From our practice: How is an ESG report created for a developer?

What does it take to prepare an ESG report, where to start, what problems are encountered during implementation and what benefits can reporting bring to a company? We summarize our experience in preparing an ESG report for Urbanity, a Czech real estate group.

Reporting sustainability data according to EU standards will be an obligation for all companies affected by the CSRD. ESG disclosure is also essential for relations with banks, investors and other business partners. Moreover, in real estate, sustainability is increasingly required by customers themselves. These were the main reasons why the sustainability solutions group Urbanity decided to publish an ESG strategy and ESG report. Read step by step how we helped the company become a pioneer in ESG reporting in the property development sector.

ESG reporting is one of the main topics we focus on. We have been directly involved in the development of the EU sustainability reporting standards - our team leader is a member of the EFRAG Sustainability Reporting Board, which is responsible for the development of the EU standards. Thanks to our expertise, we also collaborated on the development of a unique ESG reporting guide for the Prague Stock Exchange and the European Bank for Reconstruction and Development.

1. Identification of relevant topics

Before a company begins to develop an ESG strategy or report, it needs to assess what ESG topics and areas are relevant to its business in terms of negative impacts, risks or opportunities.

Therefore, in the first step we prepared a so-called materiality analysis for the client, where we identified the topics to focus on in the strategy and report based on the company's business model. A description of how the company assessed its material topics is also a mandatory part of the reporting according to EU standards.  "The analysis is based on objective criteria relating to ESG impacts and financial risk reversals, not on a survey of what stakeholders think or how the company perceives things," adds Filip Gregor, head of Frank Bold Advisory and member of the EFRAG Sustainability Reporting Board.

2. Help with data collection and process setup

We then explained to the client what data we would need from them for the ESG report and prepared materials for them to complete. In general, the better the quality of the materials the client provides us with, the easier and faster we can produce the report. 

Similarly, we helped Urbanity identify the data it needs to collect from its suppliers for ESG reporting. "Our goal is not just to deliver one-off outputs to the client, but also to help them navigate the EU ESG framework and set up processes for data collection.  This will make the client's job easier in subsequent reporting periods," explains Gregor's approach. 

3. Policy review and preparation of ESG strategy

Based on an analysis of significant topics, we reviewed the client's existing ESG policies and proposed adjustments to align with the EU ESG framework and best practice. EU legislation defines the minimum set of policies expected of a company. However, it is important that the policies are specific and assist the firm in business decision making.

In the next step, we developed a comprehensive ESG strategy, in which we set strategic goals and commitments for important topics in collaboration with the client. "While the CSRD does not require firms to adopt specific objectives or measures, for material topics, firms should address specific objectives and commitments, as they will be asked about them by investors and banks and as material impacts may pose a risk to the firm going forward," says reporting consultant David Janků. For example, a company in the construction and property development sector typically adopts climate, circular economy and biodiversity targets, he says.

4. Creating an ESG report

After the client provided us with the necessary information, we started working on the ESG report. "A common mistake companies make in their reports is to focus on CSR activities, philanthropic projects, sponsorship or volunteering and neglect the impacts that the company's activities cause, contribute to or are linked to by business relationships. A focus on CSR is of course welcome, it is just not covered by EU ESG standards. They require companies to focus on their real impacts," says Gregor, describing one of the main principles of reporting under the EU standards.

The resulting ESG report for the developer follows the structure of EU standards, which will make it easier for the company to communicate with banks and other business partners. It addresses identified material topics such as climate change, circular economy, water efficiency, biodiversity, own employees, etc., with specific KPIs and plans for each.

What benefits has the company received?

As Urbanity's final ESG report is written with the EU ESG framework in mind, the company can more easily meet the information requirements of its banks, investors and business partners. In addition, our work has helped the company understand what data is appropriate to collect and how to make the process as easy as possible (for example, through a questionnaire for suppliers). Finally, the client gained valuable insights into its negative impacts, including a coherent ESG strategy to help address these impacts.

Get ahead with ESG reporting

We help companies to prepare ESG reporting according to the new European legislation, thus obtaining key data for their clients, business partners and financial institutions.