ESG Sustainability Reporting
– Environmental, Social, and Governance –
The environment, people, society
Report on your company's sustainability
Have you started preparing for the changes to the ESG reporting standard? Sustainability reporting is coming under EU regulation, and more and more companies will be required to report on their sustainability. It makes sense to integrate sustainability reporting into financial reporting. At HSolutions, we can provide effective tools for this. How a company generates profit and the value it brings to the surrounding society through its operations have become just as important as generating profit alone. Responsible business practices can improve business performance. Sustainability encompasses the impact of business operations on the environment (Environmental), people (Social), and society (Governance). Corporate responsibility is becoming a fundamental requirement for business profitability and acceptability. In the future, companies must take responsibility into account in both their operations and their reporting. Business responsibility and the information it provides are becoming increasingly important to a company’s success.
Policy
ESG Reporting in Practice
Corporate responsibility requires clear goals and measures that can be quantified using key performance indicators. ESG reporting is a transparent way to report on these key performance indicators. Examples of ESG reporting metrics and areas for improvement by topic include:
Environment: Greenhouse gas emissions , water use, raw material sourcing, renewable energy
People: Diversity, equality, privacy and data security, health and safety
Society: Ethics , fair competition, corruption, and bribery. General standards and tools can be used when selecting ESG reporting metrics.
Corporate Social Responsibility
The financial statements must include a report on corporate responsibility
The principles of corporate social responsibility reporting largely follow the same principles as those of accounting:
The information in the corporate responsibility report must be material and up-to-date, comparable, and based on the assumption of going concern. If necessary, it may be verified by an external verifier.
The NFRD (Non-Financial Reporting Directive) in Finland:
Provisions on sustainability reporting are set forth in Chapter 3a of the Accounting Act under the heading “Report on Non-Financial Information.” The Accounting Act currently requires approximately 200 large Finnish companies to prepare sustainability reports. The requirement currently applies to banks and insurance companies, as well as companies listed on the main list of the stock exchange that employ an average of more than 500 people. In April 2021, the European Commission published a proposal for a directive known as the CRDS (Corporate
Sustainability Reporting Directive).
The key changes in the proposed directive compared to current legislation are:
o The reporting requirement will be extended to cover all large companies and all companies listed on the main list of the stock exchange
, excluding micro-sized companies
o Sustainability reporting will be subject to verification/audit
o The content requirements for sustainability reporting will be clarified
Reports must be submitted in a structured format
In phases starting as early as 2024, the CSRD will apply to:
o All publicly traded companies (excluding micro-companies)
Other large companies, provided that two-thirds of the criteria are met:
o Average number of employees is 250
o Net revenue is 40 million euros
o Balance sheet total is 20 million euros
o Insurance companies and credit institutions
o SME sector from 2026 onwards
Non-EU companies, if:
o Net revenue in the EU is at least 150 million euros and
o The company has a subsidiary or permanent establishment in the EU
Standards
Use standards and tools to help you, but focus on what matters
The UN Sustainable Development Goals (SDGs), adopted in 2015, currently serve as a key guide for sustainability. Corporate responsibility can be reported using various standards and tools that are constantly being updated and refined. These standards include the 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, companies’ day-to-day operations are influenced by legislative initiatives such as the EU Taxonomy, which is part of the EU’s Green Deal project.
The EU Taxonomy aims to determine whether a reporting company’s operations are sustainable and what proportion of its revenue, capital, and operations consists of activities that comply with the Taxonomy. The field of corporate responsibility is truly vast, but to navigate it effectively, it’s best to focus on the issues that are material to your company’s business. Materiality should be assessed based on the impact of your operations. So, in your sustainability work, focus on the areas where your company’s operations have the greatest impact. In other words, focus on what matters most.
HSolutions' solution
The right reporting tool helps you get started with sustainability work and makes it easier to monitor and report on your progress. The solution simplifies both conducting a corporate responsibility assessment and collecting relevant data. It also makes it easier to define the right KPIs and report on them. For our ESG solution, we have chosen the Wolters Kluwer CCH Tagetik ESG solution as our partner. Read more!
We have extensive experience with data platforms, integrations, and reporting, so we can help you define, integrate, and manage the data needed for sustainability reporting. We have developed the ESG Data Hub, which enables data to be collected centrally from various sources as early as the planning stage of sustainability reporting.