2.2.

Governance

Corporate governance encompasses structures and processes within a company to make transparent decisions necessary to manage and monitor a company. Sustainable corporate governance requires that companies integrate environmental and social aspects in all areas of the company and take them into account in business decisions, including opportunity and risk assessment regarding climate risks and human rights and environmental standards along the supply chain. This includes, on the one hand, the establishment of processes to inform management and supervisory bodies about environmental and social issues and, on the other hand, the establishment of responsibilities and the role of management for the ongoing assessment and management of sustainability risks.

Investors and regulators are particularly interested in understanding how sustainability risks are considered by the company‘s management and supervisory bodies. As part of sustainability reporting, the handling of ESG risks and opportunities in the implementation of the corporate strategy and in investment decisions should therefore be disclosed. To anchor the topic of sustainability at management level and to achieve a commitment here, in the sense of sustainable corporate governance, remuneration and incentive systems also play an increasingly key role today. Ultimately, the goal is to achieve long-term sustainable value creation instead of short-term profit maximization.

2 First steps on the path to a green transformation