ESG Sustainability Reporting
- Environmental, Social, Governance -
Environment, people, society
Report on the sustainability of your business
Have you taken steps to prepare for the change in the ESG reporting standard? Sustainability reporting will become subject to EU regulation and more and more companies will be required to report on sustainability. It is therefore worth integrating sustainability reporting into financial reporting. We at HSolutions can provide the tools to do this. How a company generates profit and what value it brings to society has become just as important as pure profit. Responsible business practices have the potential to increase business performance. Responsibility encompasses the impact of business on the environment (Environmental), people (Social) and society (Governance). Corporate responsibility is becoming a fundamental business requirement for business profitability and acceptability. In the future, companies will have to take responsibility into account both in their operations and in their reporting. Business responsibility and the information it provides will play an increasingly important role in the success of a company.
Policy
ESG reporting in practice
Sustainability requires clear objectives and measures, which can be described in terms of sustainability indicators. ESG reporting is a transparent way to report on sustainability indicators. ESG reporting indicators and areas for improvement by theme could include:
Environment: greenhouse emissions, water use, raw material supply, renewable energy
People: diversity, equality, privacy and security, health and safety
Society: ethics, fair competition, corruption and bribery General standards and tools can be used to select ESG reporting indicators.
Sustainability
The financial statements must report on accountability
The principles of corporate responsibility reporting follow broadly the same principles as for accounting:
The information in the CSR report must be relevant and up-to-date, comparable and assuming business continuity. They may be certified by an external certifier if necessary.
NFRD (Non-Financial Report Directive) in Finland:
Responsibility reporting is provided for in Chapter 3a of the Accounting Act under the heading "Statement of non-financial information". The Accounting Act currently obliges around 200 large Finnish companies to prepare responsibility reporting. The requirement currently applies to banks and insurance companies, as well as to companies listed on the main list of the stock exchange, which employ on average more than 500 people. In April 2021, the EU Commission published a proposal for a directive, the so-called CRDS Directive (Corporate
Sustainability Reporting Directive).
The main changes of the proposed Directive compared to the current legislation are:
o The reporting obligation will be extended to all large companies and all companies on the main list of the stock exchange
, excluding micro-corporations
o Responsibility reporting will be subject to verification/audit
o The content requirements for responsibility reporting will be specified
Reporting should be produced in a structured format
Gradually, starting as early as 2024, the CSRD will apply:
o All listed companies (excluding micro companies)
Other large companies when 2/3 of the criteria are met:
o Average number of employees is 250
o Net turnover is 40 million euros
o Balance sheet total is 20 million euros
o Insurance companies and credit institutions
o SME sector from 2026 onwards
EU:Non-EU companies if:
o Net turnover in the EU is at least EUR 150 million and
o The company has a subsidiary or permanent establishment in the EU
Standards
Use standards and tools, but focus on the essentials
The UN's Sustainable Development Goals (SDGs), adopted in 2015, are currently the key driver for sustainability, which can be reported on through a range of standards and tools that are constantly evolving and developing. These standards include GRI (Global Reporting Initiative), TCFD (Task force on climate-related financial disclosures), SASB (Sustainability Accounting Standards Board) and NSRS (Nordic Sustainability Reporting Standard). In addition, legislative initiatives such as the EU Taxonomy, which is part of the EU Green Deal project, have an impact on the daily lives of companies.
The EU taxonomy seeks to determine whether the reporting company's activities are responsible and what proportion of its turnover, capital and operational activities are taxonomy-compliant. The field of corporate responsibility is very broad, but to grasp it, it is worth focusing on what is relevant to your company's business. Materiality should be assessed through the effectiveness of activities. So, in your responsibility work, focus on what your company's activities have the greatest impact on. So focus on what matters.
HSolutions solution
The right reporting tool will help you to start your sustainability work and make it easier to monitor and report on your work. The solution facilitates both the corporate responsibility mapping process and the collection of relevant data. It also makes it easier to define and report on the right KPIs. For the ESG solution, we have chosen to partner with Wolters Kluwer CCH Tagetik ESG solution. Read more!
With our long experience in data platforms, integrations and reporting, we can help you define, integrate and manage your sustainability reporting data. We have conceptualised the ESG Data Hub, which allows for the centralised collection of data from different data sources already at the design stage of sustainability reporting.