Updated: Jan 23
Copyright: European Union
You might be used to ESG reporting (Environmental, Social, and Corporate Governance), but the new EU reporting requirements are a bit more complex. So what is it you need to know?
The significant changes are that:
Your sustainability reporting will sit alongside your financial reporting in your Annual Report.
More data needs to be included: organizations will need to include Scope 3 emissions and a greater scope of the company’s impact.
Your information will be audited.
A digital format of the data will be required.
So why do we need it?
The previous Non-Financial Reporting Initiative (NFRD) indicated that ESG had no financial relevance and needed to be trustworthy with reliable and extended data.
When?
This new EU legislation) will gradually be coming into play over the next few years.
FY’24: For all organisations that are already within the existing scope of the NFRD
FY’25: All “large” organisations—firms with a net turnover of €40 million or more, at least €20 million in assets and 250+ employees
Later: All listed companies, including listed small and medium-sized enterprises (SMEs) but with the exception of micro enterprises
What? Companies will need to disclose information concerning:
The Environment
Treatment of staff and approach to social matters
Human Rights
Anti-bribery and Corruption
Board Diversity
What is expected from me?
No need to panic. I assume you do not start from scratch. You have most likely done some reporting in previous years, and now is the time to step it up and take your sustainability commitment one step further. By doing this work now, you will ensure a smoother ride in the future.
So how do I start?
Depending on how much you have in place – it is always a good idea to start with your strategy.
1.) Strategy Your initial goals and objectives might need to be sharpened. Is your sustainability vision inspirational and integrated enough? Is your focus areas the right ones considering you should also include your whole value chain? Is it communicated?
Take a moment to assess this and ensure you focus on the correct issues. Then, when you start your reporting, you will most likely go through a risk assessment and better identify your weaknesses and strengths – revisit your strategy and align it with your climate work’s long-term KPIs.
2.) Reporting
With more complex reporting demands, you better set up a system that makes it easy. Maybe your existing financial reporting systems include ESG reporting; otherwise, there are many new services available up to date with current regulations. These software tools:
Make collecting data across markets easy.
Allow you to monitor the status of your KPIs in real time.
Provide graphs for communication.
Suggest activities to reach your goals.
Help you engage key people and follow up on tasks within the organization.
Create action plans and reports and lets you display data on the intranet and website.
Check out some software reporting tools: Worldfavor, Workiva, Stratsys, Envoria, Brightest
3.) Activation / Communication
Communication is about publicly setting your goals and intentions. These intentions will help you reach your goals – as a communication professional, I could list a million reasons why communication is essential. Make sure it is inspirational; show what works and what does not and highlight what can be learned from other affiliates and their Best Practices. Make it aspirational; what are you trying to achieve, and are all your colleagues aware; it is impossible to work towards something when it is not clearly communicated. You also need to help your value chain to understand what is expected from them – what is your Code of Conduct? How can they improve? Why not engage your suppliers in Scope 3 with the Climate Education Tool?
Take this opportunity to make sure your organization is fit for the future.
Elin Wibell
The other day I was talking to a sales contact for an up and coming CSR software company. Being a CSR consultant I have positively praised these companies for making our job easier and providing innovative solutions for corporations to do right. Their services range from audits of the supplier chains to employee engagement.
I was surprised when he referred to their software as a “CSR consultant killer”. It sounded like something a Swedish politician said in the beginning of the 90s. That internet was only a trend and that too would pass.
Not in sync with reality. Reality is that not one CSR consultant, or agency for that matter, is able to provide everything needed for a comprehensive CSR program.
The skills of an engineer do not often include the extensive knowledge of climate impact. A communications expert might not be skilled with the technological knowledge to analyze a supply chain. Or a packaging innovator might not be aware of the UN sustainable development goals.
You get the point: Let experts be experts. The role of a CSR consultant is to create change with the resources necessary. To be able to create a strategy in line with the corporation and the brand and to understand the resources available and what to take into consideration. Create a team and the resources to make a solid impact. But don’t fool yourself to believe that one system or one consultant can help you with everything.
The beauty of implementing sustainability in an organisation is the collaboration needed. That all the departments, employee ambassadors and systems need to work together. That is how you create the best CSR program there is.
So a shout out to all fantastic CSR softwares and changemakers out there: Keep up your good work!
Photo by Tingey Injury Law Firm on Unsplash
- Elin Wibell
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