Environmental & Regulatory

Environmental & Regulatory

Environmental Social Governance Compliance

Regulation to protect sustainability and human rights

What do companies need to know?

Companies play a central role in moving the economy towards greater climate protection, sustainability and the protection of human rights. Under the header “Environmental Social Governance Compliance” (abbreviated to: “ESG”), they increasingly have to consider new regulatory requirements that are being imposed at European and national level. 

In terms of climate protection, the European Union has defined ambitious energy and climate policy goals with its Green Deal. With its "Fit for 55" legislative package, it is striving to have its goals implemented by the member states with binding effect. Further points are

  • national climate protection targets,
  • duties to protecthuman rights and
  • requirementsfor recycling and the sustainable handling of waste.

The numerous existing and future regulatory requirements contain different instructions for action. These requirements especially have to be considered when companies establish and update compliance programmes.

The following overview shows, based on selected exemplary requirements, which regulatory ESG requirements companies may face. This selection is by no means exhaustive and is based on the legal acts that we consider to be of particular importance to companies in various sectors of the economy at present or in the near future.

The overview differentiates according to type and jurisdictional basis of the respective obligation and encompasses:

  1. human rights and environmental due diligence in the supply chain;
  2. duties in connection with the reduction of greenhouse gases;
  3. due diligence duties with regard to waste disposal and recycling as well as
  4. disclosure and reporting duties.

Due to the complexity of the issues, we confine ourselves to highlighting the range of possible obligations and the requirements for corresponding compliance systems.

You can also find a summary on ESG compliance in this brochure (PDF).

Holger Hofmann

Holger Hofmann


Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 449
M +49 172 2458 375



Dr. Carsten Bormann<br/>M.Jur. (Oxford)

Dr. Carsten Bormann
M.Jur. (Oxford)

Junior PartnerAttorney

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 329
M +49 175 3282 907



I. Due diligence duties along the supply chain

Various regulatory requirements at national and European level oblige companies to check whether their supply chains observe human rights and sustainability-related obligations.

The background to this is that, lacking legislative competence, the German legislature is unable to exert any influence on foreign companies at the production site. German and European companies are therefore required to exert their influence abroad to ensure that certain production standards are met by foreign companies. The existing and planned regulations in this area impose public law due diligence obligations on the companies that fall within their scope of application.

The relevant regulations cover the entire supply chain, such as the German Supply Chain Due Diligence Act [Lieferkettensorgfaltspflichtengesetz, LkSG], and certain particularly high-risk areas, such as the EU Conflict Minerals Regulation.

II. Obligations in connection with the reduction of greenhouse gases

A central lever for achieving the sustainability goals is the reduction of greenhouse gas emissions.

In the EU, companies are held to account in this respect through the existing emissions trading system in particular and, in future, also through the so-called Carbon Border Adjustment Mechanism (CBAM).

III. Due diligence obligations with regard to waste disposal and recycling

Companies are required to reduce the waste generated by them while producing goods, placing them on the market and after the end of their service life.

There are also due diligence obligations to protect valuable resources. The central goal is to gradually stop linear processes and, through organisation and technical progress, to establish a circular economy.

IV. Disclosure and reporting obligations

Another important building block in the European sustainability transformation is disclosure and reporting obligations with regard to certain environmental, social and governance information.

The aim is to create transparency on the key aspects of relevance to sustainability for companies, stakeholders and ultimately the public as a whole.

Your contact

Compliance Practice Group

Effective prevention is crucial for effective compliance - and an efficient internal compliance organisation is of increasing importance for assessing the penalties for legal violations.

Our compliance group, which has received multiple nominations for the JUVE Award, comprises experts who are leaders in their respective areas of consulting: antitrust law, export control & sanctions, money laundering, anti-corruption, corporate governance, employment law and data protection. With our many years of tried and tested cooperation, we address all the relevant topics and interfaces.

Further information on the Practice Group