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Navigating ESG Reporting: Key Takeaways From The Irish Business Post’s ESG Summit, May 2023

Jun 12, 2023 Navigating ESG Reporting: Key Takeaways From The Irish Business Post’s ESG Summit, May 2023

Authored by Celia Le Lievre, Senior Regulatory & Requirements Compliance Specialist, Compliance & Risks

The Irish Business Post’s ESG Summit 2023 took place in Dublin on 30 May.  The conference welcomed over 400 delegates and covered a wide range of topics pivotal to climate change and sustainability, including Compliance & Risks’s own Celia Le Lievre, Senior Regulatory & Requirements Compliance Specialist.
The key take-aways are summarized in this blog. More details can be found in the The ESG Summit Highlights.

This year’s Summit explored how companies can develop effective data management systems and best practices to meet the reporting requirements of the new Corporate Sustainability Reporting Directive (CSRD). The panel of speakers discussed the implications of the EU CSRD on public and private businesses and shared their insights to help companies develop mature ESG processes.

Discussions were centered around the following topics:

  • Developments in the regulatory and standards landscape
  • ESG data collection and reporting: Best practices for reporting on ESG
  • How to manage your ESG reporting processes and become a sustainable data-driven business
  • Practical approaches to incorporating sustainability into day-to-day operations
  • The latest technologies in ESG reporting and investment
  • Practical approaches in designing ESG governance structures
  • Measuring the ‘S’ in ESG
  • Supply chain and Scope 3 emissions: Case studies and practical deep dive
  • Sector specific examples and case studies

Managing And Mitigating Greenwashing

How To Pledge Net Zero In Decades When Already Claiming Carbon Neutrality?

In the first presentation, a lecturer from the National University of Ireland highlighted the absence of a commonly agreed definition for “net zero emissions” and “carbon neutral” and discussed the importance of avoiding reputational damage for companies which are already claiming “carbon neutrality” and targeting “net zero GHG emission” at the same time.  

Corporate sustainability data were retrieved from a number of official company’s sustainability reports and press releases. The findings revealed that 526 firms have made net zero pledges of which 25 firms claimed to be already carbon neutral. Based on the IPCC’s definition of “carbon neutrality”*, the research shows that achieving net zero greenhouse gas (GHG) emissions [already] means ensuring carbon-neutral corporate processes. Thus, the claim of targeting net zero GHG emissions in decades was found “to conflict with the statement of already being carbon neutral”. Such claims in corporations’ sustainability reports may be perceived as greenwashing.

*Carbon neutrality is defined by the IPPC as “Net zero Carbon dioxide CO2 emissions that are emissions achieved when anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specific period” (IPPC, 2018). 

Corporate Sustainability Reporting Directive (CSRD): What Is Involved?

Speakers from Irish law firm A&L Goodbody shared their insight on the implementation of the CSRD and its implications on public and private companies operating in Europe. 

In short, the CSRD will be a big change for companies and how they report on their sustainability performance. The experts clarified that the Directive requires in-scope businesses to disclose ESG data in annual directors’ reports. They also emphasized the consequences of non-compliance. Non-compliance in Member States will not only trigger legal consequences (i.e. sanctions, fines and penalties) but also reputational damages which will more likely result in restricted access to markets, investments and procurement processes. 

The three novel elements of the Directive were also briefly discussed:

  1. Double Materiality:
    In-scope companies must disclose forward-looking information that is necessary to understand the impacts of the company on people and the environment and to assess sustainability risks faced by the company as a result of such environmental and social matters.
  2. Supply Chain:
    Companies must report with respect to their own operations and with respect to their direct and indirect business relationships across their value chain. A three-years transition period allows companies not to procure information on their value chain if they can explain the efforts made to obtain such information and the reasons why information could not be obtained.
  3. Limited Assurance:
    Companies must report with respect to their own operations and with respect to their direct and indirect business relationships across their value chain. A three-years transition period allows companies not to procure information on their value chain if they can explain the efforts made to obtain such information and the reasons why information could not be obtained.

ESG’s Case Study: From Talk To Action

The Group Director of a large IT solution provider discussed their ESG strategy, how they have put a dedicated team in place and what steps they have taken for effectively reporting on social impacts. The group particularly emphasizes the social pillar of their approach. The Social aspect essentially refers to the organization’s relationship with stakeholders and the company’s impact on the communities on which it operates. As part of their strategy, the group has established financial health and well-being advisors and engages quarterly surveys of their employees and customers to take their feedback on board.

Other key principles of their ESG strategy involves working with regional teams to organize group level activities in communities (e.g collective cleaning/ recycling actions) and to promote employability in those communities. Increased female representation within the organization and greater cultural diversity were also highlighted as strategy objectives.

ESG Data Collection, Management And Reporting

The outcomes of the discussions revealed that collecting and reporting on ESG data is a daunting task. Businesses are feeling pressure from stakeholders – investors, employees, consumers and society – who demand information that can stand up to scrutiny. ESG data must be both measurable and auditable in accordance with the CSRD.

An auditor provided clarification on the level of assurance to be applied to reported ESG data. ESG reports will first be audited on the basis of limited assurance. Significant uncertainty remains as to how limited assurance will be carried out in practice. The auditor nonetheless confirmed that, during the first years of application, the focus of limited assurance will initially be on the method, workflow and process used by the company to compile and record ESG data. The outcomes of the double materiality assessment will also be reviewed to avoid situations where companies omit to report disclosures due to the lack of policy or data on an ESRS topic.

In this respect, participants also emphasized the challenges associated with a double materiality assessment. While it may be easier to understand the inward impacts of the environment on a company, it is more difficult to assess the outward impacts of a company on people and the environment.  The Draft European Sustainability Reporting Standard on “General Requirements” (ESRS 1) introduces a step-by-step approach to double materiality assessment. However, the complexity of these standards makes their implementation particularly challenging for companies.

Overall, the speakers encouraged businesses to put work upfront to establish processes to collect and report ESG data. While the use of spreadsheets and online databases are generally accepted as appropriate tools for small and medium-size companies, digital tools are considered more effective at managing ESG data, especially for companies collecting data from different sites. 

Why Does ESG Matter?

Many companies perceive ESG reporting as an expensive burden and tend to ignore the opportunities that are inherent to it. Having an ESG strategy gives access to a wider range of investors (balance sheet benefits). Moreover, integrating ESG strategy into your business model has knock-on effects on the reputation of the company and its capacity to retain staff and customers (moral argument).

Key Messaging For Attendees: Start Preparing Now!

The message to the attendees is clear:  start preparing now.  The importance of starting early and embracing a proactive approach cannot be underestimated.  Businesses need to understand the urgency of collecting data regardless of when they become subject to the CSRD.  

In-scope companies should start putting data management and reporting processes in place before the finalization of draft ESRS standards which is due this month. A clear understanding of the structure of the standards (i.e. policy, targets, metrics) will help companies design their targets and identify what metrics should be accumulated to support these goals. 

Project planning (i.e. resources for collecting/managing data and analyzing ESRSs) and data gap analysis will be key steps to start your ESG journey. The data gap analysis should be geared towards answering the following questions:

  • What data is available?
  • What data needs to be obtained?
  • What system should be put in place to obtain it?

The panelists also recognised the need to take a holistic approach, making sure that ESG reporting is an integral part of the company’s board, governance and culture.  One of the panelists argued that “sustainable practices should be deeply ingrained within an organization’s DNA, from top-level decision-making to operational implementation”. These words reflect the need to identify (up-front) internal roles and responsibilities within the business system. Traditionally the financial department was responsible for financial reporting, but now that we are talking about non-financial reporting there will be a lot more departments involved. It is important to decide at an early stage who will be involved in the process. The finance department has experience in collecting financial data; it is therefore important to rely on internal expertise at the beginning of the process. 

Finally, the need to adopt a flexible ESG strategy was also considered necessary to respond to market changes and potential revisions of the draft european reporting standards.  

Do not panic”, “keep it simple” and “be clear on what you want to achieve” were, in my sense, the key takeaways of this conference! 

Accelerate Your ESG Journey With Compliance & Risks

Compliance & Risks’ ESG Solution helps you seamlessly implement a company-wide ESG strategy by providing an overview of mandatory reporting obligations and mapping these to your ESG goals.
Along with that, you can research, collaborate and align with stakeholders, track progress towards their ESG goals and targets, and demonstrate compliance to evolving regulatory requirements.
See our list of ESG resources.

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The Ultimate Guide To ESG Compliance

The goal of our Ultimate Guide is to help sustainability and compliance managers get a clear picture of the fundamentals of ESG that are relevant for 2023 – including guidance about the best practices while drafting a company’s ESG strategy.