2024: a key year from an ESG perspective. Are you ready?

ESG stands for environmental, social and governance, three areas that measure how companies impact society and the planet through their actions. Environmental aspects include, for example, reducing greenhouse gas emissions, recycling waste and protecting natural resources and biodiversity. The social aspect covers, for example, respect for human rights, ensuring decent working conditions, promoting equal opportunities, diversity and inclusion, and engaging communities and stakeholders. Governance relates, for example, to transparency and ethics in corporate governance, compliance with laws and regulations, prevention of corruption and fraud, risk and crisis management.

Why is ESG important?

More and more investors, customers, employees, suppliers and other stakeholders are demanding that companies contribute to sustainable development and social responsibility in addition to making a financial profit. Companies that demonstrate a high ESG rating can gain a competitive advantage, improve their reputation and stakeholder relations, reduce costs and risks, and ultimately have an advantage in raising new capital – banks increasingly take clients’ ESG approach into account when assessing financing. Conversely, companies that underestimate ESG risk future negative consequences – from reputational damage to sanctions and restrictions to outright closure.

ESG report – what is it and how to “deal with it”?

And how is each company’s approach to ESG actually assessed? This is where 2024 will be crucial. This is because there is a reporting obligation for companies that must report on non-financial data, sometimes referred to as ESG reporting. Non-financial reporting is part of the EU’s Sustainable Financial Strategy and requires companies to disclose how they are affected by, and how they themselves affect, ESG factors. This obligation has been defined by the adopted amendment to the Accounting Act and you can read more about the criteria in our previous newsletter.

This year represents the final preparatory year for companies that will be required to issue ESG reports in accordance with the new EU rules from 2026 (data collection will take place in 2025). The information in the report will need to be verified by an independent auditor and will be provided to investors and other stakeholders to better understand the ESG profile of companies.

How to prepare for the reporting obligation?

If you don’t already have an ESG management and reporting system in place at your company, it’s time to get started. We are happy to help you in this regard, offering comprehensive ESG consulting services that include:

• Analysis of your current ESG status and potential.
• Design and implementation of your ESG strategy and objectives.
• Collection, processing and review of ESG data.
• Creation and publication of ESG reports according to required formats.
• Education and training of your employees and management on ESG issues.

At RSM, we focus on ESG issues in great detail and offer our clients advice and support in developing non-financial reporting in line with the latest EU standards. We can help you analyse your company from a sustainability perspective and determine which areas you should focus on most and which ones you should not waste time on. We’ll advise you on the right way to go about collecting data and how to set everything up to make future reporting easier for you. We will guide you through the entire process and tailor a solution to your business. Come into this challenge with us.