ESG Sustainability strategy and reporting: new opportunities for companies

In recent years, sustainability has become crucial for companies, especially in the EU space, following the introduction of increasingly stringent regulations. The adoption of ESG sustainability practices helps to enhance corporate reputation in a context where consumers are increasingly aware of the impact of their choices. A tangible commitment to sustainability strengthens the brand and fosters customer loyalty. Sustainability reporting allows this commitment to be told, beyond a simple compliance practice or a new marketing tool, in a transparent manner, creating new opportunities for partnership and investments

Non financial reporting: what you need to know

The introduction of the Non-Financial Reporting Directive (NFRD, 2014) and the Corporate Sustainability Reporting Directive (CSRD, 2023) has made it imperative for companies to adopt effective tools to monitor and communicate their environmental and social impact, including sustainability reports.

The new framework formally integrates ESG (environmental, social and governance) impact assessment criteria into an unprecedented transparency and reporting system, requiring companies to disclose detailed information on how their operations affect the environment, society and governance.

Whyis sustainability reporting  useful?

The adoption of a sustainability strategy not only ensures regulatory compliance, but also offers numerous benefits to the companies themselves. These include greater transparency and a clear view of the company’s practices, which strengthen trust and legitimacy in the eyes of stakeholders.

The adoption of ESG criteria makes companies more attractive to investors, who see in them safer and more sustainable investment opportunities in the long term. In particular, voluntary reporting can attract more investment and facilitate access to international markets, demonstrating a concrete commitment to sustainability and long-term stability, and allowing companies to benefit from green financing and government incentives.

In addition, clear and authentic communication of ESG practices prevents accusations of greenwashing, building trust in the brand. Companies committed to sustainability are also more attractive to talent, especially among the younger generation – which is particularly keen on sustainable investments – and a sustainable and ethical working environment fosters employee engagement and retention.

Another benefit lies in operational efficiency: the implementation of sustainable practices stimulates innovation, enabling the development of new products and services or the improvement of existing processes. This can lead to a reduction in operating costs through the more efficient use of resources and the adoption of green technologies, improving profit margins.

Finally, early CSRD compliance and voluntary ESG reporting offer a competitive advantage, differentiating the company from competitors in markets where ESG reporting is not yet mandatory, while early adoption of ESG practices optimises the supply chain, ensuring continuity and preventing bottlenecks. Moreover, companies that adopt CSRD compliance early can proactively identify and manage risks associated with environmental and social factors, preparing for future regulations and reducing legal and financial risks related to non-compliance and preventing litigation or reputational damage related to ecological incidents.

How to achieve these benefits with an effective sustainability strategy?

Companies nowadays face significant challenges in integrating sustainability into their business models. These obstacles may include difficulties in identifying key impact areas, internal resistance to change, and initial implementation costs.

For example, the transition to more energy-efficient technologies or less polluting production processes may entail immediate expenses that generate returns only in the long term.

At the same time, sustainability regulatory guidelines are complex and constantly evolving, making it difficult for companies to maintain compliance without an in-depth knowledge of current laws, such as CSRD guidelines or ESRS standards.

Mainstreaming ESG criteria and CSRD compliance require companies to adopt structured processes to incorporate sustainability issues into their operations and strategies. This implies:

• Internal reflections and assumptions of responsibility, such as the concept of dual materiality, which obliges companies to consider both the impact of their activities on the environment and society and the influence of sustainability factors on their performance.
• Creation of governance structures dedicated to sustainability, both through in-house expertise and with the support of external consultants, to ensure that sustainability is integrated into business decisions.
• Reporting and communicating sustainability strategies and achievements in annual reports, which provide transparency to stakeholders and strengthen trust in the brand.

For companies that want to seize these opportunities, it is crucial to integrate ESG criteria into day-to-day business processes. The first step is to define a clear strategy that aligns sustainability goals with the company’s mission and vision. It is essential to involve and train all levels of the organisation, from managers to employees, so that they understand the importance of sustainability.

Finally, employee training and awareness-raising are crucial to the success of an ESG strategy, as each team member must be aware of how their work contributes to the company’s goals. In addition, companies can benefit from partnerships and collaborations with other companies, NGOs and institutions, which allow them to share knowledge and resources and achieve more ambitious sustainability goals.