How to prepare for mandatory sustainability reporting?

From 2024, many companies will be required to submit sustainability reports. This is in line with the EU Corporate Sustainability Reporting Directive (CSRD).

"Sustainable Entrepreneurship"

The annual CSRD report will cover information about the impact of the company's activities on the environment, social and economic spheres of society. The concept of "sustainable development of the company" is directly related to the concept of corporate social responsibility.

The relevance of the so-called sustainable entrepreneurship, on the one hand, is due to the need of customers to know where the product comes from, and on the other hand, the desire of the government to fight climate change. The introduction of CSRD reporting should clearly indicate whether European companies are contributing to this goal.

Bas de Gooijer, spokesman for De Duurzame Adviseurs (Council for Sustainable Development), says: “Consumers and investors expect companies to operate responsibly and not just make a profit”. Working together with his colleagues on the practical implementation of the Climate Agreement, he emphasizes: “Healthy financial performance is important, but so are sustainability performance.”

Submission and verification of CSRD reports

While it is not known exactly what the report on sustainable development should look like, the EU has not yet taken a decision on this matter. Entrepreneurs will have to submit a report on the online portal, and it will be checked after delivery. According to the requirements set by the CSRD, it seems most logical for the Dutch market that accountants take over the responsibility for compiling and reviewing sustainability reports.

Scheme for the introduction of mandatory reporting on sustainable development

CSRD reporting matters to both small and large organizations. “Even if you are only a small link in the chain, you must prove in a sustainability report that you are doing everything possible on your part to positively influence the world - or at least not make it worse”, says Bas de Gouyer.

However, mandatory sustainability reporting will not be introduced for all companies at once. At the first stage, from January 1, 2024, the obligation to submit CSRD reports will apply to companies that are already required to comply with the Non-Financial Reporting Directive (Non-Financial Reporting Directive - NFRD).

In the second phase, from 2025, sustainability reporting will become mandatory for large companies that are not currently subject to the NFRD. A company is considered large if it meets at least two of the three conditions:

1. the staff includes more than 250 employees;
2. turnover - more than 40 million euros per year;
3. on the balance sheet - more than 20 million euros.

At the third stage, CSRD reporting will affect small and medium-sized businesses (kleine en middelgrote bedrijven - MKB).

Sustainability reporting for MKB

Bas de Gouyer notes: “To many MKB entrepreneurs, CSRD seems like a dark cloud hanging over them. They think that reporting will cause an extra mountain of work, so they have a desire to postpone this work until later.. But this representative of De Duurzame Adviseurs recommends already now to get acquainted with the EU directive on corporate sustainability reporting.

The logic is the following. From 2024, large companies will be required to report across their entire supply and contractor chain. “Suppose you provide services or products to a large company that is required to report. Then you also have to deal with CSRD, explains de Guyer. - Large companies will look more closely at their suppliers and contractors. Otherwise, they will not be able to complete the sustainability report themselves.”.

Questions for MKB

The primary questions that an MKB entrepreneur should answer are: 1) what impact your product has on the world; 2) what is the social impact of your service; 3) how your product is produced, transported and processed.

"Make sure you can answer these questions now, advises de Guyer. — As an entrepreneur, you are probably used to talking to buyers and suppliers about purchase prices, shipping or recycling. Ask the right questions and write down the answers.”.

Bas de Gouyer also recommends taking the time to calmly think about things like: “How is my building heated, where do my energy sources come from, how are my products produced and transported, what about recycling?”. The results obtained and the studies carried out will form the basis for the CSRD report.