From 2025, many medium-sized companies will be required to prepare a sustainability report as part of the management report in their annual financial statements. In itself, this obligation is an “additional workload required by law, which causes additional costs and ties up capacities and, on the face of it, does not benefit the business”. If this basic attitude is maintained and a report is prepared in accordance with the auditor’s requirements, it is certain that the organization will be extremely burdened without any added value. I would like to give these “skeptics” the following advice:
- Realise that you can no longer turn back these social upheavals. The essential transformations have been decided in principle by the parliaments in Europe and are supported by a broad majority, mostly driven by the noticeable climate change.
- The mandatory report according to ESRS requires the collection of data and the preparation of declarations and documents in all areas of your company. This is not just a burden, but a huge opportunity. All those responsible in your company can be involved. Through a systematic approach and consistent delegation to the areas of responsibility with a coordinating hand in or alongside the management, the burden on each individual is less noticeable. Many of those involved are even additionally motivated by the transfer of responsibility for the company’s sustainability!
- For the management of sustainability-related data, you should actually invest in additional software that can be docked onto your existing ERP solutions. Good sustainability-management-IT solutions, once they have been set up with a large one-off outlay, will be able to generate the CSRD-compliant sustainability report in accordance with ESRS “at the touch of a button” in future, in a similar way how your finance systems do it when preparing the balance sheet.
If you decide to “face up” to systematic sustainability management now, then consider the following checklist to minimise the effort from the outset:
- Form a Sustainability-Management-team (SM-Team) with a few responsible persons from the areas of production, logistics, quality management, marketing and HR.
- Postpone sustainability projects planned at short notice (e.g. PV systems, investments in vehicle fleets or machines to increase energy efficiency, etc.) by a few months so that they can be included in the future sustainability successes documented in the mandatory report.
- Investment: Together with the SM team, carry out an inventory of the sustainability aspects of your company internally and along the value chain in just a few workshop hours. Together with an experienced sustainability consultant and using relevant checklists (e.g. the ZNU sustainability check), you will gain an initial overview of which sustainability aspects are already present in your company and which critical construction sites exist.
- Investment: Based on the check, carry out a double materiality analysis with the sustainability team to determine your sustainability strategy, if necessary with moderation and documentation by an experienced sustainability expert. This is a mandatory part of the sustainability report.
- Result: Use the materiality analysis to exclude the non-material sustainability aspects for your reporting obligation in accordance with ESRS and save yourself the necessary documentation and data collection.
- Result: Realize that you cannot become “sustainable”. You can only set up your company in such a way that you continuously work on becoming more sustainable. In principle, the legal regulations (CSRD) only require this.
- Investment: Use sustainability software (e.g. leadity, envoria or extensions from your ERP provider) and “feed” the system together with your IT and the SM team with the data points of the key sustainability aspects of your company.
- Investment: However, you cannot avoid creating capacities for this. In small and medium-sized companies with 50 or more employees, my experience is that you need around half a job to coordinate sustainability management, and a full-time employee for 200 or more. A high level of participation by all employees can reduce the workload.
- Result: A sustainability officer does not have to be an expert in sustainability but is usually found through committed employees in the SM team. This person can receive further training (e.g. to become a ZNU sustainability manager), must be closely linked to the management and be given cross-departmental competencies.
- Result: Continue planning your projects now and reassess your priorities. Perhaps an investment planned before the systematic sustainability approach is not essential anymore!
My recommendation is to get involved in associations and business initiatives on the topic of “green transformation“. The chambers of commerce offer information events. Membership of the German B.A.U.M. eV can provide additional insights. Exchange ideas with other entrepreneurs. Find out that others have had good experiences with their transformation initiatives or that you may already be further along in some aspects than others.
I would be happy to accompany you on your journey as your external sustainability expert. I will make sure that you minimise the effort required for your sustainability report. I also make sure that the effort you have to implement delivers such meaningful results that they create benefits for the entire company over and above the mandatory report. Shall we talk about it? Then contact me here: info@torsten-spill.de.