Currently, at LemonTree, we are in the process of preparatory work for the first voluntary sustainability report for the year 2025, in accordance with the CSRD (Corporate Sustainability Reporting Directive). One of the most important strategic actions undertaken to prepare such a report was the implementation of numerous initiatives across all three areas E, S and G. In the Governance area, numerous policies and codes have been implemented, which are required in the implementation of the company’s sustainable development strategy.
Over the past 34 years, since the signing of the United Nations Framework Convention on Climate Change, laws and regulations concerning sustainability (Environmental, Social and Governance) have become increasingly extensive and complex. This process began with general international declarations regarding environmental protection and the setting of global goals, and over time transformed into detailed national regulations imposing specific, measurable obligations on organizations meeting defined criteria.
Non-financial issues have ceased to be merely a corporate trend or an element of image strategy – they have become a real set of requirements, especially when environmental and social challenges began to directly impact economic stability.
Only recently has the pace of regulatory development in the area of sustainability begun to slow down, mainly due to the situation on the international political scene. An example of such a change is the EU Omnibus Simplification Package, which significantly reduced regulatory and administrative burdens related to non-financial reporting obligations. This package led to partial exemptions or postponements of sustainability reporting requirements for up to 80% of companies, which constitutes significant relief, particularly for smaller organizations.
Regardless of current changes, environmental, social and governance issues, as well as the creation and implementation of sustainable development strategies, may still remain a key factor determining how companies are regulated, financed and assessed by stakeholders and potential investors.
Companies that have a coherent sustainable development strategy, implemented policies and codes of responsible management, and conduct reporting in accordance with non-financial standards – even if they do so voluntarily – currently have significantly better prospects of obtaining bank financing. This results from the fact that financial institutions increasingly integrate environmental and social factors into their risk assessment processes and credit decisions. Banks are also subject to non-financial reporting obligations (including CSRD and ESRS) and climate risk management requirements, which leads them to prefer cooperation with entities that are transparent and responsibly manage their impact.
As a consequence, sustainable development is no longer solely a matter of marketing or empty declarations. It is an area concerning enforceable obligations, accountability, as well as the establishment of compliance standards and corporate governance.
In this article, I explain why the development and proper implementation of policies and codes relating to responsible business conduct is crucial for the functioning of a company, as well as why further postponement of this process may expose an organization to serious legal and business risks in the future.
As mentioned earlier, standards related to sustainable development initially functioned as so-called “soft law”. In practice, this meant that companies adopted policies or ethical codes voluntarily, guided mainly by reputation and investor expectations. Today, however, this is no longer the case – in the European Union these issues have been regulated by detailed, binding, generally applicable legal provisions.
The adoption of such legal acts as the CSRD directive or the SFDR regulation established specific standards and practices: from the disclosure of policies and processes, through reporting environmental, social and governance risks, to transparency requirements for financial market participants. As a result, companies can no longer freely shape their procedures or policies solely in order to present themselves in the best possible light – they must adapt them to applicable regulations and market practices.
The role of policies and codes from a legal perspective
Procedures, policies and codes related to responsible management have become a key tool enabling effective implementation of a sustainable development strategy. It is precisely these that help organizations meet regulatory requirements and collect data necessary for reliable reporting in accordance with regulations.
From a legal perspective, they perform several fundamental functions:
A standard package of policies and codes in the area of sustainable development includes, among others:
environmental policy,
anti-money laundering policy (AML),
codes of conduct for employees/business partners,
human rights policy,
labor rights policy,
diversity and inclusion policy,
whistleblowing policy,
personal data protection
It is crucial to tailor each document to the specifics of the organization, its operational activities, scale, value chain, size and industry. Only personalized documentation enables measurement of strategy effects and efficient reporting of results.
Policies and codes as a strategic asset
The assessment of non-financial policies and procedures as well as the degree of implementation of a sustainable development strategy is now becoming part of risk analysis conducted by stakeholders, including financing institutions and investors.
As a result, implementation of a sustainable development strategy – together with adequate policies and procedures – transforms into a real strategic asset, which:
increases the company’s credibility,
facilitates access to financing,
reduces transaction risks.
The lack of complete documentation or inconsistency of actions may result in identification of “red flags” in the due diligence process or weakening of the company’s negotiating position during transactions. In turn, professionally prepared documents and consistent implementation of principles of responsible management may become a source of competitive advantage.
Conclusion
Non-financial issues should be perceived as a permanent and fundamental change in the regulatory and business environment.
Effective implementation of a sustainable development strategy requires development of policies and codes that are detailed,
tailored to the realities of the organization and subject to actual operational supervision.
The greatest challenge remains ensuring compliance of actions with the adopted documents and ongoing monitoring of the implementation
of resulting obligations. At the same time, properly prepared and consistently applied documentation may significantly strengthen the company’s competitive position, minimizing risks, building stakeholder trust and supporting the long-term value of the enterprise.