esg report: informative overview for companies
With an ESG report, companies record their efforts in terms of the environment, society and corporate governance. Some do this voluntarily, for others the preparation of the report is already mandatory - something that will affect all capital market-oriented companies in the future.
But even if you are not affected by this obligation, you can still benefit from disclosing this information. The associated key figures give you valuable information about previously undiscovered opportunities, help you avoid risks and strengthen your reputation.
What is an ESG report?
The EU has set itself the goal of becoming climate neutral by 2050. The European Green Deal includes various measures to achieve this. EU taxonomy serves as a set of rules that assesses the sustainability of companies’ economic activities.
There is also the CSRD (Corporate Sustainability Reporting Directive), a standard on what a company must report in its annual report and the ESRS (European Sustainable Reporting Standard), which defines like this report looks like.
Both CSRD and EU Taxonomy contain certain criteria that are to be ESG reporting recorded and evaluated. For this purpose, both financial, but also non-financial indicators taken into account – the aim is to gradually bring sustainability reporting onto a par with financial reporting.
ESG describes the three areas that are measured, evaluated and disclosed Werden:
ESG reporting requirement: Who is affected?
So far, the CSR reporting obligation applies to capital market-oriented companies with more than 500 employees and for fund companies, banks and insurance companies (even without capital market orientation) – if they have a Sales of more than 40 million euros or a balance sheet total of more than 20 million euros to generate.
obligation from 2025
From January 2025, this will also affect (retroactively for 2024) large limited liability companies in the EUthat meet two of these three factors:
obligation from 2026
From 2026 (retroactively for 2025), small and medium businesses present an ESG report if they
Tip: It is advisable to start implementing this as early as possible. It is also worthwhile to voluntarily prepare an ESG report.
What criteria must be included in the report?
An ESG report includes over 70 key figures that are distributed across sustainable, social and corporate governance factors. However, you do not have to cover all of these, but rather limit yourself to the values that are relevant to your company.
In the course of a materiality analysis, you will find out in advance which points are important for you.
The materiality analysis forms the basis of the ESG report. It identifies Risks,
opportunities and adjustments necessary – both at the beginning and at regular intervals.
We are happy to take over the materiality analysis for you give you an insight
about what kind of relevant to your ESG report.
To give you a little insight in advance: Basically, the three core areas include the following points, among others.
Key areas of ESG reporting
Environment: Measures for the benefit of the environment
The majority of the indicators deal with the question of a company's environmentally conscious behavior. They therefore include factors such as:
Social: social efforts of the company
This area refers to social aspirations along the entire value chain.
Factors that play a role in these key figures include:
Governance: Behavior of Corporate Management
Here you record topics related to the management and control of the company. Is it fair, social and in accordance with the guidelines? This is measured by key figures on the following topics:
Find out more about determining key figures for the EU taxonomy using a prototype from Energie Steiermark Green Power GmbH.
Objectives of the introduction of sustainable reporting
In principle, ESG reporting is the result of the EU’s European Green Deal plan, which aims to EU climate neutral Intermediate goals along the way include:
Increasing transparency
Disclosing your environmental, social and governance activities provides valuable information to outsiders. Investors, consumers, business partners and other stakeholders can use it to make better decisions.
ESG report as an incentive for improvements
Companies that make their efforts public are usually encouraged to improve even further, thereby developing business models that are more sustainable in the long term and in the interests of all stakeholders.
promoting a more sustainable economy
By introducing the obligation to produce an ESG report, companies are becoming an active part of the sustainable transformation of the economy. The measurability of the individual factors makes this clear and increases understanding.
Opportunities and Benefits of ESG Reporting
Not all companies are yet required to do so, but many still voluntarily implement such a report - and benefit from it. Because the ESG report is not only a step forward for the community, but also for your business concerns.
improving reputation
Sustainability, social aspirations and good corporate ethics have become a priority for many people. decisive criterionKeeping this transparent and using concrete factors to demonstrate that you want to improve will benefit you here.
Potential customers, employees or partners often decide on the basis of whether to work together.
Keeping up with competitors
Imagine your competition is one step ahead of you - and unlike you, they can present an ESG report. In the worst case, this could be the deciding factor that allows your competitors to overtake you.
Evaluation of the core figures as an indication of greater economic efficiency
An analysis of your standing provides insight into undiscovered opportunities and provides assistance in Risk assessment If evaluated correctly, the key figures can be decisive for the development of new business models or an improvement of the existing one.
In short, it is worth seeing the preparation of such a report as an opportunity to take responsibility and benefit from it in the long term from an economic point of view.
ARE YOU CURIOUS?
Risks, Challenges and Pitfalls
The fact that ESG reporting brings with it many opportunities does not mean that there are no hurdles. Like everything new, this change also presents certain challenges:
Understanding and evaluating key figures
Data collection for the sustainability report differs from traditional financial reporting, you must familiarize yourself with many new terms and an set of key figures Understanding them is not enough, because you will only get the full potential of the ESG report if you can evaluate them accordingly and draw conclusions from them.
Our solution: The best thing to do is to complete a training course that will help you gain understanding and provide you with the important information.
Compliance with legal aspects of the ESG report
Conversion and implementation are complex, especially because you have many regulations and frameworks underlie.
Our solution: Hire a specialist or use an external service provider who is familiar with the subject matter. Alternatively, appropriate software that complies with current standards and guidelines can be helpful. Together with training, you will also be well prepared.
Find Compatible Software
There are also questions about technological requirements, because the software used to create the ESG report should be compatible with your existing systems. What's more, it should have appropriate connections so that data can be transferred automatically.
Our solution: Get detailed advice and choose software that suits your way of working.
implementation using software
The many data-driven key figures are almost impossible to manage without a tool. Accordingly, there are many providers on the market who can help you create your ESG report.
When choosing the right software, it is important that it meets your requirements and makes the creation of the report as uncomplicated as possible.
These functions have proven to be useful:
We at INSIRE, for example, work with the SAP Sustainability Control Tower (SCT)This complies with all legal and other relevant industry-specific requirements.
This software for creating the ESG report enables you
Thanks to the uniform presentation, the creation of your report is made easier and will become a routine part of your work in the long term.
SAP Sustainability Control Tower (SCT) could be the right tool for ESG report creation be for you?
Please feel free to contact us without obligation and we will find out together which applications are best for you
make sense – and will be happy to implement them for you upon request.
ESG reporting: collaboration with external consultants
For many companies, the introduction of the processes and tools associated with the report is initially a huge stress factor. In order to bring some order to the complex topic and to get an initial overview, we recommend consulting an expert. This will help you in the long term to make the implementation a permanent part of your work structure.
INSIRE offers you various services to help you get started with your ESG reporting:
Do you have any questions or are you interested in an offer? Then please feel free to contact us without obligation via our Contact form our experts in the field of ESG reports.
Sources for further information:
Federation of German Industries: https://bdi.eu/themenfelder/steuern/esg-reporting (Status: 18.10.2024)
European Commission (English):https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
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FAQ – Frequently asked questions about ESG reporting
What legal ESG reporting requirements do we need to meet and how do we start the process?
Your company must first analyze the relevant laws and industry-specific standards to gain an understanding of the ESG reporting requirements. They depend on the size of the company, the industry and the market.
What systems or processes do we need to implement to effectively collect and manage ESG data?
Your company can benefit from an ESG software solution that enables systematic data collection and analysis. Establishing processes for regular data reviews and updates is essential to ensure the quality of ESG data.
Can an ESG software solution be seamlessly integrated into our system infrastructure to complement and optimize our processes?
An ESG software solution can be seamlessly integrated into your system infrastructure and can effectively complement and optimize your processes. This requires a detailed analysis of your existing system landscape in order to develop an implementation strategy that is right for you.
What measures do we need to take to ensure audit-proof documentation and recording of our sustainability data during the reporting process?
The use of ESG reporting software supports the audit-proof documentation of ESG data as it comprehensively integrates functions for precise data collection and governance management with the help of audit trails.
How do companies benefit from software-supported sustainability reporting?
Software-supported sustainability reporting optimizes efficiency through automation and pre-integrated standards. It enables real-time reporting and can lead to long-term cost reduction.