- Adaptation to climate change
- The sustainable use and protection of water and marine resources
- The transition to a circular economy
- Pollution prevention and control
- Protection and restoration of biodiversity and ecosystems
Who is required to report?
Under current regulations (CSRD), the following companies must publish an ESG report:
From January 1, 2024:
Companies listed on regulated markets that were already subject to the previous reporting obligation (NFRD) (with the exception of listed micro-enterprises) and large companies that meet at least 2 of the following 3 criteria: - More than 250 employees - €40 million in annual revenue - More than €20 million in balance sheet total
If the company is included in the sustainability reporting of a parent company, it may be exempt from the reporting obligation.
From January 1, 2025:
All large companies, regardless of capital market orientation, that were not yet subject to the reporting obligation under the CSRD.
From January 1, 2026:
Small and medium-sized enterprises (SMEs) listed on a regulated market in the EU, as well as non-complex credit institutions and captive insurance companies.
What must an ESG report contain?
- Revenue:
The share of revenue from products that is associated with environmentally sustainable economic activities
- CapEx:
The share of total investments associated with environmentally sustainable economic activities or assets.
- OpEx:
The share of operating expenses associated with environmentally sustainable economic activities or assets.
To make ESG reports comparable, the implementation guidance of the Global Reporting Initiative (GRI), an organization that creates frameworks for sustainability reporting, has become established worldwide. In addition to the classification, it also contains universally applicable reporting principles and standards.
The Austrian Sustainability Reporting Award (ASRA) also serves as a guide to best practice ESG reports. It honors the best ESG reports of Austrian companies each year.
Benefits of ESG reporting for companies
- Risk minimization and cost savings
Due to the aforementioned increasing national and international regulatory requirements, companies will in the future be even more strongly confronted with their actions in terms of climate protection, and will feel both financial and economic consequences if climate protection is not a pillar of the company's philosophy.
Failure to comply with the reporting obligation has financial consequences. In Germany, for example, violating a regulation on CSR reporting can result in a fine of up to €50,000. Certain cases may even face criminal consequences, should misleading or false information be provided. Here, too, fines or a prison sentence of up to 3 years may be imposed.
Furthermore, fulfilling ecological ESG criteria offers the opportunity for energy efficiency and cost reduction in the value chain of companies.
The introduction of recycling programs can also help companies reduce waste management costs. By recycling materials such as paper, plastics, and metals, companies can reduce the amount of waste they send to landfills while simultaneously reducing their environmental impact.
- Reputation among investors and stakeholders
In addition to the aforementioned investment decisions by investors, potential employees are also increasingly drawing on ESG factors at companies for their decision-making.
And it is not only in the area of investment and employee recruitment and satisfaction that fulfilled ESG factors play a role, but also among customers. It has been shown that sustainability creates a competitive advantage over direct competitors in one's own industry, and customers are more likely to choose the sustainable product/company.
- Resilience
Implementing climate protection measures is an additional effort, but in the long term it avoids costs such as high CO2 taxes and helps companies remain competitive in the market. Should the goals of the Paris Climate Agreement not be achieved, it is not the regulations but the climate crisis itself that will demand immense financial losses from companies. A study by Deloitte and SORA shows that in Austria alone, in the "worst case" scenario defined in the study—global warming of 3 degrees—"around 90 to 100 billion euros of economic output and a potential of 0.7 to 0.9 million jobs would be lost by 2070."