||RARENA Dr. Ralf Resch Sustainability Consulting|
Through various initiatives like "Financing Sustainable Growth", "Green New Deal" and "Build Back Better" the EU sets out measures to achieve the following objectives:
This shall be achieved by higher requirements for transparent communication of relevant, comparable and reliable sustainability information and the "merger" of financial and nonfinancial reporting. This complies with requirements from investors, but also from the civil society. After already large enterprises had to report about such "nonfinancial aspects" of their business activities, this circle is now enlarged.. Enterprises with balance sheet total >€20mn, net turnover >€40mn and employees >250 as well as all (also smaller) listed companies will be affected over time.
This ESG reporting has to be part of the annual report and financial and nonfinancial (ESG) aspects and KPIs need to have a similar level of assurance. A declaration according to EU Taxonomy Article 8, which of the enterprise's acitivities can be classified as sustainable, has to be provided as well.
So what is the scope of this ESG reporting?
Through a stakeholder and materiality analysis the relevant aspects of the following environmental subject areas have to be determined:
In addition, various aspects of social responsibility and of governance have to be specified, e.g.:
This meets the change of societal requirements towards enterprises. Stakeholders expects that enterprises act ethically responsible and don't deteriorate (instead ideally improve) the natural and societal means of livelihood which the use through their business activitites. It's not enough any more just to comply with laws that's just the"ethical baseline". Legitimacy ("licenso to operate") requires far better performance,,and room for manoeuvre ("license to grow") has to be earned instead of enforced. Thus, the widening of focus from just financial KPIs to a comprehensive consideration of the social and environmental aspects and stakeholder interests is essential to ensure the future of the enterprise. Nonfinancial KPIs have to be integrated in the everyday management of the enterprise, their communication to stakeholders demonstrates transparency and openness to feedback.
In this sense, CSRD respectively ESRS can be regarded as instruments to structure, unify and disseminate this reporting.
How to best prepare for it?
A variety of frameworks like GRI, DNK, ISO 26000, CDP, Ecovadis and more already contain the largest part of the required reporting aspects. Thus, CSRD is only seemingly new. We have longterm experience with the mentioned frameworks and can support you with your sustainability reporting.
A meaningful reporting about the effects of your business activities to society and environment conveys accountability, responsibility and a future-proof enterprise orientation.
Start CSR reporting with conviction!