Steering Sustainability Reporting: A Guide for European Boards from EY
Overview:
A recent insight from EY outlines how European boards are navigating a monumental shift in corporate reporting due to the Corporate Sustainability Reporting Directive (CSRD). This directive offers a unique opportunity to align corporate strategy with sustainability goals, driving long-term value creation.
The Corporate Sustainability Reporting Directive (CSRD) is transforming the landscape of corporate reporting in Europe. With around 49,000 companies affected, the directive mandates the public disclosure of sensitive information about business models, strategies, and supply chains. This shift is not just about compliance but about embedding sustainability into the core of corporate strategy.
Governance and Oversight
Enhanced Responsibilities: Audit committees now have increased responsibilities to monitor sustainability reporting processes.
Strategic Alignment: Boards must use sustainability reporting to align corporate strategies with long-term sustainability goals.
Building Trust: High-quality sustainability information helps build trust with key stakeholders, including investors.
Strategy Alignment and Risk Management
Double Materiality Assessment: This assessment provides valuable data for better investment decision-making.
Risk Management: Boards need to reassess how they manage risks and seize new opportunities presented by sustainability reporting.
Value Creation: Companies that actively address climate change are 1.8 times more likely to report higher-than-expected financial value.
Reporting
Comprehensive Disclosure: The CSRD requires detailed reporting on sustainability risks and opportunities, impacting business models and supply chains.
Data Collection and Metrics: Accurate data collection and the use of relevant metrics are crucial for effective reporting.
Interoperability: Ensuring compatibility with international standards, such as those from the ISSB, is essential.
Stakeholder Engagement
Transparent Communication: Engaging with stakeholders through transparent sustainability reporting builds credibility and trust.
Investor Relations: Clear and comprehensive sustainability reports attract and retain investors.
Training and Competence
Board Education: Continuous training for board members on sustainability issues is vital.
Competence Development: Developing the necessary skills and knowledge to oversee sustainability reporting effectively.
The CSRD represents a significant opportunity for European boards to transform their business models through sustainability reporting. By focusing on strategic alignment, risk management, and stakeholder engagement, boards can drive long-term value creation and build trust with key stakeholders.
Sign up for the CSRD webinar: https://www.sustaira.com/blog/blog-webinar-series-csrd-csddd-cbam-esgreporting
