Protecting whistleblowers as a key element of implementing ESG principles 

This article is a guest post from the Polish law firm Gras i Wspólnicy, a Whistlelink partner, exploring the essential role of whistleblower protection in ESG compliance.  

Whistleblowing regulation and ESG (Environmental, Social, and Governance) principles are increasingly intersecting in the realm of modern business management. Whistleblowers, or individuals who expose misconduct within organisations, play a crucial role in promoting transparency and accountability, which form the foundation of ESG. In an era of growing emphasis on sustainable development and ethical business practices, companies must not only focus on environmental and working conditions but also ensure a safe environment for reporting potential violations. 

Whistleblower protection and corporate governance 

Whistleblower protection within ESG primarily falls under the Corporate Governance (G) reporting area, specifically under the ESRS G1 standard for business conduct in ESG non-financial reporting. The CSRD (Corporate Sustainability Reporting Directive) and the Commission Delegated Regulation (EU) 2023/2772 supplementing this legislation explicitly state that companies must present their organisational culture, including whistleblower protection mechanisms. It is essential to outline the measures taken to implement internal reporting channels, policies for employee training and information, and whistleblower protection policies. High corporate culture will also ensure proper safeguards against retaliation and an appropriate follow-up procedure. Whistleblowers can disclose irregularities related to corporate governance, such as illegal activities, corruption, conflicts of interest, or abuse of power. 

Whistleblower protection and social issues 

In the realm of ESG reporting on Social (S) issues, there is also an element of whistleblower protection, as they play a key role in ensuring compliance with ethical standards, human rights standards, and labour laws. Their activity is particularly important for monitoring employer practices, employee relations, compliance with social standards, and anti-discrimination measures. Entities preparing ESG reports must disclose their actions to support whistleblowers and promote reporting of social issues. Whistleblower activity helps ensure a transparent and responsible working environment and facilitates the rapid identification of issues that could jeopardise an organisation’s reputation. 

The Environmental (E) component also plays a fundamental role in the sustainability of companies, focusing on the environmental impact of corporate activities. Whistleblowers, under both Directive (EU) 2019/1937 on the protection of whistleblowers and national law, are entitled to report violations in this area, thereby contributing to improving companies‘ environmental standards. Including these actors in the ESG strategy promotes transparency and accountability in resource management and helps identify and eliminate environmentally harmful practices. Reporting covers aspects such as waste management, greenhouse gas emissions, energy efficiency, and sustainable sourcing of raw materials. 

Supporting whistleblowers for stronger ESG performance 

Whistleblowers thus play an indispensable role in promoting ethics and transparency in organisations. Their actions contribute to improving ESG standards and building trust with stakeholders. To effectively support whistleblowers, organisations need to invest in legal protections, create an open organisational culture, and implement policies that promote accountability. Ultimately, whistleblowers are key players in the move towards a more sustainable and responsible business world. 

This article is for informational purposes only and does not constitute legal advice. Legal status as of 13 November 2024. 

Author: Lawyer Aleksandra Kaminska.
Series editor: Attorney and partner Mateusz Grosicki.
Please visit the Graś i Wspólnicy website to find out more about their services.