Large listed companies are required to produce their first sustainability report this year. Next year, a new group of companies will be required to produce a sustainability report: large companies with more than €50 million in net revenue, more than €25 million on their balance sheet, and 250 or more employees.
Many companies are not yet actively preparing sustainability reports, as various studies show. Organizations are often too busy with their daily operations, don’t immediately see the benefit, or face obstacles to getting started. I also see that many companies struggle with the extensive requirements and guidelines of CSRD reporting. There’s a lot of commotion about the administrative burden this supposedly entails. But where should a company begin? And who should be involved?
The first step has often already been taken.
Almost every company already includes a risk assessment in its financial report. This often addresses topics relevant to sustainability reporting. Furthermore, every company has access to financial and operational data. For example, consider: do you use a lot of water, and is there enough available in your region? Or: where is the steel you purchase produced? Do you use chemicals, and have you already considered their impact on the environment? And what about your vehicles: what fuel do they use, and how much do you consume annually? Data is already being collected on all these topics. This existing information can be cleverly converted into an impact report. The challenge lies in the effective use and translation of this data into sustainability reports.
Who should be involved?
Sustainability touches every part of the company, from the shop floor to the boardroom. It is therefore essential that sustainability initiatives are not entrusted solely to the finance department or the sustainability coordinator. Assemble a multidisciplinary team, consisting of people from finance, IT, HR, and the operational departments. Embed the sustainability policy within the management and board of directors, and encourage employees to contribute ideas for sustainable solutions. An internal competition, challenging employees to contribute ideas for improvements, can provide additional motivation. A collaborative approach ensures the creation of a sustainable company through collaboration.
Make conscious choices and document them
In our conversations with companies, identifying the most impactful processes is usually straightforward. Most companies know exactly where the bottlenecks are. However, it’s important to clearly document the choices you make. You don’t have to describe everything in detail, as long as you clearly state your priorities.
For example, if a company uses a lot of steel, this is an important and impactful issue. Steel production requires a lot of energy and is often sourced from far away. This makes it a top priority to investigate. The carbon footprint of different types of steel is known, and the data is easily obtained from suppliers. Steel transport is also easy to calculate. This is the first step.
Set goals and take action
Step two is developing an action plan. Determine where within the company the necessary data can be found and translate this into concrete objectives. For example, your energy bill is known to the purchasing or finance department, and your energy supplier can calculate the carbon footprint of your energy use. If you’re still using gray energy, switching to green energy can be a simple step to drastically reduce your CO2 emissions. While this often entails additional costs, it’s important to look at the broader picture: where can you save energy? Is investing in solar panels or a heat pump profitable? The CSRD regulations also require an action plan in which you set goals across ten areas: the ESG (Environmental, Social, and Governance) goals.
Make monitoring easy
We use software that seamlessly integrates with existing business processes. This eliminates the need to manually collect and enter data into Excel every year. This software uses current, internationally recognized data and calculation tools to quickly and accurately calculate your carbon footprint. This allows you to monitor progress at any time and easily report with the push of a button. This not only prevents errors but also provides better insight into your results.
My advice is to start small by setting goals and monitoring key indicators, and gradually expand. This helps keep the process manageable and offers the opportunity to learn for future steps. Remember: a sustainable company isn’t a mandatory task you do reluctantly. It’s a progressive organization committed to a better future. And that forward-looking approach energizes everyone within the company.
Lenny van Klink
Co-founder of Salacia Solutions
