Guide to ESG reporting: What you need to know

12/05/2024

With new changes in the law regarding social, environmental, or governance responsibility, ESG reporting has become an integral part of every company's strategy. In this guide you will learn what ESG reporting is, what data to include, what ESG reporting standards apply, and how to prepare your company for the process.

What is ESG reporting?

Effective ESG reporting is created as a process of collecting, analyzing and presenting information in these three areas, environmental impact, social relations and responsibility to stakeholders, and corporate governance principles.

ESG reporting is designed to show how a company contributes to sustainability, minimizes its environmental impact and supports employees, customers and supply chain companies. In short, for investors, an ESG report is a guide to a company's sustainable operations that builds its reputation and credibility.

What data should be included in an ESG report?

Preparing an ESG report requires detailed information on a company's environmental, people and governance activities. The information should be truthful, measurable and tailored to the company's specifics. So what data for an ESG report is most important? What do the ESG guidelines say about this?

Environmental data - emissions of greenhouse gases such as carbon or methane, energy and water consumption, waste management and recycling, the company's impact on the environment.
Social data - employees' working conditions and safety, HR policies of diversity and inclusiveness, involvement in social and charitable projects, relations with customers and suppliers.
Management data - board structure and oversight mechanisms, transparency of operations and anti-corruption policy, principles of executive compensation, ESG risk management.

By collecting and presenting this information, companies can showcase their achievements, identify areas for improvement and prepare a strategy for further development.

Standards and guidelines for ESG reporting

Polish companies that want to prepare effective ESG reports can use internationally recognized standards that ensure uniformity and comparability of data. The most popular standards are: GRI Global Reporting Initiative, detailed guidelines for ESG reporting, SASB Sustainability Accounting Standards Board, standards that focus on ESG-related financial aspects, TCFD Task Force on Climate-related Financial Disclosures, recommendations on reporting climate impacts on a company's operations, EU Taxonomy, EU guidelines defining which activities can be considered sustainable.

These are templates and examples of good practice that indicate what sustainability reporting should look like. SASB and GRI are used by global companies that want to meet the expectations of investors, customers or counterparties.

In Poland, businesses are subject to obligations under EU regulations, such as:

CSRD Corporate Sustainability Reporting Directive, imposes sustainability reporting obligations, more companies are already in force as of this year.
The NFRD Non-Financial Reporting Directive, applicable to large companies with more than 500 employees, requires reporting of non-financial data, including ESG.

The regulations mentioned are some frameworks, but they don't define details like SASB and GRI, they increase report transparency and build investor confidence. They allow you to create reports that can be cross-referenced with those of other companies. Although they are not mandatory, compliance with them facilitates compliance with EU regulations.

There is no obligation to use specific standards to create ESG reports in Poland. Companies covered by CSRD/ NFRD requirements must prepare reports according to ESG guidelines. Reporting according to GRI, SASB or TCFD is voluntary, but recommended as a tool to build competitive advantage and attractiveness to investors.

Following global ESG reporting standards avoids mistakes such as inconsistency or omission of important information. This will make the documentation valuable, for investors, business partners and stakeholders.

How to prepare a company for ESG reporting?

Preparing for ESG reporting requires careful planning and team involvement. So what should you do to create effective ESG reports?

To start, you need to identify the important areas in your company from an ESG perspective. Not all elements will be relevant to every organization. You need to identify which aspects of the company's operations are important to stakeholders and relevant to the company's specialty.

The next step is data collection and analysis. This is the foundation of ESG reporting. It's a good idea to use a digital tool, as this will make measurement easier and speed up the process.

Using recognized standards, such as GRI or SASB, will help create a report that meets expectations. ESG Guidelines also help determine what data to include and how to present it.

ESG reporting is not just a legal obligation, it is a real opportunity to increase your competitive advantage in the marketplace. Implementing recognized ESG reporting standards, collecting data properly, and working with intersectors, will allow you to prepare effective ESG reports that meet the needs of the market. And is your company already prepared for ESG reporting?