In my previous blog – 'Don't underestimate the impact of the CSRD' – I already talked about the impact of the Corporate Sustainability Reporting Directive (CSRD). Conclusion: a good sustainability policy is a requirement for every entrepreneur. Just like recording what you do as an entrepreneur in this area. The CSRD may not yet apply to small and medium-sized companies, but you will eventually have to deal with it. Our motto, therefore: start reporting now. But where and how to start? I would like to give you some tips to get started with your sustainability reporting.

A result of the Green Deal

Just briefly about the CSRD. This is a European law that results from the EU Green Deal. This law forces companies to be fully transparent about what measures they take to promote sustainability and contribute to the objectives of the EU Green Deal. This will become a permanent part of the annual report. An accountant must assess that report and issue an assessment report. The law applies from the 2024 financial year to large listed companies and from 2025 to all large companies. But actually, every entrepreneur has to deal with it. After all, the reporting is not only about the company's impactm but about the entire chain. This often also includes medium-sized and small companies.

The large chain partners will therefore ask medium-sized and small partners for sustainability information. And they will soon be legally obliged to comply. But that's not all. Banks and insurance companies are also placing increasing demands on the sustainability policy of companies that want to take out financing or insurance. They are forced to do this by other laws and regulations resulting from the EU Green Deal. Virtually all companies in the Netherlands and the rest of the EU therefore have to deal with (some form of) mandatory sustainability reporting.

It concerns the entire company

The importance of good reporting is therefore clear. Even if you do not have to comply with the CSRD yourself, it is good to get started. But how do you start with that? In the previous blog, I already provided an impetus for a step-by-step plan. That's already a good start. In addition, there are other important things you should consider. The first is perhaps the most important: sustainability concerns the entire company. It should therefore not be a solo project by one department. Too often we see that marketing or finance 'just do it on the side'. That is a fallacy. Therefore, form an internal, multidisciplinary team that will work on the reporting, based on a strategy established by the board.

It is also smart to seek cooperation in trade associations. This prevents you, as an entrepreneur, from having to invent wheels that have already existed for a long time. You can also choose to join so-called IMVO sector covenants. These are sector-wide agreements for international corporate social responsibility (IMVO). Within these covenants, companies, trade associations, government, trade unions and social organizations work together in the areas of human rights, working conditions, and the environment.

Get inspired

The CSRD requires companies to be transparent on a wide range of topics, divided over the main themes of environment, social and governance (ESG: Environmental, Social, Governance). These main themes are further divided into subthemes; in total it covers more than 100 topics. It is good to realize that not all topics need to be described in the report. Only the so-called material themes are discussed. The basis for a good sustainability report is therefore formed by a thorough selection of material themes. The manner in which this selection is made is not prescribed in detail, but an active dialogue with relevant stakeholders is a mandatory part of this process.

If you, as a large company, have to meet the requirements of the CSRD from 2025, you can also be inspired by listed peers. After all, they have been required to publish sustainability reports for years (based on the predecessor of the CSRD), so their annual reports for 2022 (and soon 2023) often provide a good insight into the relevant themes. These industry colleagues have also gained experience with stakeholder dialogues and interpreting their outcomes.

So-called SME standards are being developed for SMEs that want to voluntarily draw up a sustainability report or that want to prepare for questions from large chain partners; the first concepts are already available.

Ask for help

Finally, one last, important tip: feel free to ask for help. With colleagues, with specialists or with us, for example. We are already quite familiar with the matter, because we are fully preparing for our own role in the sustainability report: issuing an assessment statement. Based on this expertise, we can also help our customers set up sustainability reports. For example, we can help formulate goals and determine strategy. In that case, we look together at how sustainability is anchored in the company. We can also provide support in identifying the relevant stakeholders, the material themes and the associated opportunities and risks. We also have knowledge of and experience with setting up processes and collecting, processing and presenting data in a clear manner.

Register for the seminar 'What impact does sustainability reporting have on my organization?'

Are you curious about what sustainability can mean for your company? Or would you like to know what Joanknecht can do for you when it comes to reporting on this?

Register here for their in-person seminar (in Dutch) on January 25, 2024. They delve deeper into sustainability reporting in SMEs and provide answers to the many questions that will certainly arise.