Sustainability Reporting and ESRS – Read Everything You Need to Know

In the previous part of the blog series, our expert Minna demonstrated what the new EU Sustainability Reporting (CSRD) means for your company. In this follow-up, we will delve deeper into what and how you need to report on your company’s sustainability actions. 

While the sustainability reporting CSRD tells us what, where and when is happening in the field of sustainability, the European Sustainability Standard (ESRS) tells us in concrete terms what companies should take into account in their sustainability report. 

The new ESRS will apply to all companies operating and doing business in the EU. Its goal is to create a uniform framework for companies’ sustainability reporting. 

ESRS in a Nutshell 

Currently, the ESRS consists of 12 different standards that companies use to report on their ESG activities. They are divided into two main groups: 

1. Cross-cutting standards 
2. Topical standards 

The first main group includes two standards: 

• ESRS 1 – General Requirements
  Defines the general principles and concepts of sustainability reporting. In addition, it provides guidance on conducting a double materiality assessment, which examines how ESG factors affect the company and, on the other hand, how the company affects ESG matters. 
• ESRS 2 – General Information
  Focuses on corporate governance, strategy, risk and opportunity management, as well as metrics and targets related to sustainability. 

The second main group consists of ten standards, which are divided into three themes: 

• Environment 
• Social factors 
• Governance 

Environmental Factors 

The ESRS’s environmental factors include five standards: 

• E1: Climate Change
  Deals with the impact of a company’s operations on climate change. For example, the standard provides guidelines for measuring the carbon footprint and assesses the company’s goals and plans for mitigating and adapting to climate change. 
• E2: Pollution
  Examines the company’s impact on environmental pollution, such as soil, water, and air pollution. 
• E3: Water and marine resources
  Focuses on water consumption and management, as well as the sustainable use of marine resources. 
• E4: Biodiversity and ecosystems
  Assess the company’s impact on biodiversity. In addition, it examines how the company supports, for example, the goals of the EU Biodiversity Strategy. 
• E5: Resource use and circular economy
  Guides the company to evaluate the use of materials throughout their life cycle and promote solutions that comply with the principles of the circular economy. 

Social Factors 

Four standards affect social factors: 

• S1: Own workforce
  Observes the company’s working conditions extensively, such as occupational health and safety, salary practices and social interaction. 
• S2: Value chain employees
  Requires reporting on all rights, risks and working conditions of people working in the company’s value chain. These include collective agreements, diversity, and privacy protection. 
• S3: Affected entities
  Obliges companies to identify all communities that affect their operations and to find out what kind of benefits and disadvantages the interaction between them can cause. 
• S4: Consumers and end-users
  Examines the security and privacy protection of a company’s products or services from the perspective of consumers and end users. 

Governance 

One of the standards affect governance: 

• G1: Doing Business 

This standard requires the company’s administration to report, for example: 

• Anti-corruption and anti-bribery measures and processes 
• Formation, monitoring and promotion of corporate culture 
• Practices and measures related to whistleblower protection and animal welfare 
• Issues related to invoices and payments. 

Please note that European sustainability standards are subject to change. Up-to-date information on the updates is available on the European Commission’s website. 

Don’t Navigate Sustainability Reporting Alone 

If the European Commission’s proposed amendments are approved, many companies will likely benefit from the additional two-year transition period for reporting. However, getting started with sustainability reporting can feel overwhelming, especially with the complexity of ESRS standards. 

That’s why it’s important not to face the challenge alone – or to delay action indefinitely. 

Finland is home to several expert organizations specializing in ESG reporting, ready to help businesses take their first steps. With the right guidance, understanding the requirements and identifying opportunities becomes significantly easier. 

At Huld, our experts are happy to support you on this journey. Whether through a focused workshop or a relaxed conversation over coffee, we’re here to help you find the right approach to sustainability reporting for your organization.  

Contact 

Minna Sajama
+358408236457
minna.sajama@huld.io