Next year, businesses across the globe will face new rules concerning ESG reporting (environmental, social and governance). These new rules will target increasing transparency around ESG and sustainability initiatives.
For the vast majority, this will involve gathering more granular data from across their value chains and operations to reveal the progress and impact of these initiatives. It is imperative for companies to invest in corporate sustainability training to ensure their teams are well-versed in gathering and interpreting the granular data required for comprehensive sustainability initiatives and reporting.
By this point, the Corporate Sustainability Reporting Directive will also come into action across Europe. The European Council overwhelmingly voted to adopt the CSRD, first proposed in April of 2021.
It aims to establish a shared framework for reporting non-financial data. The understanding is that by enforcing robust, thorough, and standardised reports, everyone in a business can make informed decisions regarding its ESG performance.
This means many businesses will have to take their ESG reporting and business sustainability measures very seriously. A lot of businesses are already voluntarily creating sustainability reports against self-selected parameters and on their timelines.
What do the new rules mean for businesses?
The brand-new ESG reporting policies will require robust ESG reporting on an audited and public basis. Businesses will have to disclose their impact on communities, employees, the planet, and consumers, whilst also describing their corporate governance performance and practices.
To generate reliable reports, businesses must reimagine how they are gathering and assessing their data. However, instead of looking at this as a burden, businesses are being encouraged to deem this an opportunity to get greater visibility into their activities. Getting this level of visibility will enable decision-makers to enhance their business and ESG performance whilst improving their long-term competitiveness.
The importance of transparency in ESG reporting
The new rules are being brought into action to increase transparency. Transparency is a fundamental component of good corporate governance. It acts to build essential relationships of trust between key partners in any organisation. This helps businesses to keep track of corporate efforts to meet sustainable social, environmental, and economic development.
Much research has revealed that businesses that publish their environmental data regularly and yearly can reap several advantages. These consist of getting ahead of regulation, protecting and enhancing their reputation, and improving their competitive advantage. Additionally, tracking and benchmarking progress, the chance to uncover opportunities and risks, and get access to lower costs of capital. Overall, transparency represents an opportunity to engage with stakeholders about social and environmental impact.
Summary
Companies around the world need to prepare for a more transparent future whereby they consistently report and disclose their sustainability efforts and progress. Transparency plays a key role in any sustainability report, and it has many business advantages. In saying that, businesses must take genuine action with environmental and social initiatives.
Our courses help businesses take this journey to learn how to embed sustainability into their DNA. You will gain the tools, practical insights, and expert guidance you require to take your next steps. The time to act on the climate emergency is now, and businesses have a big role to play in mitigating it.
