ESG reporting: challenge or opportunity? An experts' perspective on the path to sustainability

Is sustainability data collection and ESG reporting a green scarecrow to worry about? What to expect from the new EU legislation and how to successfully implement it in your business? In mid-November,  leading ESG experts as well as representatives of companies that are already preparing for sustainability reporting shared their know-how and experience at the Bold Future conference organized by the Frank Bold Expert Group as part of the ESG Workshop. More than 500 professionals from business, government and local authorities came to the event to get the latest know-how on ESG, real estate and urban development and electricity sharing.

Bureaucracy or the path to a better future?

Is sustainability the way to a better future, or extra administrative work? The purpose of reporting according to CSRD and ESRS standards was explained by the European Commission's ESG reporting expert Tom Dodd. The sustainability reporting standards, he said, are intended to ensure transparency, consistency and ease the transition to a sustainable economy by focusing on key information instead of superfluous details. They serve not only investors and financial markets, but also a wider range of stakeholders, supporting better decision-making and financial system stability.

"The Green Deal is Europe's policy prescription for a successful, dynamic and sustainable economy. And we argue that we cannot achieve this without having sustainability information from business as a basis," Todd explained.

Implementation of standards: what does it mean for the company?

After summarizing what the sustainability standards are good for, it was time to implement them in companies. Filip Gregor, a senior ESG expert at Frank Bold and member of the Executive Board of EFRAG, the European Commission's advisory body for sustainability reporting standards, addressed the audience on whether implementation guidance for climate risk will be issued.

"There are currently no plans to issue general implementation guidance for climate risk analysis as it would be too abstract and would not help companies. EFRAG is therefore focusing on sector-specific standards that would name the key issues in selected sectors with the greatest sustainability impact and make reporting easier for companies. However, their issuance and adoption has been delayed due to complications at the political level."

The latest analysis of reports of 100 European companies by the Frank Bold expert group, which can be downloaded here after registration, shows how prepared major companies are to meet the new sustainability and ESG reporting obligations.

ESG reporting in practice

Mike Jennings, an ESG expert working with Frank Bold, shared his know-how and extensive experience in dealing with audits with the audience. He gave attendees a closer look into the ins and outs of financial materiality and how to handle it like a superhero.

"With financial materiality, we have to think about whether there's a risk or there's an opportunity, whether it means more costs for our company, more revenue or devaluation of tangible assets," Mike Jennings explained.

In the last session, David Janků, Senior ESG Consultant at Frank Bold Advisory, shared eleven challenges he encounters in practice when developing sustainability reports with clients. One of the ones that businesses often encounter was, among others, how to approach the analysis of double materiality, whether "more is less".

"The biggest challenge at the moment is that it is not entirely clear exactly how and at what level the opportunities, risks and impacts should be named. How you define them then determines how you assess them. If they are too general, you will find them difficult to assess; if they are too specific, you will find them too much. So I recommend taking the golden mean," Janků explained.

His contribution was complemented by Iva Prošková, Sustainability Manager for Severotisk and Svoboda Press, from the perspective of production company and Frank Bold Advisory client. She gave the participants an overview of how they approach the ESG challenge in their company and how challenging it is to align with other stakeholders.

"Our main customers are very sustainability-oriented and we consult each other on a daily basis on the steps we want to take and that our customers require of us. We look for logic in this and try to work together, which is why we decided to release our ESG reporting before our reporting obligation," Prošková explained.

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