Sustainability

Concept and Meaning of Sustainability

The term “Sustainability” is a central concept in environmental law, commercial law, as well as in international case law, and describes the quality of an action that is viable in the long term and equally considers ecological, social, and economic factors. Legally, sustainability is becoming increasingly significant, as numerous regulations at the national, European, and international levels explicitly require sustainable actions.

Development and History of the Concept of Sustainability

The origin of the concept of sustainability lies in the forestry principle of the 18th century, stating that no more wood should be harvested than can regrow. Through international discussions, particularly since the Brundtland Report in 1987 (“Our Common Future”) and Agenda 21 of the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, sustainability became a global guiding principle.

In the legal context, sustainability today encompasses much more than environmental aspects: besides the protection of natural resources, the term also includes social justice and economic development.

Sustainability in German Law

Constitutional Anchoring

The German constitution does not explicitly mention the term sustainability, but obligations arise from the state objective defined in Article 20a of the Basic Law (GG):
“The state also protects, in responsibility for future generations, the natural foundations of life and animals […]”
Sustainability is thus indirectly recognized as a constitutional guiding principle.

Statutory Implementation

Environmental Law

A wide variety of laws contain regulations regarding sustainability, including:

• Federal Nature Conservation Act
• Circular Economy Act
• Energy and Climate Protection Law (e.g., Renewable Energy Act)

These regulations mandate resource conservation, environmentally sound production, and measures to preserve natural resources.

Commercial Law and Sustainability Reporting

The CSR Directive Implementation Act obligates large companies (§§ 289b-289e HGB) to non-financial reporting, e.g., on environmental matters, employee concerns, social issues, and combating corruption.
These reporting obligations highlight sustainability as a guiding principle of corporate actions and compel companies to disclose their sustainability measures and objectives in a structured manner.

Public Procurement Law

Public procurement integrates sustainability through § 97 (3) GWB and §§ 2, 34 VgV. Contracting authorities can and must consider social, environmental, and innovative criteria in procurement.

Sustainability in European Law

Contractual Foundations

The European Union has enshrined sustainability as a core principle in Article 3(3) of the Treaty on European Union (TEU) and Article 191 TFEU:

• Promotion of sustainable development of Europe based on balanced economic growth
• Environmental protection and sustainable management of natural resources

Legislation and Directives

Key European laws for sustainability include, among others:

• European Climate Law (Regulation (EU) 2021/1119)
• Directive on Corporate Sustainability Reporting (Corporate Sustainability Reporting Directive, CSRD)
• Taxonomy Regulation (EU) 2020/852, which classifies the sustainability of economic activities

These regulations make it more difficult to ignore sustainability requirements and have significant effects in German law.

Sustainability in International Law

Principles of International Law

Globally, the Agenda 2030 with its 17 Sustainable Development Goals (SDGs) particularly obligates the contracting states to act sustainably. Other international treaties include:

• Paris Climate Agreement
• Convention on Biological Diversity (CBD)

These agreements set standards and targets that are transposed into national and supranational law.

Soft Law Instruments and Voluntary Guidelines

In addition to binding treaties, there are numerous soft governance mechanisms (“soft law”), such as the OECD Guidelines for Multinational Enterprises, the principles of the UN Global Compact, or the ISO 26000 standard on social responsibility.

Key Legal Areas in the Field of Sustainability

Corporate Law and Corporate Governance

Companies are increasingly obligated to sustainable corporate governance through statutory requirements and compliance demands. Relevant concepts include due diligence in supply chains (e.g., Supply Chain Due Diligence Act), anti-greenwashing regulations, and the growing importance of sustainable investments (sustainable finance).

Environmental Law

Environmental law requires sustainability in the use of natural resources, the protection of biodiversity, emission reduction, the designation of protected areas, and the conduct of environmental impact assessments (EIA).

Labor Law and Human Rights

Sustainability includes the preservation of social standards, fair working conditions, and compliance with internationally recognized human rights. This includes, for example, regulations on minimum wages, working time protection, prohibition of child labor, and rules against discrimination.

Consumer Law

Consumer protection regulations promote sustainability through labeling obligations, take-back requirements for waste, and mandatory product requirements (Eco-design Directive, WEEE Directive).

Liability and Control of Sustainable Actions

Regulatory oversight, reporting obligations, and sanctions ensure the enforcement of sustainability requirements within companies and public administration. Violations may result in fines and compensation claims. Civil liability may also arise due to lack of sustainability, e.g., in cases of environmental pollution.

Outlook: Development of Sustainability in Law

Sustainability remains a dynamic legal concept whose importance continues to grow. National, European, and international regulations are increasingly introducing binding sustainability standards. Major future developments are expected in stronger institutional integration, extended due diligence obligations for companies, and the enforcement of binding social and environmental standards along global supply chains.

Literature

• Bunzel, Sustainable Development and the Law, 2021
• Birnstiel, Environmental Law and Sustainability, 2022
• Grohm, Sustainability Law in Germany and Europe, 2020

See also

• Environmental Law
• Sustainability Report
• Corporate Social Responsibility
• Sustainable Development Goals
• Supply Chain Due Diligence Act

Frequently Asked Questions

What legal obligations apply to companies in the area of sustainability?

Companies are increasingly confronted with national and European laws regarding sustainability. The most important regulations include the German Supply Chain Due Diligence Act (LkSG), the EU Taxonomy Regulation, and the Corporate Sustainability Reporting Directive (CSRD). According to these regulations, companies are required to observe human rights and environmental due diligence obligations in their supply chains, regularly prepare sustainability reports, and classify their business activities according to ecological criteria. Violations can result in fines and reputational damage. Implementing these obligations requires the establishment of risk management systems, documentation of relevant measures, and, if necessary, cooperation with suppliers and third parties.

To what extent is management liable for breaches of sustainability obligations?

The management may be personally liable under certain circumstances for breaches of the company’s sustainability obligations. According to the LkSG, management must ensure that adequate processes for complying with due diligence obligations exist. Omissions can result in civil liability for damages, fines, or even criminal liability. In particular, liability may arise from violations of organizational, supervisory, and reporting duties. In the case of publicly listed companies, the Stock Corporation Act expands responsibilities to ensure that sustainability aspects are included in corporate governance.

What legal provisions apply to the disclosure of sustainability data?

Companies in the European Union are subject to increasing obligations to disclose sustainability data (“Non-Financial Reporting”). The CSRD requires many large and listed companies to report in detail on environmental, social, and governance (ESG) issues in their annual reports. Reports must be externally audited and published in machine-readable form. Additionally, the EU Taxonomy requires companies to disclose to what extent their activities are environmentally sustainable. This is intended to increase the comparability and transparency of sustainability efforts.

What sanctions apply to violations of sustainability requirements?

If legal sustainability obligations are not met, companies face various sanctions. The Federal Office for Economic Affairs and Export Control (BAFA) may impose fines under the LkSG, issue public sanctions, or even exclude companies from public procurement. Additionally, affected parties may under certain conditions assert civil law claims against companies. Breaches of reporting obligations (e.g., incomplete or false reports under the CSRD) can also result in severe penalties.

What requirements apply to contracting partnerships with suppliers?

The LkSG and comparable European regulations require companies to take sustainability criteria into account when selecting and monitoring their suppliers. Contract clauses must be included obligating suppliers to comply with human rights and environmental standards. Companies must also regularly conduct audits, risk analyses, and training, as well as establish complaint procedures. If violations are detected, remedial actions or, ultimately, termination of the business relationship are required.

What role do international agreements and standards play in national law?

International agreements such as the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, or the Paris Climate Agreement significantly influence national sustainability legislation. National laws such as the LkSG or the CSRD often implement these standards as binding law and build upon them. Companies must therefore be familiar with and consider international standards, as these can result in direct or indirect legal obligations under national law.

Are there sector-specific differences in legal sustainability obligations?

Yes, certain sectors such as chemicals, textiles, or automotive are often subject to additional statutory and regulatory requirements due to their specific risk profiles. For example, strict requirements apply in the chemical industry under the REACH and CLP regulations concerning the handling of hazardous substances. The so-called Conflict Minerals Regulation particularly affects electronics and vehicle manufacturers. In addition, there are sector standards and industry-specific reporting obligations that impose further sustainability requirements alongside general regulations.