Mandatory sustainability reporting for companies by 2024

Sustainability reporting is essential for organizations to comply with regulations and also to improve public perception of companies. In this post we will review mandatory reporting regulations from this year.

Find out how mandatory sustainability reporting is changing companies this year.

Sustainability regulations are becoming increasingly stringent, so digital transformation, operations and sustainability managers need to understand how mandatory sustainability reporting can serve as a catalyst for innovation and change within their organizations.

Mandatory sustainability reporting provides business transparency and enables organizations to enhance their reputation with employees, customers and partners by highlighting, through green marketing actions, the organization’s commitment to sustainable and responsible practices.

Advantages of mandatory sustainability reporting

Several factors come into play in a company’s sustainable management strategy. Mandatory sustainability reporting should be part of this strategy and brings with it a number of benefits, including improved transparency. With it, the company’s credibility grows and, by having to analyze ESG performance, it will also be able to carry out continuous improvement of its environmental, social and governance practices in a controlled manner.

On the other hand, mandatory sustainability reporting provides organizations with a valuable tool to identify and manage sustainability-related risks and opportunities.

In this context, the use of a platform such as GreewAIs by aggity makes it possible to anticipate the corporate environmental impact of companies’ day-to-day operations and develop sustainable management strategies to reduce risks and take advantage of opportunities. These reports also help organizations strengthen the company’s reputation and brand, increase customer loyalty and investor confidence, develop circular economy strategies, and attract and retain the talent they need.

Current regulations

In addition to these benefits, mandatory sustainability reporting enables companies to comply with various environmental compliance regulations. The diversity of laws is increasing, including environmental laws, labor regulations or regulations to drive finance 5.0 or sustainable finance.

Among the new regulations is the obligation to comply with the new sustainability reporting framework under the European Union’s Corporate Sustainability Reporting Directive (CSRD) as of 2024. This is an evolution of the Non-Financial Reporting Directive (NFRD), which established minimum environmental legal compliance requirements and obliged large companies to disclose and make public certain types of non-financial information.

Differences between standards

The main difference between the two provisions is that the CSRD expands the number of companies that are required to comply with the legislation. While the NFRD applied primarily to large listed companies, the CSRD extends to a broader set of entities, including large unlisted companies, medium-sized companies and certain small companies.

The CSRD implies that companies are required to conduct mandatory ESG sustainability reporting and sustainability audits to account for sustainable practices within the organization. These sustainability reports cover a wide range of topics ranging from greenhouse gas (GHG) emissions and carbon footprint analysis to labor policies and practices and natural resource consumption.

The purpose of this legislation is to increasing transparency to provide information on the sustainability practices of companies to customers and investors, increase the importance of corporate sustainability, and increase the Environmental, social and governance (ESG) factors in business decision making and also to encourage the development of sustainable innovation and the improvement of its sustainability performance.