Building trust and protecting reputation through responsible, transparent reporting
Sustainability in reporting and assurance
Environmental, social and governance (ESG) considerations are driving a complete reframing of how we measure value. It’s more than legal compliance, more than ticking boxes. Investors, consumers, employees, suppliers and other stakeholders are putting pressure on organisations of all types to put sustainability at the heart of business.
This stakeholder demand and regulatory pressure are driving investment into better ESG information. Increased transparency along with third party assurance creates stakeholder trust in business performance, protects reputation and helps create long-term value.
Putting sustainability reporting on par with financial reporting
The European Green Deal aims for climate neutrality by 2050, pollution reduction, transition to clean products and technologies, and a just and inclusive transition.
To achieve these objectives the EU has created a regulatory package to ensure companies’ transition to sustainable business models, prevent greenwashing, and enhance the reliability and comparability of sustainability information. In a nutshell, the ambition is to bring sustainability reporting and assurance up to the level of financial reporting and assurance.
The rapid changes in legislation (e.g. the Non-Financial Reporting Directive (NFRD), Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy Regulation, etc…), and constantly increasing disclosure requirements, put high pressure on companies and their leaders. In addition to incorporating their sustainability reports into their annual reports, they now also need to ‘translate’ their ESG ambitions and activities into standardised, comparable sustainability disclosures.
Incorporating both financial and non-financial sustainability information into your reports can pose new challenges.
Which sustainability related data do you target to serve as a foundation for sustainability reporting?
How can you ensure the accuracy and credibility of your data reporting and full regulatory compliance?
How do you source sustainability data and integrate this into your current finance processes?
And how can you increase your credibility with outside stakeholders, and provide internal assurance to management, staff and board members that your business practices are sustainable?
The legal framework
National, regional and EU legislation to address ESG issues is complex and continually changing. Among many other demands, EU regulation – notably, the CSRD – will very soon require companies to disclose, in their annual report, information on their business model and strategy, KPIs and targets, risks, policies and due diligence in relation to sustainability. The CSRD defines a set of EU sustainability reporting standards (ESRS), where ‘Sustainability’ covers specific ESG topics as well as transversal standards.
The CSRD becomes applicable to companies in the EU from January 2024, 2025 or 2026, depending on the company.
Common challenges to prepare for ESG reporting
- Identify what’s in scope
- Embed sustainability into the business strategy
- Design a continuous process to identify what matters
- Design governance and oversight for change
- Build an audit-ready reporting process
Identify what’s in scope
Which business entities, what level of reporting, and the implications for legal entity structuring and tax.
Embed sustainability into the business strategy
Embed sustainability into the business strategy to create sustainable value by improving business decisions, attracting the best talent and differentiating from competitors.
Design a continuous process to identify what matters
What sustainability topics matter to your stakeholders? What are the [changing] reporting requirements? How is the company impacting people and the planet? How are sustainability risks and opportunities affecting business priorities and decision-making?
Design governance and oversight for change
Build structures, risk management and policies that allow directors to provide oversight, implement change and demonstrate compliance with statutory requirements.
Build an audit-ready reporting process
Design robust and well structured sustainability reporting data, processes, systems and controls taking into account internal and external, voluntary and regulatory information needs, and embed them within the business to be on a par with financial reporting.
Partner with PwC on your ESG journey
Few companies are fully ready to meet upcoming legislation. And many companies struggle to assess where they are and what needs to be done, whether in terms of compliance or of meeting their stakeholders’ ever-increasing expectations for ESG-related transparency.
Your situation may call for deep analysis of your business models, defining the right metrics, reviewing your audits, reporting and assurance practices, or introducing new technologies and methodologies. For example, we can work with you with:
creating awareness and upskilling across management levels
assessing business activities against EU taxonomy criteria
identifying CSRD reporting gaps against legal requirements
benchmarking against peers.
We also offer PwC’s Reporting Integrated Solution, a complete suite of offerings to support clients with transforming their sustainability reporting function to generate high quality, decision-useful information.
Connect with PwC Belgium
Contact us
