Scenario Analysis in the Context of ESG
October 18, 2023
ESG for Small and Medium-sized Enterprises: How to Get Started?
January 3, 2024
Basic information needed to prepare for the first ESG (CSRD and ESG are extensive topics that require thorough analysis and understanding. But what is important to know in a nutshell? Below, we present a brief outline of the most important steps that will help your company prepare for the first implementation of these significant practices.
Let’s start by reminding ourselves of the schedule that lies ahead for European companies in the context of upcoming changes in ESG reporting. These are important dates that will change the way companies communicate their sustainable development activities.
Which companies are required to prepare and publish non-financial reports?
The year 2025 will mark a turning point for large enterprises in Europe in terms of sustainable development reporting. Until now, only large publicly traded companies employing more than 500 employees had to disclose ESG information.
Starting from 01.01.2025, large enterprises that exceed two out of the following three criteria will also be subject to these requirements.:
- an average annual level of employment of 250 or more employees,
- a balance sheet total of more than 20 million euros,
- or an annual turnover exceeding 40 million euros.
Then from 01.01.2026, small and medium-sized enterprises listed on capital markets, meeting two out of three criteria, will also need to comply with ESG reporting:
- employment over 10 people,
- a balance sheet total of more than 350,000 euros,
- and an annual turnover above 700,000 euros.
Finally, from 01.01.2028, these requirements will be extended to non-European companies that achieve a net turnover of over 150 million euros in the European Union and have at least one subsidiary or branch there. It’s important to note that branches, except those listed on the stock exchange, will not have to prepare their own reports, provided the reporting is done at the group level. In such a case, the branch should refer to the group report.
Harmonogram raportowania ESG
What is CSRD and ESG Reporting and why are they important for your company?
CSRD (Corporate Sustainability Reporting Directive) is an EU directive aimed at increasing transparency in companies’ sustainable development activities. Meanwhile, ESG reporting is a tool for analyzing sustainable management and publishing non-financial aspects of a company’s activities. The goal of ESG reporting is to showcase company actions and increase transparency for investors and stakeholders, potentially improving company outcomes through measurable ESG criteria. Both CSRD and ESG play different but complementary roles in a company’s business strategy, with CSRD focusing on establishing reporting standards and ESG concentrating on the practical aspect of presenting company activities in environmental, social, and governance contexts.
How to implement CSRD and ESG in your company?
Implementing the CSRD directive and ESG reporting practices in a company requires an integrated and strategic approach
Point 1. and 2. Understanding CSRD and ESG requirements, and engagement of management and employees are key for the initial stages of implementation.
Point 3. and 4. Establishing processes and tools, and integrating ESG with business strategy are essential for operationalizing and harmonizing sustainability principles with the company’s objectives.
Points 5, 6 and 7: Communication and transparency, monitoring and evaluating effectiveness, and reporting and compliance ensure ongoing conformity and improvement of sustainable practices
Challenges and how to deal with them
And even if you adopt recommendations from the best and apply the most common practices, during the implementation of CSRD and ESG you will inevitably encounter challenges related to non-financial reporting. It is crucial to be aware of these obstacles to recognize, identify, and manage them early on. Our ESG reporting tool can be invaluable for such problems, offering support and facilitation in effectively addressing and overcoming challenges.
Our ESG data collection tool has been on the market since 2017 and has been validated by numerous companies, making managing and reporting data according to current CSRD and ESG requirements easier for our clients.