27.10.2023 Blog

Is a headlamp necessary for sustainability reporting?

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CSRD increases sustainability reporting requirements and improves comparability and transparency between companies
Reporting encourages companies to develop sustainable business practices and communicate their goals clearly
Materiality is at the core: companies should focus on sustainability topics that have the greatest impact on the business and stakeholders
Reporting must provide useful information to support decision-making by different stakeholder groups
Assessing sustainability factors is an ongoing process linked to business development
It is important to understand sustainability risks, opportunities, and their impact on financial performance
Sustainability should be integrated into the company’s strategy and everyday processes
Maintaining a clear overall picture and communicating a strong sustainability vision is essential

Preparations for mandatory sustainability reporting have been underway for some time now among companies falling under the scope of the Corporate Sustainability Reporting Directive (CSRD). Little by little, smaller companies are also getting their systems up and running. Standardized reporting improves the comparability of companies and increases transparency. The CSRD is expected to drive the development of sustainable business practices and operations, but at the very least, it requires companies to report on their sustainability goals and current status through a common, comparable framework.

The concept of materiality is at the heart of the Corporate Sustainability Reporting Directive (CSRD). Companies are guided to report specifically on those sustainability issues that are most material to their respective businesses and to focus on topics that, from the perspective of stakeholders, have significant impacts and represent key financial risks and opportunities for the company’s operations. In other words, the information must be useful, and stakeholders must be able to use it to assess the company’s future and make decisions based on that information. Investors, customers, current employees, and potential employees all require different types of information to support their decision-making.

Assessing materiality and the role of sustainability factors in business operations is not a one-time exercise, but rather a continuous process of business development. What is the significance of sustainability and responsibility in the company’s business model, strategy, and management?
What sustainability impacts, risks, and opportunities are identified, and how are they addressed through business development?
Which sustainability topics are material in terms of their impact on stakeholders?
How do material sustainability factors affect financial performance?
How is all of this communicated to different stakeholders?

Reporting jargon can easily obscure the common thread, and it’s easy to get lost in the fog. It’s worth grabbing a headlamp and seeing how sustainability issues can be integrated into your company’s existing processes. When navigating the jungle of data, it’s important to keep the big picture in mind and focus on the essential message your company conveys to stakeholders through reporting and communication. With a clear sustainability vision, you can tackle risks and discover new opportunities.

Are you concerned about reporting, or do you need support with it?

The Corporate Sustainability Reporting Directive will be implemented in phases. The first to report on their sustainability in accordance with the directive will be large companies and PIE entities of public interest, reporting on 2024 data in 2025; the following year, 2025, will see other large companies subject to accounting requirements, and the regulation will then be phased in for smaller companies. At the EU level, the directive affects tens of thousands of companies, and in Finland, hundreds—and through indirect effects, thousands.