ESG Report: Informative overview for companies

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 Who 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:

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:

ESG describes the three areas that are measured, evaluated and disclosed Werden:

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.

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.

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:

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.

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.

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.

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.

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 ESG report creation software allows you to:

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.

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:

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.

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