Creating a sustainability report: How to best proceed with the collection and documentation of environmental indicators

29. July 2024 | Author: Lena Reuter | Reading time: 8 min

The Corporate Sustainability Reporting Directive (CSRD) requires more companies in the EU to prepare a sustainability report. For example, while 500 companies in Germany were previously affected by this regulation, this number rose to 15,000 in 2024.

If you want to find out whether your company is subject to the CSRD directive, what needs to be included in a sustainability report, and how to create one, then our article will provide answers! Our comprehensive and free e-book also provides further information on how tackle environmental management digitally. Take a look!

Please note: This text refers to the laws and regulations in the EU.

What is a sustainability report, and why is it important?

With the help of a sustainability report, you, as a company, present the ecological and social impacts of your core business and your sustainable commitment. It is important to think about all sustainability dimensions, which include the areas of environment, social issues and corporate governance (Environmental, Social, Governance, ESG ). Regular reporting also ensures that defined sustainability goals are reviewed and potential risks are identified at an early stage.

You also analyse how your company’s activities affect competitiveness. This requires relevant key figures that you can use to measure operational measures and services. It also includes a materiality analysis explaining your methodology for creating the report. The sustainability report, therefore, provides a systematic overview of your company’s economic, ecological and social developments.

Reporting not only has an impact outside your company but also within it:

For whom is a sustainability report mandatory?

Sustainability reports have been mandatory for large listed companies since 2018. However, the CSRD guidelines adopted in 2022 also increasingly affect capital market oriented small and medium-sized enterprises (SMEs).

Specifically, a CSR report is required if you meet the following criteria:

• Your company has at least 500 employees

                 AND

• They generate net sales of over 40 million euros

                OR

• They have a balance sheet total of more than 20 million euros

In addition, SMEs with ten or more employees must submit an annual report on sustainability-related activities if the capital market orientation applies to them.

A voluntary sustainability report is possible at any time and makes sense. It shows your social commitment and transparently communicates your ecological impact. Preparing sustainability reports fulfils applicable reporting obligations and contributes to your company’s success. Disclosing your sustainable development strengthens the trust of investors, stakeholders and customers. In addition, you can track processes throughout the entire supply chain more transparently and react early to errors and problems in sustainability management. Finally, the report can be used to comprehensively reflect on and adapt your sustainability strategy.

When is a sustainability report necessary?

The law on preparing a sustainability report was passed in 2022 and is gradually coming into force. To help you prepare accordingly, we have listed the deadlines for various types of companies here.

Important: Companies have one year to publish their report. This means, for example, that companies in the first category must submit a report on the 2024 financial year by 2025 at the latest.

How should a sustainability report be structured?

1. Concept and objective of the report

• Which sustainability strategy does your company pursue?
• Which external standards should the report follow?
• determination of the framework conditions
  • including the development of associated time, personnel, strategy and budget plans

2. Materiality analysis

• identification internal and external stakeholders your report addresses (e.g., customers, suppliers, politicians, media, etc.)
  • development of relevant topics
• determination the methodology for preparing the sustainability report

3. Facts and figures

• collection of data (e.g. quantitative consumption figures, qualitative interview results, but especially environmental indicators -> anchor link to the topic below )
• development of a suitable key performance indicator system
• Important: You need key figures from at least two consecutive years for a meaningful comparison!

4. Text version

• writing the sustainability report
  • can be done internally or externally
• optimal text: understandable, clear and target group-related
• mixture of specific figures, examples and comments from stakeholders

5. Layout and publication

• supplementing the text with images or analysis graphics
  • tables increase the credibility of the CSR report
• decision: print, digital or both?
• final step: distribution to key customers, partners and organisations

No sustainability report without environmental indicators

Facts and figures increase the credibility of your sustainability reporting and also provide a better overview of your consumption. The so-called environmental indicators areparticularly suitable for this. They condense extensive ecological data into the essential core information and thus represent your company’s environmental impact in suitable metrics.

But which aspects are covered by the environmental indicators? In practice, they are often sorted according to inputs and outputs within the company. Below, we give you a few examples for both categories:

Types of environmental indicators – a classification

It is already apparent from the examples that many factors influence the data to be collected and documented. For a better overview, the environmental indicators according to ISO 14031 can be divided into three classes:

• Environmental performance indicators (EPIs) provide information about materials, energy, or infrastructure and thus illustrate your company’s impact on the environment.
  • e.g., absolute energy consumption, waste generation per production unit
• Environmental management indicators: The indicators quantify the efforts your company makes to reduce environmental impacts.
  • number of environmental training courses for your employees, results of supplier discussions
• Environmental status indicators: They provide information about the state of the environment outside the company and are, therefore, particularly suitable for companies that significantly influence their surroundings.
  • e.g., water quality of a nearby lake, regional air quality

You can also divide environmental indicators into company, process, and location indicators. The indicators then refer to an entire organisation, such as a retail chain, a location, or a process within the area. Here, you can refer to quantity-related values, which you specify in units such as tonnes or pieces. Using cost-related environmental indicators can also be used by assigning a cost value to each size.

In addition, a distinction is also made between relative and absolute environmental indicators. Absolute measurement values are usually derived directly from the input-output analysis and reflect the overall ecological impact. Water consumption in cubic meters is an example of an absolute indicator. Relative data, however, are related to a reference value and thus illustrate environmental efficiency. One example of this is water consumption per kilogram of a product.

Digital support in the preparation of a sustainability report

In a project as extensive as sustainability reporting, a large amount of information must be bundled within the company. Manual creation quickly reaches its limits. Therefore, intelligent systems, in particular, are ideal as a basis for your CSR report. Suitable sustainability software enables you to centrally collect, update and document key figures for the various sustainability areas. The advantage is obvious: the multiple departments involved in the report can access the data regardless of time and location and exchange it in an audit-proof manner.

Our compliance management software iManSys supports you in systematically preparing your legally compliant sustainability report. Get an overview of all regulations, laws, guidelines and obligations in the area of sustainability in digital form. Our software solution lets you centrally record the data and consumption relevant to your report. You can also view the respective input and output values over time and make comparisons with previous years.

The document management in iManSys also allows you to store important data, requirements, and preliminary reports for everyone involved in the sustainability report. Necessary measures resulting from your analyses can then be derived and assigned to the responsible employees. With our software world “Sustainability & Environment,” your environmental management will be optimised!