with them the role and responsibilities of the board in implementing the regulations for their business.
How to Get Started with ESRS G1
As regulatory landscapes evolve, 2025 will inevitably bring further updates to ESRS standards to governance frameworks and expectations, including through the ESRS and ISSB. Anthesis remains at the forefront, providing cutting-edge insights and tailored solutions, ensuring compliance and value-adding advisory support.
By partnering with Anthesis, you can navigate the complexities of ESRS standards, align with best practices, and showcase your long-term commitment to ethical governance. Effective alignment with ESRS G1 will elevate your business governance, foster trust and ensure compliance while driving sustainable growth.
We are the world’s leading purpose driven, digitally enabled, science-based activator. And always welcome inquiries and partnerships to drive positive change together.
