Photo by Tobias Weinhold on Unsplash
Author: Gian Giacomo Sommariva
Business activities can have a significant impact on the environment, both in terms of resource consumption and pollution. In particular, industry is responsible for a significant share of greenhouse gas emissions and pollutants, in addition to causing major environmental impacts such as the release of harmful substances into water and soil, waste generation, and high energy consumption. In addition to these environmental aspects, businesses profoundly influence the society and economy of the regions where they operate.
In light of the challenges posed by climate change and a growing awareness of sustainability, companies are incorporating concrete actions into their strategies to reduce negative impacts, in accordance with the principles of Corporate Social Responsibility (CSR) and ESG (Environmental, Social, and Governance). These actions include, for example, reducing emissions and resource consumption, promoting workplace safety and social equality, and investing in innovation and the development of the local economy.
As a Benefit Corporation that is mindful of its social and environmental impact, Enertech Solution pursues goals that serve the common good. It operates in a responsible, sustainable, and transparent manner toward its stakeholders and promotes the development of best practices in corporate social responsibility.
An important tool for achieving these goals is the sustainability report.
What is a sustainability report?
A sustainability report is a document that details a company’s results, initiatives, and goals in the environmental, social, and economic spheres. It is intended for stakeholders—such as customers, investors, suppliers, and the media—and provides a transparent overview of the company’s performance and impacts from a sustainability perspective. The goal is therefore to highlight the company’s social and environmental values and communicate its non-financial impacts to all stakeholders.
In accordance with Directive 2014/95/EU (Non-Financial Reporting Directive, NFRD), the sustainability report must include information regarding:
- Environmental issues;
- Social Issues and Employee Treatment;
- Respect for human rights;
- Fight against corruption;
- Diversity in Corporate Bodies.
What are the benefits of a sustainability report?
The sustainability report is not just a tool for monitoring corporate performance; it also offers a number of benefits, including:
- Improved reputation, with a greater ability to attract funding and support for marketing activities;
- Mitigation of Negative Impacts environmental, social, and governance impacts;
- Greater transparency which fosters trust, differentiation, and new market opportunities in a context increasingly focused on sustainability;
- Attracting and Retaining Talent since professionals are increasingly drawn to companies that prioritize sustainability;
- Reduction in operating costs, thanks to performance monitoring and the identification of areas for improvement;
- More efficient risk management, with better identification of opportunities and threats to the company.
In summary, the sustainability report is a key factor in gaining a competitive edge, improving business resilience, and contributing to the sustainable development of society.
We are here to help you
Please contact us for any information you may need.
The latest news from the industry
Receive the latest articles from our blog on your email
The New CSRD (Corporate Sustainability Reporting Directive)
According to European Directive 2014/95/EU, the preparation of a sustainability report is mandatory for large public-interest companies, while it is voluntary for SMEs. In recent years, however, the growing focus on sustainability issues has led to an expansion of the reporting requirement, involving an increasing number of companies.
Legislative Decree 2024/125 (published in the Official Gazette No. 212 of September 10, 2024) will take effect on September 25, 2024; it expands the scope of entities subject to the decree and introduces new reporting requirements.
Parties Affected by the CSRD Directive
The directive provides for an increase in the number of companies required to prepare a sustainability report, based on whether they exceed two of the three size thresholds:
- Effective January 1, 2024, this applies to publicly traded companies with total assets on the balance sheet exceeding 25 million euros; net revenue exceeding 50 million euros; and more than 500 employees;
- Effective January 1, 2025, this applies to companies—including unlisted ones—that have total assets on their balance sheet exceeding 25 million euros, net revenue exceeding 50 million euros, and more than 250 employees.
In the coming years, the number of businesses subject to this requirement is expected to increase further.
The new requirements introduced by the CSRD Directive
The CSRD requires greater transparency regarding the impacts of business activities. The key points to include in the sustainability report are:
- A description of the impacts of the company’s activities on society and the environment (inside-out perspective) and of the risks and opportunities arising from sustainability factors that influence the company’s performance (outside-in perspective);
- The business model and strategy, and their resilience in relation to sustainability-related risks;
- Plans to align corporate strategies with the goal of limiting global warming to 1.5°C, as set out in the Paris Agreement, and with the EU’s goal of achieving climate neutrality by 2050;
- The role of the administrative, management, and oversight bodies, and the incentive systems related to sustainability issues;
- The company’s objectives and policies regarding sustainability issues.
The directive also introduces the ESRS (European Sustainability Reporting Standards) and requires the use of the XHTML (Extensible Hypertext Markup Language) electronic format. These changes represent a further step toward greater corporate accountability.
The sustainability report is an essential tool for demonstrating a company’s commitment to the community. In today’s landscape, which is increasingly focused on sustainability issues, adopting this practice helps build a strong reputation, which makes it easier to forge or strengthen partnerships with investors and customers. The new CSRD directive, with its additions and updates, sends a clear signal of the need to place sustainability at the center of corporate strategies, promoting greater accountability and transparency.
