You can’t manage what you can’t measure; and you can’t improve what you can’t report on.
ESG reporting supports the increased demands of stakeholders for greater transparency around clear and trackable targets and substantiation of any claims that achieve ‘positive impact’. ESG Reporting translates often lofty and longer-term sustainability ambitions and commitments into real-time information underpinned by key issues identified by an organisation as crucial for decreasing ESG risks and maximising opportunities. Sustainability reporting helps avoid claims of greenwashing, empty promises and paying lip service to any sustainability commitments.
EU rules require large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. It modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability. Some non-EU companies will also have to report if they generate over EUR 150 million on the EU market.
The new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided. The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
The Corporate Sustainability Reporting Directive (CSRD) requires that from the 2025 financial year, large companies will be required to report on sustainability. Listed companies (with more than 500 employees) are already required to do so from the 2024 financial year. The aim of the CSRD is to drive investors towards sustainable investments, to achieve sustainable and inclusive growth.