Understanding sustainability: Strategy, Data and Reporting

Practical guide for craft businesses

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INTRODUCTION

The Chambre des Métiers du Luxembourg, BDO Luxembourg and the Fédération des Artisans, in partnership with Enterprise Europe Network (EEN) Luxembourg, have developed this practical guide specifically for craft businesses. Its purpose is to help the craft sector prepare for the implementation of the Corporate Sustainability Reporting Directive (CSRD) in Luxembourg.

While most craft businesses are not directly subject to the CSRD’s reporting obligation, many will be indirectly affected. They will increasingly need to provide basic Environmental, Social and Governance (ESG) data to banks, insurance providers, and large companies they supply or subcontract to – and, in the near future, possibly as part of public procurement processes.

This guide aims to prepare companies for the future demands from business partners and customers, as well as to promote the adoption of sustainable practices in daily operations. It offers practical advice on understanding and applying the CSRD requirements, as well as drafting a sustainability report on a voluntary basis, which can also serve as a company management tool. The guide includes recommendations, strategies for optimising data collection, and information on government grants.

Amid today’s environmental and social challenges, it is crucial to shift economic models towards greater sustainability while respecting planetary limits. Sustainability reporting is a first step in this direction, enabling companies to collect and analyse ESG data to better understand their impacts and identify opportunities for improvement. This will facilitate the transition to more sustainable practices, strengthen long-term financial and commercial viability of craft businesses contributing to a more resilient and fairer future for all.

THEORETICAL PART

1 1UNDERSTANDING THE CSRD AND ITS SCOPE

1.1 FUNDAMENTAL

CONCEPTS

RELATING TO THE CSRD

1.1.1 Sustainable development

Sustainable development is a development approach that seeks to meet present needs without compromising the ability of future generations to meet their own. It is built on three fundamental pillars: environment , society, and economy. These dimensions must be balanced to ensure fair and lasting growth. Sustainable development involves managing natural resources responsibly, promoting social equity, and achieving stable economic progress. It is a global concept that informs policies and practices at all levels – from governments and businesses to individuals.

1.1.2 The Environmental, Social and Governance (ESG) criteria

ESG refers to the three criteria on which sustainable development for companies is based. It integrates sustainable and responsible practices in three key areas. For craft businesses, we present these pillars as follows:

Environmental:

Reducing the company’s ecological impact by optimising resource use, minimising waste, and adopting environmentally friendly practices such as using sustainable materials, improving energy efficiency and reducing fuel consumption.

Social:

Supporting the well-being of employees and local communities by improving working conditions, ensuring safety and security, and contributing positively to society.

Governance:

Ensuring transparent and ethical management practices, good corporate governance, compliance with regulations, responsible decision-making and effective risk management.

THE 3 PILLARS OF SUSTAINABLE DEVELOPMENT

Health, environment

Environmental Society

Preserve species diversity and natural and energy resources

SUSTAINABLE DEVELOPMENT

Production and consumption methods

Meet needs in health, education, housing, employment, exclusion prevention, fairness

Equality, solidarity

Economy

Create wealth and improve material living conditions

1.1.3 Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) is a voluntary approach whereby companies integrate social, environmental and economic considerations into their operations and interactions with stakeholders1 . Its aim is to improve the company’s overall performance while making a positive contribution to society and the environment. CSR is often seen as a way for companies to demonstrate their commitment to ethical business practices.

1.1.4 Sustainability / ESG / CSR strategy

A Sustainability strategy – also referred to as an ESG (Environmental, Social, Governance) or CSR (Corporate Social Responsibility) strategy – is increasingly important these days, even for Small and Medium Enterprises (SMEs). Numerous academic studies and reports from leading consultant companies have shown that companies which have structured sustainability practices and/or strategies tend to perform better financially over the long term than the average company, and to be more resilient in times of crisis or uncertainty, including start-ups and SMEs.

A Sustainability, ESG or CSR strategy is an overall action plan that incorporates environmental, social, and responsible governance practices while maintaining the company’s economic balance. It begins with assessing the company’s environmental and social impacts (materiality analysis), followed by the implementation of sustainability initiatives and objectives to be achieved within a defined period of time.

Such a strategy reduces the negative impacts, manages sustainability-related risks, enhances resilience, and creates opportunities for sustainable growth. It improves overall performance, also for SMEs, while making a positive contribution to society and the environment. It helps identify and manage financial, climate, and brand image risks, while reducing operational costs. It also plays a key role in attracting and retaining talent , as employees, especially the younger generation, prefer to work for responsible employers.

In addition, it facilitates market access and financing , as business partners and investors increasingly demand sustainability commitments. A solid Sustainability strategy also boosts the company’s reputation and strengthens stakeholder confidence – both essential for remaining competitive and ensuring sustainable growth.

By embedding the Sustainability strategy into its operations, a company can better prepare for upcoming challenges like resource scarcity and stricter environmental regulations. Implementing a strategy makes data collection, progress monitoring and CSRD-aligned reporting more efficient , while enhancing the company’s transparency and responsibility.

What is the difference between a Sustainability, ESG, and CSR strategy?

These terms are often used interchangeably, as they share common goals in terms of sustainability and responsibility. However, they differ slightly in focus and application. When we talk about a SUSTAINABILITY STRATEGY, we are referring to a company’s long-term plan to minimise its environmental and social impact while ensuring its economic viability

An ESG STRATEGY focuses on meeting a set of criteria used by investors to assess a company’s ethical impact and sustainable development practices.

Finally, a CSR STRATEGY is seen as the integration of social and environmental considerations into business activities and interactions with stakeholders.

1.1.5 Stakeholders

Stakeholders include all individuals or groups who have an interest in a company’s activities. They define the company’s sphere of influence in promoting a more sustainable and responsible approach to its activities.

Here are some examples of stakeholder groups:

Management

Employees

Shareholders

Customers

Suppliers and service providers

Regulators

Governments and public institutions

Local communities

Professional associations and sectoral bodies

Financial institutions and lenders

Investors

Educational institutions

Competitors

Media

Unions

NGOs

Identifying stakeholders is a key step in shaping the company’s sustainability approach. It supports effective risk and opportunity management, ensures the quality and relevance of the sustainability report, and builds trust in the company and its actions.

1.1.6 The value chain and the supply chain

The value chain comprises all activities required to create a final product or service 2 It encompasses all the activities that add value to a product, from design to marketing and after-sales service, with a focus on customer satisfaction and competitive advantage.

ELEMENTS OF THE VALUE CHAIN3

COMPANY INFRASTRUCTURE

HUMAN RESOURCES MANAGEMENT

RESEARCH AND DEVELOPMENT

PURCHASING

The supply chain focuses on the flow of goods, from the procurement of raw materials to the delivery of finished products, with the aim of improving efficiency and reducing costs.

The supply chain is operational and focused on logistics, while the value chain is strategic and customer-focused. The supply chain is an integral part of the value chain, but the latter covers a broader scope. In short, the supply chain transports the product; the value chain adds value to it

Imagine you run a bakery and produce bread. Your value chain includes everything from sourcing flour and ingredients, to production, packaging, and selling your bread. Each stage adds value to the final product — hence the term "value" chain.

See the value chain example on the next page:

2.

3. A model created in the 1980s by Michael Porter based on his

1.1.7 Double materiality assessment (DMA)

The double materiality assessment (DMA) enables us to assess a company’s impact on the environment and society (e.g., intensive water consumption/employee training) and, conversely, the impact or effects of the environment and society on the company’s financial performance (e.g., consumer satisfaction). A defining characteristic of the DMA is that it is not limited to the company’s own activities. It must also take into account its stakeholders, the value chain of upstream suppliers, and the company’s downstream customers for the goods and services it consumes and produces.

The DMA is a useful tool for gaining an overview of the company’s positive and negative impacts and their significance. It allows for prioritising issues with the greatest potential impact, optimising the use of human and financial resources. It can therefore be used as a tool to help refine the definition of a Sustainability strategy. In mandatory sustainability reporting, the DMA is a mandatory step that allows companies to select the material topics to include in the report.

DOUBLE MATERIALITY IN A NUTSHELL

Effect of the environment / society on the company

Effect of the company on the environment / society

ENVIRONMENT / SOCIETY

Financial materiality covers the financial impacts that ESG issues can have on a company’s performance, cash flow, and access to capital. The stakeholders most likely to ask questions related to this materiality are lenders, suppliers, company owners, etc.

From the point of view of impact materiality, a company will assess the influence it exerts on individuals and the environment. Stakeholders likely to inquire about this materiality include customers, employees, trade unions, etc.

A sustainability issue will be considered "material" when it has an important impact (I.) and/or an important risk (R.) and/or an important opportunity (O.).

IMPACT, RISK AND OPPORTUNITY (IRO)

COMPANY’S NEGATIVE OR POSITIVE IMPACT ON SOCIETY OR THE ENVIRONMENT

RISK FOR THE COMPANY THAT AFFECTS ITS FINANCIAL DEVELOPMENT

And / Or And / Or

OPPORTUNITY FOR THE COMPANY THAT AFFECTS ITS FINANCIAL DEVELOPMENT

OPPORTUNITIES FROM SUSTAINABLE PRACTICES

GAINING A COMPETITIVE EDGE

By adopting sustainable practices, companies can stand out from competitors, improve their image, and meet growing consumer demand for responsible products and services.

ATTRACTING AND RECRUITING TALENT

By emphasising their commitment to environmental and social values, employers are more likely to attract and retain skilled talent.

OPTIMISING COSTS

Sustainable practices can lead to savings in energy and resources, reducing operational costs in the long term.

ANTICIPATING REGULATORY CHANGES

Implementing changes ahead of regulatory deadlines and pressures helps avoid rushed actions and potential penalties, while ensuring competitiveness.

IMPROVING FINANCING CAPACITIES AND CONDITIONS

Companies demonstrating sustainable practices can attract investments more easily and benefit from better lending conditions. A wide range of grants is available for sustainable projects, easing the transition for companies.

INNOVATION AND GROWTH

Innovation and sustainability form a virtuous cycle where sustainable solutions drive innovation, strengthening the company’s competitiveness and resilience, and meeting growing consumer and regulatory expectations.

IDENTIFYING PRIORITY THEMES

Implementing sustainable practices helps identify priority areas, allowing the company to focus efforts on the most impactful themes, while boosting resilience and competitiveness.

MOTIVATING AND REWARDING EFFORTS

Recognising and celebrating efforts and progress in sustainability encourages ongoing commitment and pride among teams, while fostering a culture of continuous improvement within the company.

1.2 CSRD DIRECTIVE AND ITS ROLE IN EUROPEAN LEGISLATION

The European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) aims to improve and standardise ESG information communication. It seeks to meet the growing demand for transparent and comparable information on sustainable development. The directive supports the transition to a sustainable economy and the European Green Deal’s goal of climate neutrality in Europe by 2050. It reflects a growing awareness of the importance of sustainability for companies, consumers, and other stakeholders, and aims to integrate these issues into corporate strategy.

Adopted in November 2022, the directive replaces and extends the scope of the previous Non-Financial Reporting Directive (NFRD). Large listed companies, banks and insurance companies are required to publish reports on the policies and management processes they implement with regard to social responsibility and the treatment of employees, respect for human rights, the fight against corruption and bribery, and diversity on company boards. It required these companies to publish extra-financial reports on their ESG performance to improve transparency.

To meet their CSRD obligations, credit institutions, insurance and large listed companies are preparing sustainability reports and collecting ESG data from stakeholders to meet CSRD obligations in 2024. In order to gain a competitive advantage over time, it is recommended that SMEs and large companies, which are not subject to the reporting obligation, also start collecting data now to prepare for future requests or consider preparing a sustainability report based on voluntary standards4

Companies subject to the reporting obligation that fail to comply risk financial penalties, loss of contracts, reputational damage, and reduced competitiveness, as well as legal uncertainty.

A European legislative proposal known as the ‘Omnibus’, introduced in February 2025, aims to simplify the CSRD by narrowing its scope, with the aim of reducing the regulatory burden on businesses in relation to the CSRD, the European Taxonomy and the Corporate Sustainability Due Diligence Directive (CSDDD). In this way, the European Commission hopes to boost the competitiveness of European businesses. In addition, companies affected by the CSRD will have an extra two years to comply with the new requirements, allowing SMEs to prepare themselves better and start collecting their sustainability data now

This measure, if accepted, would make it possible to concentrate reporting efforts on companies that have a significant impact on the economy and the environment.

SUSTAINABLE INVESTMENTS

ROLE OF NON-FINANCIAL COMPANIES

CORPORATE SUSTAINABILITY REPORTING DIRECTIVE (CSRD)

Harmonised reporting of ESG information

Calculation of a company's sustainable economic activities

REPORTING OBLIGATION WHO IS AFFECTED?

CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE (CSDDD)

Sustainable and responsible behaviour of companies in their activities and in all of their worldwide value chains

1 2 3

The Corporate Sustainability Reporting Directive 6 (CSRD) requires certain companies to publish detailed reports on their sustainability performance, incorporating ESG aspects.

The European Taxonomy, based on a European regulation, is a classification system introduced by the European Commission that identifies economic activities considered environmentally sustainable for investment purposes. It is based on a set of criteria to be met in order to assess the sustainability of different economic activities, allowing them to be considered environmentally sustainable and thus "taxonomically aligned". An economic activity included in the EU taxonomy is defined as "eligible for taxonomy".

The activities covered by the Taxonomy are specifically selected as they account for a significant proportion of greenhouse gas emissions and are therefore expected to make a substantial contribution to the transition to a sustainable economy. The sectors concerned include:

Forestry

Manufacturing industry

Energy

Water supply and waste management

Environmental restoration

Transport

Construction and real estate

Information and communication technologies

Disaster risk management Services (e.g. repair and sale of second-hand equipment/products)

Companies subject to taxonomy regulations can use these criteria as a basis for structuring and drafting their sustainability reports. Traditional craft SMEs are not subject to the obligations of the European Taxonomy, but may choose to align voluntarily, just as with the CSRD, to prepare for requests from larger companies.

The European Corporate Sustainability Due Diligence Directive (CSDDD) imposes a due diligence obligation on large companies, requiring them to identify, prevent, and mitigate risks related to human rights, the environment, and health throughout their value chain. Companies must publicly report on their actions and the measures taken to meet their due diligence obligations, including implementing reparation mechanisms for victims of human rights violations or environmental damage. This directive aims to harmonise sustainability practices within the EU by creating a coherent and transparent regulatory framework. Information collected as part of the CSRD can be used to comply with the CSDDD.

In summary, the CSRD-aligned sustainability report provides a framework for harmonised reporting that supports the European Taxonomy and the responsibility of due diligence (CSDDD) by providing essential data for assessing the sustainability of business activities and compliance with due diligence requirements.

AIMS OF THE SUSTAINABILITY REPORTING

STANDARDISE SUSTAINABILITY INFORMATION

Reduce confusion, enhance comparability, and demonstrate the sustainability performance of companies.

PROMOTE THE TRANSITION TO A SUSTAINABLE ECONOMY

Motivate companies to understand their impacts and implement sustainable practices that support the shift towards a greener and socially responsible economy.

INCREASE TRANSPARENCY

Provide clear, understandable, and comparable sustainability data across companies to enable consumers, employees and investors to make informed decisions.

PREVENT GREENWASHING

Provide data in a standardised sustainability report to avoid misleading claims, strengthen credibility, and secure public trust.

ENSURE BETTER RISK MANAGEMENT AND ENHANCED RESILIENCE

Encourage companies to prepare for the risks posed by climate change, regulatory shifts, and evolving financial conditions (linked to their level of sustainability maturity) by requiring the identification, assessment, and management of environmental and societal risks.

1.3 SCOPE AND TIMETABLE7

Initially, the CSRD aimed to extend sustainability reporting obligations to around 55,000 European companies across all economic sectors. It required large companies to publish information on their ESG performance as from 2025. The so-called "stop-the-clock " directive adopted in April 2025 postpones the dates of application of certain sustainability reporting and due diligence (CSDDD) requirements.

The Omnibus proposal, presented in February 2025, aims to simplify the CSRD by reducing its scope. This proposal has been made to lighten the regulatory burden and boost the competitiveness of European businesses. If adopted, only large companies with more than 1,000 employees will be affected, reducing the number of companies subject to this obligation to around 11,000

If this proposed legislation is adopted by the European Parliament, it will still have to be transposed with the CSRD into the national law in Luxembourg.

GROUP 1:

Applies to all companies already subject to non-financial reporting requirements (NFRD)

GROUP 2: Large companies employing > 1,000 workers, meeting at least 1 of the 2 following criteria:

€50 million annual turnover

Total balance sheet of €25 million

GROUP 3: Applicable to listed SMEs, small noncomplex credit institutions and captive insurance and reinsurance companies

GROUP 4: Non-European companies: if annual turnover in the EU > €450 million

PUBLICATION YEAR FINANCIAL YEAR

1.4 IMPACTS FOR  SME s AND OTHER COMPANIES WITH NO DIRECT OBLIGATION

Although traditional craft SMEs and those with fewer than 1,000 employees are exempt from the obligation, they will likely need to provide structured sustainability information to their stakeholders, in compliance with the new standards 8 , particularly to banks and insurance companies they are customers of, as well as large companies they supply or subcontract . As a result, companies with no direct reporting obligation will be indirectly affected by the transparency requirements of their trading partners.

Companies required to publish sustainability reports and collect ESG data on their value chains will send questionnaires to all businesses they work with, including SMEs. Companies without reporting obligations will need to provide basic ESG data to avoid missing out on business opportunities or facing less favourable banking conditions

It is strongly recommended that companies whose business partners are subject to the CSRD reporting obligation, or who are involved in public procurement contracts, should familiarise themselves with these requirements and gradually integrate them into their business model. The pressure to provide ESG data will increase annually for SMEs not required to report.

To prepare, SMEs and large companies with fewer than 1,000 employees can focus on sustainability within their operations, managing environmental and social impacts, and meeting regulatory requirements, customers’ and stakeholders’ demands.

1.5 REPORTING STANDARDS

Under the CSRD, the companies concerned must include detailed information on sustainability risks and opportunities, as well as the impact of their activities on society and the environment in their reports9 . To assist companies in complying with the directive’s requirements, reporting standards have been developed under the aegis of the European Financial Reporting Advisory Group (EFRAG), which has been appointed as the technical advisor to the European Commission.

EFRAG is in charge of developing the reporting standards which define the information to be included in the report but does not define the layout or provide a standard template for companies to follow.

1.5.1 Standards for mandatory reporting - ESRS

The standards known as the European Sustainability Reporting Standards (ESRS) apply to all companies falling within the scope of the CSRD and therefore subject to the obligation to prepare a sustainability report in accordance with the CSRD. The ESRS in their current form were adopted by the European Commission in July 2023.

Following the Omnibus10 proposal, the European Commission has asked EFRAG to simplify these standards to reduce the mandatory data points and facilitate their practical application. EFRAG must provide its technical advice by 31 October 2025, so that the Commission can adopt the new ESRS before the end of 2026

The  current version of the ESRS  is divided in 12 themes corresponding to approximately 1,000 data points but companies are not obliged to respond to all of them . They can reduce this figure by focusing only on those points relevant to their specific sector and situation, using conditional and alternative data points. This can be done using the results of a double materiality assessment 11 , which allows companies to determine which data points are relevant to them, based on the impact of their activities on society and the environment, as well as the impact of these factors on their financial performance.

LES THÈMES PRINCIPAUX DES STANDARDS ESRS

CROSS-CUTTING STANDARDS

1 - GENERAL REQUIREMENTS

General reporting principles, guiding principles on materiality and double materiality.

ENVIRONMENTAL ESRS

SOCIAL ESRS

GOVERNANCE ESRS

2 - GENERAL DISCLOSURES

Business model, governance, risk management, double materiality.

TOPICAL STANDARDS

E1: Climate change (greenhouse gas emissions, decarbonisation strategies...).

E2: Pollution (pollution prevention of air, water and soil and management of substances of concern).

E3: Water and marine resources (withdrawals, consumption and water discharges).

E4: Biodiversity and ecosystems (impact and dependency on biodiversity and ecosystems).

E5: Resource use and circular economy (resource efficiency and waste management).

S1: Own workforce (human rights, diversity, fair remuneration, safety in the workplace…).

S2: Workers in the value chain (employee working conditions in the value chain).

S3: Affected communities (impact of the company’s activities on the local communities).

S4: Consumers and end-users (protection of consumer and customer rights).

G1: Business conduct (governance structure, ESG-related risk management and business ethics…).

1.5.2 Standards for voluntary reporting - VSME

The Voluntary Sustainability Reporting Standards for SMEs (VSMEs) have been developed to help micro, small, and medium-sized enterprises meet their stakeholders’ growing demands for sustainability information (e.g., banks, insurance companies, and large corporations) while improving the management of sustainability issues, without being directly subject to the strict requirements of the CSRD. With the Omnibus12 proposal, if it is accepted, these standards will also be used by large companies with fewer than 1,000 employees.

These voluntary standards provide a simplified framework for companies not subject to the CSRD obligations to structure and standardise their sustainability reports. The VSMEs are structured into a Basic Module and a Comprehensive Module:

The Basic Module is the recommended approach for SMEs new to ESG reporting. It covers the essential environmental and social information. This module is a mandatory prerequisite for SMEs wishing to complete the Comprehensive Module at a later stage.

The Comprehensive Module is recommended for companies that have already implemented ESG practices. It contains more detailed data on the policies in place and the company’s strategy, which may be requested by banks and large companies. This module must be submitted together with the Basic Module.

A company that chooses to report voluntarily on one or both modules must provide all the data requested in the respective module, if the subjects mentioned are applicable to the company or are not part of the confidential or sensitive subjects linked to the company’s activity.

Here is the  revised version of the VSMEs  dated December 2024, which, according to the Omnibus proposal, must be approved by the European Commission via a delegated act by the end of 2025.

On 27 May 2025, EFRAG published a first version of a digital model for VSMEs,  in Excel format,  to facilitate the preparation and adoption of the voluntary sustainability report. This model is available in English only.

TOPICS OF THE VOLUNTARY STANDARDS (VSME)13

BASIC MODULE

B1: Basis for preparation

B2: Practices, policies, and future initiatives for transitioning towards a more sustainable economy

B3: Energy and Greenhouse gas emissions

B4: Pollution of air, water, and soil

ENVIRONMENTAL METRICS

B5: Biodiversity

B6: Water

B7: Resource use, circular economy, and waste management

B8: Workforce - General characteristics

SOCIAL METRICS

GOVERNANCE METRICS

B9: Workforce – Health and safety

B10: Workforce – Remuneration, collective bargaining, and training

B11: Convictions and fines for corruption and bribery

COMPREHENSIVE MODULE

C1: Strategy: Business Model and Sustainability – Related Initiatives

C2: Description of practices, policies, and future initiatives for transitioning towards a more sustainable economy

ENVIRONMENTAL METRICS

SOCIAL METRICS

GOVERNANCE METRICS

C3: GHG reduction targets and climate transition

C4: Climate risks

C5: Additional (General) Workforce characteristics

C6: Additional own workforce information - Human rights policies and processes

C7: Severe negative human rights incidents

C8: Revenues from certain sectors and exclusion from the EU reference benchmarks

C9: Gender diversity ratio in the governance body

THE DIRECTIVE IN SUMMARY

DIRECTIVE

STANDARDS

European directive currently being revised to reduce the administrative burden on companies (Omnibus I), and to be transposed by the EU Member States.

ESRS FOR MANDATORY REPORTING

VSME FOR VOLUNTARY REPORTING

LEGAL OBLIGATIONS

Annual report with mandatory audit certifying the accuracy

STATUS AND UPCOMING CHANGES

INDICATORS

FIGURES

Adopted in 2023 but a revised and simplified version is expected by the end of 2025 and to be adopted by 31.12.2026

Voluntary report without audit obligation

Awaiting adoption by the European Commission before 31.12.2025

CURRENT CONTENT

More than 1,000 data points

However, not all companies are required to report on everything

Only +/- 30% of data points are numbers

Most are descriptions of processes, strategies, etc.

+/- 50 data points

+/- 30 data points

+/- 55% of data points are numbers

PART

2 2FROM DATA COLLECTION TO REPORTING PRACTICAL

2.1  SME:  ESG DATA TO MEET FUTURE REQUIREMENTS

Here is a sample of ESG information that may be requested by stakeholders (banks, insurance companies, large corporations, or others) on the basis of VSME standards. It is worth noting that certain initiatives for SMEs relating to this information may be eligible for government financial aid14

Environment

Carbon footprint and emission reduction targets

Conduct a carbon assessment and set GHG reduction targets; government subsidies are available for such initiatives14

Resource use, circular economy, and waste management

Provide information on resource use and circularity principles applied in the company. Compile a list of types and quantities of waste generated and outline waste management practices.

Water consumption

Keep and analyse water bills:

Water withdrawn: Amount drawn from a source for company use.

Water consumed: Amount used in the production of goods and services.

Air, water and soil pollution

If required, collect data on the pollutants emitted and quantities released into the air, water or soil during operations. An activity may present risks to the environment or personal safety, in which case it must be subject to a "Commodo-Incommodo" permit. This authorisation, which depends on the nature of the activity, sets out the conditions required to limit nuisances and guarantee the safety of the public, employees and neighbours.

A carbon assessment is a diagnostic tool used to measure the greenhouse gas (GHG) emissions generated by a company’s activities. It helps identify emission sources and supports the development of targeted reduction strategies.

Social

General characteristics of the workforce

List the total number of employees, broken down by gender, age, type of contract (permanent, temporary, apprenticeships, etc.), and working hours (full-time or part-time).

Health and safety

Prepare statistics on work-related accidents (frequency rate, severity rate), workrelated illnesses, risk analyses for the various workstations, and prevention measures put in place.

Training and development

Keep a register of training programmes followed, number of hours per employee, and career development initiatives.

Diversity and inclusion

List the company’s diversity policies and practices, and where applicable, the level of diversity in management positions, and initiatives to promote inclusion.

Governance

Basic company data

List of stakeholders15;

List of owned and leased sites; Description of the proposed products and services; List of countries in which the company is active.

Gender diversity in management

For companies with more than 50 employees, calculate the average gender ratio in governing bodies and in senior positions.

Governance practices

Sustainability strategy16;

List of written governance procedures, including codes of conduct and internal control policies.

Exposure to climate change risks

GOOD TO KNOW

The terms diversity and inclusion refer to a commitment to value individual differences (e.g. origin, gender, age, beliefs, abilities) and to create an environment where everyone feels accepted and supported, enabling full participation.

GOOD TO KNOW

The governing body refers to the group responsible for the management and strategic oversight of a company, –usually the board of directors or management. It makes key decisions, sets the direction of action, and ensures compliance with legislation and best practice.

Identify and describe the climate change-related risks to which the company is exposed, either in relation to the continuity of its activities or that could have a negative impact on its finances.

RECOMMENDATION

The Starter Kit RSE programme supports SMEs in integrating CSR principles by providing access to a dedicated software (Toolbox RSE) and support in the form of workshops will be provided by the INDRaccredited expert (Institut National pour le Développement durable et la Responsabilité sociale des entreprises). Companies are guided step by step to assess and improve their sustainability commitment. The procedure is fully reimbursed by the Ministry of the Economy.

2.2 DEFINING A SUSTAINABILITY STRATEGY

Before developing a Sustainability strategy, also called a CSR strategy, it is always a good idea to ensure that those responsible for overseeing the project are well-informed and adequately trained17. Once this has been done, the following key steps can support the formation of an effective and meaningful Sustainability strategy:

1

Initial assessment of activity

Carry out an initial assessment to identify the company’s ESG impacts. This can be done in detail via a DMA or via various free online self-assessment tools that can help to carry out this assessment in a less complex and more general way18 . Some companies take their inspiration from the UN’s sustainable development goals (SDGs), in order to identify their impact and areas for improvement.

2

Mobilising teams and employees

Mobilising and engaging teams and employees are key factors in the successful implementation of a sustainability strategy. For the strategy to be successful, it is important to explain the value and benefits of sustainability – for both the company and its employees – and involve the staff from the very beginning. Encouraging employee input and participation in the decision-making process will strengthen their commitment and sense of belonging to the company.

Commitment from management is essential when implementing a Sustainability strategy. However, employees can play a crucial role in internal lobbying. They can influence management by proposing concrete ideas, sharing examples of good practice from other companies, and demonstrating the potential benefits.

3

Setting clear, measurable objectives

Based on the information gathered in the previous points, define clear sustainability objectives that are: Specific, Measurable, Achievable, Relevant and Timebound (SMART). These objectives must be aligned with the company’s mission and values. For each of these objectives, establish key performance indicators (KPIs) to quantify and monitor progress as effectively as possible over time.

Key Performance Indicators (KPIs) are quantitative measures used to assess the effectiveness of a business, project, or strategy. They ease the monitoring of progress.

Integrating sustainability principles into internal processes

Once the objectives have been defined, sustainability principles should be integrated into the company’s day-to-day operations and internal processes. This can include setting up internal policies, training employees, adopting sustainable practices in day-to-day operations, etc.

Here are some examples of possible integration by theme:

a) Environmental initiatives

Reducing carbon emissions through energy-efficient machinery and equipment, renewable energy sources, waste management, reassessing supply sources, reducing energy consumption, etc.

Managing resources responsibly, such as the use of water, raw materials, and other natural resources. The company can take simple measures to reduce resource usage, such as replacing certain raw materials or adopting new technologies.

Implementing a recycling policy and waste reduction programmes that can lead to reduced operating costs.

b)

Social initiatives

Ensuring employee well-being through health, safety, training, and skills development programmes, while guaranteeing working conditions that comply with legal standards.

Promoting diversity and inclusion through policies designed to limit discrimination against minorities (origin, gender, age, beliefs, abilities, etc.).

c) Responsible governance

Adopting a code of conduct for employees that addresses challenges such as ethics, professional conduct towards colleagues, diversity and inclusion, environmental responsibility, IT security, and customer relations.

Formalising risk management by proactively identifying and managing ESG risks, such as environmental risks like extreme weather events (floods, severe storms) or reputational risks like the loss of customer trust due to compliance failure.

d)

Responsible supply chain

Evaluating suppliers and integrating ESG criteria into the selection and management where appropriate.

Collaborating with partners who are used to sustainable practices and share the company’s ESG values can provide support in achieving objectives.

Communicating and raising awareness internally and externally

Communicating transparently, clearly, and regularly about sustainability initiatives, both internally and externally, to demonstrate commitment, motivate employees, and build trust with customers and partners. This can be achieved through sustainability reports, newsletters, the company website, or dedicated events. Any form of greenwashing or social washing should be avoided! Directives such as the Green Claims Directive must be respected to ensure authentic and responsible communication. Failing to do so could harm the company’s credibility and damage the trust of its stakeholders.

GOOD TO KNOW

Social Washing is a communication strategy used by some companies to improve their image by highlighting social or ethical commitments that they exaggerate or do not really respect. The aim of this practice is to deceive consumers into believing that the company is actively defending social causes (equality, inclusion, human rights, etc.), whereas these commitments are often superficial or purely marketing in nature.

GOOD TO KNOW

Greenwashing is a communication strategy used by certain companies to present themselves as ecologically responsible, by exaggerating or falsifying their actions. This misleads consumers into believing that products or services are more environmentally friendly than they actually are.

Monitoring and evaluating the strategy

Progress should be tracked using the KPIs defined in step 3, and actions should be adjusted on the results obtained. Regular monitoring helps maintain commitment, demonstrate the benefits of the sustainability strategy and encourage continuous improvement.

RECOMMENDATION

If you want to have your commitment to sustainability recognised, a label can be a good way to promote and showcase your efforts. In Luxembourg, the INDR’s ESR – Entreprise Responsable – label provides a structure and methodology to assess a company’s maturity on the ESG pillars.

ACTION PLAN TO PREPARE THE SUSTAINABILITY REPORT

Whether it is a larger company required by the CSRD to publish a sustainability report in ESRS format or an SME choosing to do so voluntarily in accordance with the VSME, the steps in the action plan outlined below remain the same. Only their scope and scale will vary, depending on the size and specific characteristics of each company.

1 2 3

Staff training

Adequate19 training of the staff and management on the concepts and methods to be used guarantees regulatory compliance, employee commitment, continuous improvement of practices, enhances a company’s reputation, and ensures data accuracy and reliability.

Overview of current regulations

Identify the regulatory sustainability reporting requirements applicable to the company20. It is also advisable to check the regulations applicable to the company based on its size and sector, particularly in terms of employee health and safety, the environment, workers’ rights, toxic products, human rights, etc.

Define the sustainability strategy21

If your company has not yet defined a sustainability strategy, now is a good time to do so. If your company already has a strategy, we recommend a quick review to ensure it is consistent with the results of the above steps and to update it to align with the outcomes of step 4 and 5.

Identify key stakeholders22

The "comply or explain" principle allows a tolerance for the first 3 years in the event of incomplete data. The company must clearly explain why it was unable to collect the data, the efforts it has made to do so and how it intends to remedy the situation. 4 6 7 5

Map all the company’s activities, from the supply of raw materials to the delivery of finished products, identifying the individuals, groups, or organisations that are affected by or can influence the company’s activities.

Double Materiality Assessment23

Identify the sustainability challenges relevant to the company and the associated data points using a double materiality assessment.

Plan the data collection24

Develop an action plan to collect the necessary data and address the gaps identified during the overview of current regulations. Companies subject to the CSRD have a tolerance for the first 3 years in the event of incomplete data (comply or explain).

GOOD TO KNOW

Draft the sustainability report25

Draft and publish the sustainability report in accordance with the standards (ESRS or VSME) applicable to the company’s size.

2.3 IDENTIFYING THE VALUE CHAIN AND STAKEHOLDERS

2.3.1 Identify the value chain

The company identifies the value chain by breaking down its various activities to understand how each one contributes to creating value for its customers.

1

List basic activities

Procurement: The supplier selection process (raw materials, tools, and services needed to implement the products and services).

Production/Services: The stages involved in the manufacture or creation of artisan products/services.

Marketing and sales: The strategies used to promote and sell products (target market, distribution channels).

After-sales service: The support the company provides to customers after purchase (warranty, repairs, maintenance advice).

2

Identify support activities

Human resources management: Recruitment, training, and personnel management activities.

Technology management: Maintenance of tools and technologies used to improve production or company management.

Internal logistics: Stock management, transport of materials, organisation of the workspace.

Support services: Overall administrative, accounting, and strategic management.

Infrastructure: Property management, maintenance of premises (buildings, offices, workshops, warehouses), and any exterior areas on the company’s property.

Create a diagram of the value chain

The company can visually represent the value chain by following the diagram included in the theoretical section26 , to get an overview of the flows and interactions between activities. This can help identify a company’s weaknesses (e.g., dependence on a single supplier) and opportunities.

2.3.2 Identify and map stakeholders

Based on the value chain analysis, the company lists the most important stakeholders Determining each stage of the value chain ahead makes it easier to identify the key players who have an impact on the company or who are influenced by it. This stakeholder assessment must also take into account economic dependencies.

Classifying stakeholders in order of priority makes it easier to target key players and optimise interactions with them based on their influence and impact. This classification or mapping is carried out along two axes:

Axis of influence: Determine the influence that the stakeholder has on the company and the extent of the risk of not including this stakeholder in the double materiality assessment.

Axis of interest: Assess the importance the stakeholder attributes to sustainability matters.

2.4 CARRYING OUT THE DOUBLE MATERIALITY ASSESSMENT (DMA)

A prerequisite for carrying out a double materiality assessment is to have completed the identification and assessment of the company’s value chain and stakeholders, as described in the previous sections. Only then can the company move on to the steps outlined below:

Involve stakeholders

Stakeholder involvement is an important step in a DMA, as it allows the integration of their views on the company’s impact on the environment and society into the overall process. Different engagement approaches can be considered for different groups of stakeholders. Stakeholders can be invited to share feedback through standardised surveys, one-to-one interviews, workshops, or brainstorming sessions. The approach will depend on their priority classification27, the detail of the information to be requested, and the time that can be invested.

Well-prepared stakeholder engagement ensures uniform data collection.

2

Identify priority matters

The company identifies the ESG matters relevant to its future, based on the information and views gathered from internal and external stakeholders. These matters generally correspond to the priority themes for the sustainability strategy. It is advisable to adjust the sustainability strategy if these objectives are not in line with the matters identified as relevant and priorities at this stage of the DMA.

3

Impact, risk and opportunity assessment (IRO)

Based on the sustainability matters identified as relevant and prioritised with the information and data collected on the value chain, stakeholders and company objectives as defined in the Sustainability strategy, an assessment is made of the company’s positive and negative IMPACTS on the environment and society (impact materiality), as well as the financial RISKS and OPPORTUNITIES associated with these challenges (financial materiality).

A scale of 1 to 5 can be used to assess the importance of each IRO, with 1 indicating low importance and 5 indicating very high importance. This assessment should consider the scale, extent and likelihood of each IRO.

RECOMMENDATION

It is advisable to document the reasons for assessment-related decisions in writing to facilitate future exercises, ensure a smooth transition in the event of staff changes, and share them with the auditor if an audit of the sustainability report is required.

See the table of specific cases on the following page:

IMPACT MATERIALITY

How does the company’s activity impact the economy, the environment, or society?

Impact materiality includes the positive and negative impacts of the company’s activities, value chain, products, services, and commercial relationships. The assessment is based on the severity of the impact and, for a potential impact, its likelihood to occur in the short, medium, and long term. The table provides examples of how certain activities can impact the economy, the environment, or society.

GOVERNANCE

Selection/choice of suppliers can encourage or hinder local agriculture.

Inadequate management of building materials can lead to waste and financial loss.

Inefficient systems lead to high costs and delay the energy transition.

Choice of non-transparent suppliers may raise questions about the quality and origin of the products used.

Import of exotic flowers increases costs and dependence on international companies.

Lack of metal recycling practices increases the waste of valuable resources.

Inadequate management of hazardous products (oils, solvents) can lead to sanctions or regulatory problems.

Poor inventory or material management can increase costs and generate unnecessary waste.

Insufficient diversification of suppliers or local partnerships can increase costs and delivery times.

ENVIRONMENT

Significant production of non-recycled organic and plastic waste contributes to pollution.

Use of unsustainable materials has a high environmental impact.

Use of fossil fuels significantly emits greenhouse gases.

Use of products containing chemicals can harm the environment.

Long-distance transport of flowers leads to a significant carbon footprint.

Processing of metals emits fine particles and toxic fumes.

Improper handling of waste oils and solvents leads to water and soil pollution.

Use of uncertified wood and waste of natural resources enhances deforestation.

Activities lead to an accumulation of non-recycled frame and lens waste.

SOCIETY

Inadequate management of the cold chain and hygiene standards can put the customers’ health at risk.

Errors in work or inappropriate techniques can cause accidents or damage.

Outdated systems can lead to insufficient thermal comfort for customers.

Use of certain products may cause allergic reactions or harm the health of customers.

Limited supply of local and seasonal flowers reduces customer options.

Noise and heat may disturb the neighbourhood or endanger the health of employees.

Poor quality repairs can compromise road safety.

Inadequate protection and safety measures entail risks to the health of employees.

High prices can limit the access to visual care for low-income populations.

FINANCIAL MATERIALITY

How do economic, environmental and social challenges affect business performance?

Financial materiality concerns the risks and opportunities associated with ESG matters that could have a significant financial impact on the company. This assessment provides an understanding of how ESG factors can affect a company’s financial performance, reputation, and resilience. The table provides examples of how certain activities can be affected by economic, environmental or social factors/matters.

GOVERNANCE ENVIRONMENT

Volatility of raw material prices directly impacting the profitability of the activity.

Dependence on the economic cycles of the building affecting income stability.

Evolution of public support schemes influencing demand and margins.

Lack of digital strategy or automated management limiting development and optimisation of costs and activities.

High sensitivity to seasonal variations and logistical costs, weighing on margins.

Cultural trends for artisanal products influencing the demand.

Fluctuations in spare parts prices affecting profit margins.

Economic cycles influencing the demand for construction projects.

Necessary investments in optical equipment, offering a competitive advantage.

Compliance with emission and waste standards increasing operational costs.

Use of sustainable materials increasing costs but attracting an ecological clientele.

Regulatory pressure towards energy-efficient equipment requiring investment.

Organic cosmetics increasing costs but attracting a cautious customer base.

Local supply reducing transport costs and carbon footprint.

Use of recycled metals reducing costs and improving sustainability.

Management of hazardous waste requiring investment in accordance with standards.

Supply of sustainable materials increasing costs but creating market opportunities.

Recycling programmes reducing waste management costs and improving brand image.

SOCIETY

Consumer concerns about animal welfare influencing demand and sales.

Safety of construction sites limiting the costs associated with accidents.

Word of mouth and customer satisfaction playing a key role in the company’s growth.

Online customer feedback having a direct impact on reputation and turnover.

Involvement in local life and cultural events increasing visibility and customer loyalty.

Preservation of know-how attracting customers in search of authenticity.

Continuous training of employees improving the quality of services and customer satisfaction.

Accidents at work resulting in medical costs and loss of productivity.

Accessibility of visual care influencing customer loyalty.

Visualise the results of the analysis with a Double Materiality Matrix

The Double Materiality Matrix helps companies visualise the matters that affect both their financial performance and have an impact on the society and environment. It centralises the information gathered in the previous points in a schematic way to determine which matters need to be addressed as a priority in the company’s strategy. Each theme is ranked based on the score assigned at the previous step (between 0 and 5) on each of the axes of the matrix, the impact materiality axis and the financial materiality axis.

In our example matrix, the topics in the " Priority topics" square, in dark green in the top right-hand corner, will be those on which improvement efforts should focus first. The topics in the light green " Secondary topics" squares are not material for the company, and the topics in the remaining squares are not as essential. These topics should not be ignored, however, as they can gain in importance over time. It is advisable to keep a close eye on their development.

EXAMPLE OF A DOUBLE MATERIALITY MATRIX BY TOPIC

Below is the double materiality matrix based on the ESRS, inspired by the sustainability reporting of a well-known cleaning company. The larger circles represent the ESRS for which the most significant impacts have been identified. The closer the elements are to the top right-hand corner of this matrix, the more material they are for the company’s stakeholders as well as for the company itself.

DOUBLE MATERIALITY MATRIX FOR A CLEANING COMPANY

Another example is the simple materiality matrix, here that of a carpentry inspired by the sustainability matters identified by a French carpentry for their 2023 sustainability report. The simple materiality assessment was carried out by focusing on the ESG topics that are important to the company’s stakeholders, without considering the financial materiality. This can be a first step towards making it easier to understand and manage these issues, and then, in a second step, to move towards a double materiality assessment, which offers a more complete vision.

In this example, the most important strategic topics identified by the company are in the top righthand corner of the matrix, while the less important topics are in the bottom left-hand corner.

SIMPLE MATERIALITY MATRIX FOR A JOINERY COMPANY

2.5 PLANNING AND OPTIMISING THE DATA COLLECTION

It is essential to collect sustainability data to meet future sustainability demands and sustainability reporting requirements. The good news is that some of the necessary data already exists within the company and will simply need to be adjusted. Here are a few tips to organise a high-quality and efficient data collection.

DRAW UP A ROADMAP

Identify the type of data required, its sources, and the methods to be used to collect it.

2 5 3 4 1 6

LEARN LESSONS FROM THE EXPERIENCE

Each year, the company analyses the data and the lessons learned from the data collection to identify trends and opportunities for improving quality and efficiency in coming years.

INVOLVE DEPARTMENTS AND APPOINT DATA MANAGERS

If the size of your company requires it, and data is distributed throughout various departments, it is important to include key people in the data collection project and to designate individuals responsible for each piece of data.

USE THE DATA

As well as serving as a basis for preparing the sustainability report, the data and information collected can guide strategic decisions to improve and adapt the way the company operates, with the ultimate aim of improving economic and sustainability performance.

DIGITISE AND AUTOMATE DATA COLLECTION

Appropriate tools and technologies will lighten the administrative burden of data collection, storage and analysis. A growing number of ERP software packages include these functionalities, making it possible to automate a large part of the process, reducing errors and improving efficiency.

DRAFT THE REPORT

2.6 WRITING THE SUSTAINABILITY REPORT

Although there are standards such as the ESRS and VSME 28 which define the content structure of the sustainability report, there is no single model setting out the format and layout to be followed when writing a CSRD-compliant sustainability report. Companies can draw on existing sustainability reports written before the CSRD came into force, as well as reports published by companies that already comply with this format. This approach makes it possible to benefit from best practices and organise the report effectively.

At the time of finalising this practical guide, we were unable to find any CSRD-compliant sustainability reports for the period 2024 published by companies in the craft sectors. However, the following are examples of sustainability reports from companies in the craft sector for the period of 2023. Although they are not CSRD-compliant, they may nevertheless serve as inspiration. You can find their most recent report on their websites.

IN FRENCH

POST Luxembourg Group - Annual Report 2023

SNCF Voyageur - CSR and Transition Report 2023-2024

Guerlain – Sustainable development report 2022-2023

IN GERMAN

Deutsche Telekom - Corporate Responsibility Report 2023

Fielmann Group - Sustainability Report 2023

IN ENGLISH

Dussmann Group - Sustainability Report 2023

Kebony – Sustainability report 2023

Tony’s Chocolonely – Annual Fair report 2023

In addition, the CSRD introduces the obligation for the companies concerned to prepare their financial statements by including the sustainability report in the management report, in a specified electronic format. This includes the use of XHTML for human-readable reports and XBRL (eXtensible Business Reporting Language) tags for machine-readable data.

XBRL tagging makes it possible to standardise data, making it easier to analyse and compare. Sustainability reports must include XBRL tagging for all environmental, social, governance, and financial data, as well as qualitative descriptions, to ensure clarity, comparability, and transparency of information.

3.1 STAFF TRAINING

Training employees to understand sustainability matters is essential to ensure a company’s long-term viability and competitiveness. Raising awareness and educating the team on sustainable practices fosters a responsible and forward-thinking corporate culture. This not only helps meet regulatory requirements and customer expectations but also reduces operational costs and improves efficiency.

RECOMMENDATION

The Chambre des Métiers offers training in sustainable development and CSRD through its "Sustainability " catalogue. These free courses allow companies to benefit from a "Climate Competence" bonus of up to €135 per participant for each 8 hours of training.

3.2 RESOURCES TO

TAKE

ACTION

3.2.1 Tools to help prepare for the sustainability report

The " Deutscher Nachhaltigkeitskodex (DNK)" developed by the German Sustainable Development Council in 2011, offers a structured framework for companies of all sizes and sectors to report on sustainability in a clear and comparable way. For Luxembourg-based companies, the DNK can help by providing German-speakers with information and a proven methodology to prepare sustainability reports in line with European, and in particular CSRD, requirements.

The  Global Reporting Initiative (GRI) is a worldwide reference framework for sustainability reporting. It provides standards to help companies communicate clearly on their environmental, social and economic impacts. The GRI emphasises the materiality of impacts, i.e. the importance of matters according to their impacts on society and the planet. It promotes a company’s responsibility towards its stakeholders. Used in over 100 countries, the GRI standards are often combined with the ESRS standards to improve the comparability and transparency of non-financial reports (or disclosures).

The "Guide d’application des ESRS" (ESRS Application Guide) from the French Autorité des Normes Comptables outlines the disclosure requirements for companies. The October 2024 edition covers all ESRS standards and addresses practical questions.

The  Practical Guide to the SBTi  (Science-Based Targets initiative) supports businesses in setting science-based emissions reduction targets to address climate change. Aligning corporate strategy with the latest scientific data, companies contribute to limiting global warming while ensuring long-term, sustainable growth.

3.2.2 Assessing the business and moving towards sustainability

For beginners in sustainability who have limited time available, the  Resilience Check  can be a valuable starting point. This free online tool from the Chambre des Métiers introduces the basics of sustainable development and resilience in around two hours. Its practical, hands-on approach is linked to everyday business operations and helps users ask the right initial questions.

The  ESR Guide  by INDR is a reference tool in Luxembourg for companies wishing to integrate CSR into their operations. Available online and free of charge, this national programme offers a comprehensive and easy methodology to evaluate your company’s level in CSR. It covers 40 key CSR objectives, with practical information to support their implementation. In addition to helping companies assess their current CSR performance, the ESR programme provides a structured action plan for improvement. This tool is essential for businesses seeking to obtain the ESR - ENTERPRISE RESPONSABLE label, demonstrating their commitment to sustainable and ethical practices.

The  B Impact Assessment  (BIA) is a free online tool developed by B Lab to help companies measure and improve their social, environmental and governance performance. By answering a series of detailed questions, businesses can identify their strengths and areas for improvement. This tool allows companies to compare their performance with that of other similar companies and helps track progress over time, while discovering opportunities for improvement and best practice and serves as the first step towards the B Corp certification. Certified companies aspire to continually improve their impact. Their mission is to "Make Business a Force for Good". This needs to be enshrined in their articles of association.

3.2.3 Sources of inspiration for sustainability initiatives

The  Klimapakt fir Betriber  offers a variety of ideas for reducing environmental impact , presented in a catalogue of measures grouped by impact area or business sector. It was developed by Klima-Agence in collaboration with Luxinnovation and in consultation with various national players. This catalogue is regularly updated with new initiatives. Each measure is accompanied by a simplified factsheet for basic understanding of the proposed project, and a technical factsheet to help users get to the heart of the matter.

As part of the Craft Sector Climate Program, the eHandwierk Service of the Chambre des Métiers has a mission to guide and orient craft businesses in their energy transformation and the decarbonisation of their activities, particularly in the areas of energy savings, renewable energies, and mobility. Don’t hesitate to  book an appointment  with our advisors. This mission is delivered through:

individual and personalised advice in your business, explanation of government financial aid available to businesses and support in the necessary steps, organisation of workshops and conferences, provision of information, creating appropriate partner matching.

ISO Standards  can help structure and implement initiatives that lead to greater sustainability. The following standards may be of interest in this context:

ISO 9001 - Improve efficiency, increase quality, and reduce product defects

ISO 14001 - Reduce environmental impact, limit waste and adopt a sustainable approach

ISO 45001 - Occupational health and safety management systems

ISO 20400 - Responsible purchasing

ISO 26000 - Corporate social responsibility

ISO 59020 - Circular economy - Measurement and evaluation of circularity performance

ISO 59004 - Circular economy - Vocabulary, principles and recommendations for implementation

ISO 59010 - Circular economy - Recommendations for the transition of business models and value networks

The  Sustainable Development Goals  (SDGs) are a set of 17 global goals adopted in 2015 aimed at ending poverty, protecting the planet and ensuring prosperity for all by 2030. Each goal addresses global challenges such as climate change, inequality and peace. They encourage governments, businesses and individuals to work together towards a sustainable future. The SDGs can serve as a framework to structure your sustainability strategy.

IMS Luxembourg  (Inspiring More Sustainability) is a non-profit organisation and Luxembourg’s leading network dedicated to sustainable development for 20 years. Its mission is to inspire responsible strategies and practices among national economic players. IMS supports its members through collaborative and unifying projects, whilst promoting dialogue with stakeholders (private, public, non-profit). Membership provides access to expert knowledge, strengthens professional networks, and offers continuous support in implementing CSR strategies.

3.3 GOVERNMENT

FINANCIAL

AID AND TAX BENEFITS

RECOMMENDATION

The State can only grant financial support for initiatives for which there is no legal obligation. Be aware that you must not sign any purchase orders or make any advance payments before obtaining the approval from the ministry. This may put you at the risk of no longer being eligible and having your application for assistance rejected.

So don’t delay – take action and benefit from these funding opportunities while they’re still available!

Are you an SME and plan to produce a sustainability report?

Benefit from government financial aid for consultancy services for SMEs

This government scheme supports small and medium-sized enterprises (SMEs) by covering part of the consultancy costs provided by qualified and accredited external advisers. The aim is to improve the competitiveness and performance of SMEs. Specifically, the aid can be used to cover up to 50% of consultancy costs related to the preparation and drafting of a company’s first sustainability report

Applications must be submitted before a consultancy contract is signed or an advance payment is made. Submissions must be made electronically to the "Direction générale des classes moyennes" (Service des aides aux PME). Once approval is granted, the company can hire the external consultant and start the project.

Given the recent changes linked to the Omnibus proposed in February 2025 and still awaiting approval, it has not yet been decided whether companies with fewer than 1,000 employees can benefit from government financial aid for their first sustainability report.

Benefit from the Starter Kit RSE

The Starter Kit RSE is a support programme designed to help small and medium-sized enterprises (SMEs) integrate Corporate Social Responsibility (CSR) into their operations using appropriate tools to assess and provide dedicated support . CSR involves the voluntary integration of social and environmental concerns into a company’s activities and interactions with stakeholders.

The programme includes access to the "Toolbox RSE", a digital platform, which enables companies to analyse their value chain and carry out an initial personalised assessment. The tools are adapted to various sectors of the craft industry, and the analysis takes approximately 8 hours. Once the assessment has been carried out, support in the form of workshops will be provided (equivalent to 3.5 days of consultancy). This INDR-accredited expert helps to identify areas for improvement and to formulate a CSR approach tailored to your company.

State aid for the CSR Starter Kit covers the full cost of the programme. To participate, craft businesses must first contact the eHandwierk department at the Chambre des Métiers, which will complete and submit the aid application on their behalf.

Below is a non-exhaustive list of government grants and tax benefits, organised by area of

SOCIAL

TRAINING:

Initial training

Continuous training

DIVERSITY & INCLUSION:

Reintegration and disabilities

Equal opportunities

Human rights

AID TO PROMOTE APPRENTICESHIP

AID FOR RECRUITING UNEMPLOYED PEOPLE

AID FOR CONTINUOUS PROFESSIONAL TRAINING

TAX BENEFITS FOR RECRUITING AN UNEMPLOYED PERSON

ENVIRONMENTAL

MANUFACTURING PROCESSES:

Waste reduction

Circular economy

Eco-design

Reducing carbon footprint

EQUIPMENT AND INFRASTRUCTURE:

Energy efficiency Mobility

HEALTH & SAFETY:

Workplace safety

Psychosocial well-being

SUPPORT FOR DISABLED EMPLOYEES

AID FOR POSITIVE WORKPLACE ACTIONS

BACK-TO-WORK CONTRACT

KLIMABONUS

SME SUSTAINABILITY PACKAGE

FIT4SUSTAINABILITY / INNOVATION

AID FOR ENVIRONMENTAL PROTECTION INVESTMENTS

AID FOR SME CHARGING STATIONS

TAX BENEFITS FOR GLOBAL INVESTMENT OR LINKED TO DIGITAL TRANSFORMATION OR ECOLOGICAL AND ENERGY TRANSITION

NATURAL RESOURCES:

Renewable energy

Water savings

Responsible purchasing

Ecosystems and biodiversity

CALL FOR PHOTOVOLTAIC OR CHARGING INFRASTRUCTURE PROJECTS

TEMPORARY ENVIRONMENTAL IMPACT AID

AID FOR NATURAL ENVIRONMENT IMPROVEMENTS

AID AND GRANTS FOR EMISSION-FREE VEHICLES

SPECIAL AMORTIZATION

For detailed information on available support schemes, please refer to the following websites:  Section "Aides " – Chambre des Métiers

Section " Financial Aid " – Guichet.lu

RECOMMENDATION

You should also contact your local municipality to find out whether any additional local subsidies are available to support your efforts to improve your environmental and social impact.

Need advice on government aid?

Service eHandwierk

The eHandwierk department at the Chambre des Métiers can help you identify the most suitable government aid for your project and provide tailored guidance.

Service économique

For questions relating to tax benefits for environmental improvements, contact the Chambre des Métiers’ Economic Department

ehandwierk@cdm.lu

(+352) 42 67 67 — 505

economie@cdm.lu

(+352) 42 67 67 — 500

GLOSSARY

ABBREVIATIONS

CSRD (Corporate Sustainability Reporting Directive)

CSR (Corporate Social Responsibility)

CSDDD (Corporate Sustainability Due Diligence Directive)

DMA (Double Materiality Assessment)

DNSH (Do No Significant Harm)

EFRAG (European Financial Reporting Advisory Group)

ESG (Environmental, Social, and Governance)

ESRS (European Sustainability Reporting Standards)

EUDR / RDUE (European Regulation on Deforestation-free products)

IRO (Impacts, Risks and Opportunities)

KPIs (Key Performance Indicators)

NFRD (Non-Financial Reporting Directive)

SMART (Specific, Measurable, Achievable, Relevant, Time-bound)

VSME (Voluntary Sustainability Reporting Standards for SMEs)

XBRL (eXtensible Business Reporting Language)

XHTML (Extensible Hypertext Markup Language)

European directive on sustainability reporting.

Integration of social and environmental concerns into the company’s supply chain.

Directive introducing sustainability due diligence obligations through the value chain.

Double materiality assessment, allows the assessment of ESG impacts.

The principle of not causing significant damage to the environment and society.

European advisory group on financial and non-financial reporting.

Environmental, social and governance criteria.

European standards for sustainability reporting.

European regulation banning the marketing of products from deforested land.

Assessment of the potential effects, hazards and possibilities associated with a company’s activities.

Indicators used to measure performance against objectives.

European directive on non-financial reporting.

Criteria to set effective and trackable objectives.

Voluntary standards for sustainability reporting initially for unlisted micro, small and medium-sized enterprises, developed by EFRAG, to be extended to all companies without reporting obligations.

Markup language used for machine-readable communication of financial and sustainability data.

Markup language used to structure and present human-readable content on the web.

CONCEPTS

CARBON ASSESSMENT

CLIMATE NEUTRALITY

COMPLY OR EXPLAIN

DECARBONISATION

DEFORESTATION DIRECTIVE

DIVERSITY AND INCLUSION

DO NO SIGNIFICANT HARM (DNSH)

DOUBLE MATERIALITY

ESG (Environmental, Social, Governance)

ENVIRONMENTAL

SOCIAL

GOVERNANCE

A diagnostic tool used to measure the greenhouse gas (GHG) emissions generated by a company’s activities. It helps identify emission sources and implement reduction strategies.

The state of reducing net greenhouse gas emissions of an organisation, country or human activity to zero, typically by minimising emissions and balancing the remainder through actions such as carbon capture or investment in carbon offsetting projects (reforestation, renewable energy).

A reporting principle that requires companies either to meet sustainability reporting requirements or to explain why they do not. Non-compliance must be clearly justified and explained.

Decarbonisation involves reducing or eliminating greenhouse gas emissions, such as carbon dioxide, from human activities. This is done by using cleaner sources of energy, such as solar or wind power, and by improving the energy efficiency of buildings and transport. The aim is to combat climate change and protect our environment.

The EU Deforestation Directive (EUDR) aims to prevent the placement on the market of products that contribute to deforestation or forest degradation and their derivatives. The products concerned are beef, cocoa, coffee, palm oil, soy, wood and rubber. It requires companies to prove that their products do not come from recently deforested land, thereby reducing greenhouse gas emissions and the loss of biodiversity.

Commitment to value individual differences (e.g. origin, gender, age, beliefs, abilities) and create an environment where everyone feels accepted and supported, enabling full participation.

Under the ESRS standards, this means that a company’s activities must not cause significant harm to other environmental or social objectives when pursuing sustainable actions.

Analysis that consists of assessing both the impact of environmental and social factors on the company (financial materiality) and the impact of the company on these factors (impact materiality).

In the context of craft businesses, refers to the integration of sustainable and responsible practices in three key areas:

Reducing the company’s ecological impact by optimising resource use, minimising waste and adopting environmentally friendly practices, such as using sustainable materials, improving energy efficiency and reducing fuel consumption.

Supporting the well-being of employees and local communities by improving working conditions, ensuring safety and security, and positively contributing to society.

Implementing transparent and ethical management practices, ensuring good corporate governance, compliance with regulations, while implementing responsible decision-making and effective risk management.

EUROPEAN GREEN DEAL

EUROPEAN TAXONOMY

GOVERNING BODY

GREEN CLAIMS DIRECTIVE

GREENWASHING

KEY PERFORMANCE INDICATORS (KPIs)

STAKEHOLDERS

SOCIAL WASHING

VALUE CHAIN

The European Union’s strategy to make the EU’s economy sustainable by achieving climate neutrality by 2050.

Classification system introduced by the European Commission to identify environmentally sustainable economic activities.

Group responsible for the management and strategic oversight of a company, usually the board of directors or management. It makes key decisions, sets the direction of action and ensures compliance with legislation and best practice.

EU directive aimed at regulating environmental claims for products and services to combat greenwashing. It requires companies to provide reliable, comparable and verifiable information on the environmental impacts of their products, enabling consumers to make more sustainable choices.

A communication strategy used by certain companies to present themselves as ecologically responsible, by exaggerating or falsifying their actions. Misleading consumers into believing that products or services are more environmentally friendly than they actually are.

Quantitative measures used to assess the achievements of a company, project or strategy. They enable progress to be monitored.

Individuals or groups with an interest in a project or company, who can influence or be affected by the actions and decisions of the organisation (e.g. employees, customers, suppliers, banks, etc.).

Communication strategy used by some companies to improve their image by highlighting social or ethical commitments that they exaggerate or do not really respect. The aim of this practice is to deceive consumers into believing that the company is actively defending social causes (equality, inclusion, human rights, etc.), whereas these commitments are often superficial or purely marketing.

The full range of activities and processes by which a company creates value, from sourcing raw materials to delivering the final product or service.

BROCHURE PARTNERS

The  Chambre des Métiers  represents all companies in Luxembourg’s craft sector. This includes businesses in the food industry, fashion, health and hygiene, mechanical engineering, construction (structural work and finishing), technical building services, and the communication, multimedia, arts, and other miscellaneous sectors. In total, the craft sector accounts for 20% of national employment and 21% of all companies in the country.

The " Sustainable Handwierk " brand has been launched to centralise the Chambre des Métiers’ sustainability offering and to promote sustainable, ethical and socially responsible practices in the craft sector. The initiative helps craft companies by providing specialist services and advice on sustainability, energy and decarbonisation, while raising awareness of the importance of sustainability in the craft sector. By working with a range of stakeholders, Sustainable Handwierk aims to guide craft businesses towards a more sustainable future.

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Founded in 1950,  BDO Luxembourg  is one of the largest firms of chartered accountants, auditors and consultants in Luxembourg. They are specialised in audit, tax, accounting, payroll, financial engineering, consulting  (Sustainability Advisory Services),  investment fund services, HR consulting and IT solutions (BDO Technology). As part of the international BDO network in 166 countries, the firm provides access to global expertise and resources, helping clients achieve outstanding results through the provision of relevant commercial and financial advice.

The  Fédération des Artisans  (FDA) is the professional organisation representing Luxembourg’s craft sector. With over 30 trade federations under its umbrella, it brings together small and medium-sized craft businesses from a broad range of industries. Based in Luxembourg, the FDA advocates for the interests of craftspeople in dealings with political institutions, trade unions, and public institutions. Its mission is to inform and accompany its members, promote craftsmanship, and support business development.

The  Enterprise Europe Network  is the EU’s largest business support network in the areas of internationalisation, innovation, resilience, and sustainability. Co-financed by the European Commission and its member organisations, the network is represented in all EU regions and in over 67 countries worldwide with some 4,000 experts.

Every effort has been made to ensure the accuracy and clarity of the information contained in this guide.

The purpose of this publication is to provide craft professionals with a practical and accessible summary of the applicable rules and recommendations. It is intended as an overview and does not replace personalised advice for specific situations.

The Chambre des Métiers of the Grand Duchy of Luxembourg and its partners accept no liability for any consequences arising from the use of this guide.