Sustainability has become one of the hottest topics in recent months, alongside artificial intelligence. ESG reporting is increasingly seen as a key component of modern business operations. Transparency in environmental, social, and corporate governance activities not only builds trust among stakeholders but also helps companies better manage risks and seize new business opportunities. Below, we present six essential aspects of ESG reporting that every entrepreneur should know.
What is ESG reporting?
ESG reporting (Environmental, Social, Governance) is the process of disclosing information about a company's activities in three key areas: environmental, social, and corporate governance. The aim is to demonstrate how the organization impacts the environment, what initiatives it undertakes in social responsibility, and how its corporate structure is managed. ESG has become a critical tool for investors, customers, and other stakeholders seeking transparency and responsible business practices.
Who is required to report on ESG?
Starting in 2024, ESG reporting requirements apply primarily to companies subject to the CSRD (Corporate Sustainability Reporting Directive). These include large entities and capital groups, such as major public companies, businesses employing more than 500 people, and those meeting specific financial criteria. In subsequent years, the obligation will extend to smaller organizations.
By 2025, companies meeting 2 out of 3 criteria will be required to report:
- More than 250 employees,
- A balance sheet total exceeding €25 million,
- Annual revenue above €50 million.
By 2026, small and medium-sized enterprises (SMEs) meeting 2 out of 3 criteria will also fall under these regulations:
- More than 10 employees,
- A balance sheet total exceeding €350,000,
- Annual revenue above €700,000.
Even SMEs not directly covered by the legislation may still face ESG reporting requirements from business partners or investors, making it worthwhile to prepare for this process now.
Why was ESG reporting made mandatory?
ESG reporting requirements were introduced to address growing climate challenges, social needs, and the demand for improved corporate governance. The European Union aims to achieve climate neutrality by 2050, and ESG reporting is a key element of this strategy. Transparency in ESG enables stakeholders to better assess risks and a company’s investment potential while promoting responsible business practices.
Why should SMEs embrace ESG reporting now?
Although SMEs are not yet fully required to report on ESG, adopting ESG practices early can build a competitive advantage. Customers and business partners increasingly value sustainable practices. Moreover, early preparation helps avoid the chaos and costs associated with last-minute compliance with legal requirements.
How to prepare for ESG reporting?
Preparing for ESG reporting requires a comprehensive approach. Start by analyzing the current state of your company in the three ESG areas. Next, set sustainability goals and develop a strategy for achieving them. Implement appropriate data monitoring systems and establish a team responsible for managing ESG initiatives. Staying informed about regulatory changes and using tools designed to support ESG reporting is also essential.
How does Continia Sustainability support ESG reporting?
Continia Sustainability offers innovative tools to support companies in the ESG reporting process. These solutions automate data collection, analysis, and the generation of reports that comply with legal requirements. Continia focuses on simplifying the reporting process, saving companies time and resources. With flexible, user-oriented features, Continia Sustainability tools provide ideal support for organizations aiming to achieve their ESG goals.
ESG reporting is not just a legal obligation—it’s an opportunity to build a more responsible and trusted business. While new regulations primarily target large companies, every organization, including SMEs, should begin adopting sustainable development principles now. Proper preparation, including leveraging tools like Continia Sustainability, enables companies not only to meet requirements but also to set the standard for responsible business practices.
Do you have concerns about ESG reporting? Or would you like to explore how modern business applications can support you in this area? Contact us today and get answers to the most pressing ESG questions!
