In a changing regulatory environment, the surge in legislation highlights the need for reliable social and labor data for supply chain workers. Today, we take a look at the legislative development of ESG reporting in the European Union, the United States, the United Kingdom, and Australia, and explore the important role of SLCP tools in providing reliable and actionable social and labor data in this area as a reporting source.

The EU Business Sustainability Reporting Directive (CSRD) came into force in January 2023. The directive is a significant advance over the non-Financial Reporting Directive (NFRD), extending its coverage to more companies and broadening the scope of mandatory disclosures. While CSRD currently only applies to companies registered in the EU, it is expected to expand. From 2028, non-EU companies with a significant presence in the EU will have to report globally. By forcing companies to disclose information on a wide range of topics such as human rights, environmental impacts, labor conditions and climate change, CSRD ensures a comprehensive, transparent overview of their sustainability plans.

The UK government has historically been active in addressing social issues in the workplace, notably through the Modern Slavery Act 2015 (MSA). The legislation requires businesses with an annual turnover of more than £36m to disclose annually the measures they have taken to eliminate modern slavery in their operations and supply chains. The Act has a global reach, extending its jurisdiction beyond national borders to include companies operating in any part of the UK, regardless of where they are registered, as long as they meet specified turnover thresholds.

Similar to the UK, Australia's Modern Slavery Act 2018 requires a significant commitment to corporate transparency and accountability. The legislation requires entities that operate within Australia and generate collective income of more than $100 million to produce and file annual returns. These documents provide a comprehensive overview of the risks of modern slavery in local and global operations and supply chains, as well as detailed information on measures taken to mitigate these risks. By doing so, it not only complies with legal requirements, but also fosters a culture of ethical responsibility and supply chain transparency, demonstrating Australia's commitment to eliminating modern slavery in business practices.

With the political landscape divided, in March 2021, the U.S. Securities and Exchange Commission (SEC) took the bold step of creating a dedicated climate and ESG task force.

California is a leader in ESG legislation in the United States, with the state legislature recently passing the Climate Corporate Data Responsibility Act (SB 253) in September 2023. The Supply Chain Transparency Act (SB 657) is another notable piece of California legislation that addresses the global challenges of slavery and human trafficking.

New York State is moving forward with the proposed Fashion Sustainability and Social Responsibility Act (FSSAA), signaling that the fashion industry will take a broad approach to addressing sustainability and social responsibility issues.

These collective efforts at the federal and state levels reflect the growing commitment of the United States to strengthen regulation and oversight of ESG matters. As these initiatives evolve, they are expected to play a vital role in shaping corporate practices and fostering a more sustainable and responsible business environment.

The global shift to mandatory ESG reporting marks an important step in recognising the importance of addressing human rights, environmental and ethical governance risks in business operations. The evolution of regulatory frameworks and corporate strategies highlights the urgent need for transparency and accountability.

Reliable and actionable data is at the heart of credible ESG reporting and is essential for companies to disclose their environmental and social impact. However, the complexity of data collection and analysis presents challenges. Here, SLCP's Convergence Assessment Framework (CAF) can be a solution. Numerous stakeholders, including brands, manufacturers, civil society organizations and auditing firms, find CAF's data trustworthy. They provide standardized data and streamlined processes that not only help comply with regulations, but also help make effective decisions about responsible business practices.

As regulations and expectations around sustainability continue to evolve, adopting tools such as ESG reporting and leveraging the SLCP's Convergence Assessment Framework (CAF) has become critical for businesses to thrive in an era of increasing sustainability and accountability.