NEWS
Companies understand their sustainability reporting obligations - implementation varies widely
Around one fifth of companies subject to sustainability reporting obligations do not yet produce sustainability reporting, even though the requirements are comprehensively understood, according to a market survey published by Knowit on 9 November 2023. The most common challenges identified by the companies surveyed were complex data collection and lack of clarity about the information required. The requirements of the EU Sustainability Reporting Directive will enter into force in phases between 2024 and 2026.
Companies' starting point for the CSRD (Corporate Sustainability Reporting Directive) is mixed, despite awareness of the content and requirements of the Directive. Most of the companies surveyed will have to change their sustainability reporting as a result of the new CSRD.
The survey found that 89 % of the surveyed companies are covered by the Directive. Of all respondents, 74 % produce sustainability reporting to some extent, but not yet in line with the requirements of the new Directive, and 26 % of all respondents do not yet produce any sustainability reporting at all. The results are taken from a market survey just published by Knowit, which provided an overall picture of the maturity of companies operating in the Finnish market with regard to sustainability and its reporting.
- The EU Sustainability Reporting Directive affects a large number of Finnish companies, either directly or through customer requirements. Many companies will certainly be in a hurry, so planning and preparation should start now. Now is the perfect time to turn the requirements into a competitive advantage, sums up Markku Haukijärvi, Senior Sales Executive, Knowit Solutions Oy.
The reporting obligation applies to the entire supply chain, so companies subject to the reporting obligation will also require sustainability data from smaller companies in their supply chain. This means that the Reporting Directive will have a multiplier effect on a very large number of Finnish companies.
Reporting practices are perceived as challenging
When asked about the collection of data and related systems used for sustainability reporting, respondents found the practical implementation challenging. The main challenge for sustainability reporting is perceived to be the collection of data and its reliability. Data is often collected manually and may be scattered across different sources, which makes it difficult to compile data. In addition, many companies experience difficulties in obtaining the necessary information from their partners and suppliers.
There was a strong need for an external partner - 60% of respondents felt they needed external help to produce sustainability reporting, 10% already use an external partner and around a third felt they could manage on their own.
Responses also showed that adapting to the Directive requires a lot of resource use and clarification. Companies also feel uncertain about the scope and level of detail of sustainability reporting that should be produced.
Sustainability reporting is generally seen as an opportunity for business
When asked about the impact of sustainability reporting on the company's operations and practices, the benefits of reporting were mentioned as a factor guiding strategic planning and as an element that unifies and systematises reporting in general. A significant proportion (88%) of companies that have produced sustainability reporting felt that it had improved transparency and accountability.
Several (56%) of the companies surveyed mentioned that they had received requests or demands for sustainability reporting from various stakeholders. These requests relate in particular to carbon footprint and emissions reporting. There is a general interest in corporate responsibility. The vast majority of companies (79%) intend to use the results of sustainability reporting in their business strategy and decision-making process and see it as a competitive advantage.
Market research
The Finnish study "Vastuullisuusraportoinnin markkinakartoitus 2023 (Sustainability Reporting Market Mapping 2023)" survey assessed the awareness and implementation maturity of Finnish companies in relation to the Sustainability Reporting Directive and the impact of reporting expectations on the sustainability performance of these companies. The survey was conducted in October 2023 and targeted companies in the manufacturing and services sectors with a turnover of more than €40 million and who are required to report on sustainability under the new CSRD Directive. For comparative purposes, companies with a turnover of €30-40 million were also included. The survey is based on 100 responses. The survey was conducted and the results analysed by Innolink.
The survey is published on the knowit.fi website.