ESG reporting – to whom does it apply? Find out more!
The CSRD directive covering ESG reporting came into force on January 5, 2023. Entrepreneurs ask who it already applies to and what information must be included in such documents. We encourage you to read it to learn detailed data on this topic.
To Whom does ESG reporting apply?
The need for non-financial reporting already applies to a narrow group of enterprises by the NFRD (NFRD) Directive. Nonfinancial Disclosure Reporting Directive). Until now, it included companies listed on the stock exchange, which were to meet other criteria (two out of three), such as:
- balance sheet total of PLN 85 million,
- net sales revenues of PLN 170 million,
- Wed. Number of people who were employed in the financial year: 500.
Why only the most significant entities? This was mainly due to the possibility of creating such lists and the considerable impact of these companies on the environment, primarily due to the generated revenues and the number of employees.
ESG reporting is an obligation for a larger group of companies
However, on January 5, 2023, the aforementioned CSRD directive came into force. With it, reporting obligations have been significantly extended, not only to listed companies. However, these are still large entities with net revenues exceeding PLN 170 million during the year, as well as assets and liabilities at the level of at least PLN 85 million. Ultimately, starting in 2026, ESG reporting will apply to all companies operating in the European Union. Therefore, it is worth taking an interest in creating them in advance so that you can plan the creation of an ESG strategy and report.
ESG report – what is it and what should it contain?
One of the challenges entrepreneurs are already facing is creating such a document and determining what information to include in the ESG report. The most important aspects are:
- governance – determining how the management board and management of the company manage issues related to climate risk, also in the context of the company’s mission,
- strategy – identification of risks and opportunities, both in the short and long term,
- risk management – how the company approaches climate risk management,
- objectives – a description of how the environmental impact is measured and what it takes to do so.
Notably, the above information resulting from the ESG strategy should be recorded in the following way:
- simple,
- transparent,
- objective,
- verifiable,
- honest.
Cost or profit? Purpose of creating an ESG report
It is worth remembering that ESG reporting is only the result of a strategy related to environmental, social, and corporate governance activities. Therefore, the goal is not declarations but actual actions that customers, stakeholders, and competitors will be able to verify. Therefore, it is worth taking steps today to show commitment to issues that build long-term value. It is also essential to collect the necessary data showing how the company’s activities impact the environment.
As you can see, creating ESG reports is an issue that will soon affect most companies, not just the largest ones. Therefore, it is worth taking action in this area now.
If you want to implement ESG activities in your company, contact us. We have ready-made solutions, especially for technology and retail entities, which can be implemented in their operations today and thus reap strategic benefits.
See also What is ESG.