Why it’s time to talk straight about sustainability
Interest in what values a company or brand stands for has exploded in recent years. Especially since Generation Greta started putting pressure on companies, governments, and world leaders – thus showing a new face of the sustainability-oriented citizen.
From next year, companies will need to really level up their sustainability reporting, thanks to the new CSRD directive from the EU. It’s high time to learn all about what’s behind the abbreviation. If you missed it, it stands for Corporate Sustainability Reporting Directive.
Elin Nilsson works as a consultant at Goodpoint – one of Sweden’s leading sustainability agencies and a partner to Spoon. As a Business Director for sustainable businesses, she is fully up to speed on the new EU directive.
So, what’s the big change when it comes to reporting your sustainability work?
Well, the big difference is that sustainability reporting cannot be a separate item, it should be part of a company’s management report. And the materiality analysis, a process that enables a business to identify their most important focus areas so that they can prioritized, will be extended.
“It’s no longer enough to only report what impact your business has on climate change, human rights, and corruption. You must also report the impact climate change could have on your business. This means reporting must be based on a so-called double materiality analysis. And that in turn means disclosure of sustainability risks that could have a financial impact on your business, such as extreme weather conditions.”
Fair enough, but why has this been initiated by the EU?
One reason is to make reporting more transparent, and to make it easier for different targets groups to compare results, just as they can with financial figures. With this way of reporting, companies can also meet the market’s growing demand for information on sustainability.
– It has become more important for investors, owners and other target groups, to find out if a company’s financial results can be affected by the effects of climate change, says Elin.
However, she points out that it’s not the reporting that is most important – it’s the actual sustainability work:
– CSRD is a strong signal from the EU that it is time for European companies to speed up their sustainability efforts.
We will also most likely see new ways of communicating about sustainability. Transparency has long been a buzz word, but with the new, stricter directives, openness and clarity will be even more important. Again, more and more environmentally conscious consumers and investors want to compare services and products before they take a decision on whether to invest - or buy something.
– Companies that can show their target groups meaningful actions, by putting their results in a good context, will be the winners, says Elin.
Another trending success factor that will continue is partnerships and showing a willingness to co-operate with others within your business to create change.
– Co-operation with other actors shows an ambition to find long-term solutions and these are not only a gain for your own company, but for the future of the planet and the people who live here, she says.
3 things that will be important for successful sustainability communication.
- Put your sustainability data in a context – help your target groups to see the big picture with guiding content. Think of your sustainability report as a source of trust-worthy information.
- Tell it how it is – transparency has long been a buzzword when it comes to sustainability, but with the new CSRD directives, openness and clarity will be key when it comes to explaining how you’ve reached your results.
- Show the complexity – don’t be afraid to lift challenges and share them. Honestly will create credibility.
On 5 January 2023, the CSRD came into force. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. The EU’s aim is to ensure that investors and other stakeholders have access to the information they need to assess investment risks arising from climate change and other sustainability issues.
The new rules will first apply for the 2024 financial year, for reports published in 2025.
Read more about what EU is doing and why here.
Jessica Johansson, Content Director, Spoon