The sustainability report is an annual non-financial report which organises and describes the various Corporate Social Responsibility (CSR) activities of a company. Moreover, it is also the result of a process, the path towards the ecological transition and of the growing awareness to issues related to the environment and the society that the company carries out over time.
The sustainability report is an essential document to communicate to stakeholders (institutions, citizens, suppliers, employees, and collaborators) the company's work and its economic, environmental, and social impact in a clear and transparent way, thus becoming a selection criterion by investors, banks, and large companies.
The amendment of the European Directive on sustainability reporting (CSRD), approved by the European Commission in July 2022, expands the range of companies involved in the need to publish a report on sustainability, from the year 2025, to companies / groups that meet at least two of the following requirements:
- Employees over 250
- Turnover of more than 40M €
- Balance sheet assets exceeding 20M €
In Italy, the number of companies that will need to publish the Sustainability Report will increase from the current 200 to about 4/5.000.
At the moment, the most widespread standard for the redaction of the Sustainability Report worldwide is the GRI - Global Reporting Initiative, which has been replaced, starting from 30 June 2023, by the new European Sustainability Reporting Standards (ESRS), as issued by the new European Corporate Sustainability Reporting Directive (CSRD).
The ESRS Standards introduce three main new points:
1. Double materiality: companies must report on how sustainability issues affect their activities and their impact on people and the environment.
2. Assurance: in order to make reporting more rigorous and authoritative, an external control and an auditing system, which can assure the reliability of the results, is introduced.
3. Value chain: sustainability reporting must have a perimeter that coincides with that of the financial statements: this means that it must be extended to the entire value chain, both upstream and downstream.
Sustainability reporting provides information on the organization's contribution to sustainable development, enabling the reporting of economic, environmental and social impacts.
The acronym ESG is a set of criteria that must inspire a company's actions in terms of sustainability:
- "E" of Environment: they are environmental criteria and evaluate how a company behaves towards the environment.
- "S" of Social: these are criteria related to social impact and examine the impact and relationship of the company with the territory, people, employees, suppliers, customers and with the communities with which it is related.
- "G" of Governance concerns the issues of corporate management inspired by good practices and ethical principles.
ESG criteria are important because they allow environmental, social and governance activities to be traced back to objective and shared measurement criteria. ESG criteria take the form of a social credit score in which all three categories are used to illustrate the amount of risk a company has to stakeholders.
The Sustainable Development Goals (SDGs) are the 2030 goals agreed by UN Member States as part of the Global Agenda for Sustainable Development, approved in September 2015.
The goals are 17 and are divided into 169 targets. The aim is to address the challenges set by climate change and reduce any form of poverty or inequality, ensuring the economic, environmental, and social sustainability of human communities in the long term.
The 17 goals | sustainable development (un.org)
SDGs officially entered into force on 1st January 2016 and, although not legally binding, they are a source of inspiration for the programs and public policies of all countries, regardless of the level of development. The SDGs are also a reference point for SRI (Socially Responsible Investment) stakeholders, who can identify ex-ante and measure ex-post the impact of their investments based on individual objectives.
"Climate change" refers to long-term changes in temperatures and weather patterns. These changes can occur naturally, such as through variations in the solar cycle. However, since the 19th century, human activities have been the main factor behind climate change, attributable mainly to the burning of fossil fuels such as coal, oil, and gas.
Climate change is partly caused by men and more precisely by their way of producing and consuming energy. In Italy, for example, fossil fuels, such as coal, oil, and gas, are responsible for 24% of climate-changing emissions. To these are added those generated by transport, to which another 24% goes, those related to the residential and commercial sector for 17%, those of the industrial sector with 11% and the agricultural sector with 9%.
The Paris Climate Agreement is the document signed by the 195 countries that participated in the 2015 COP21 (Twenty-first United Nations World Climate Conference). It deals with the theme of "sustainable management of natural resources" (art. 7) and (sustainable) technologies capable of "improving resilience to climate change and reducing greenhouse gas emissions".
The main goal of the Paris Agreement is to keep the increase in the global average temperature on the surface of land and oceans below 2 degrees Celsius, by the end of the century.
Whistleblowing is the English term that derives from the metaphorical expression "to blow the whistle" which meant “interrupting something abruptly”. Nowadays, it is the tool that allows anyone to report illegal behaviour, even presumed, that may result in fraud or that represents a risk of damage to colleagues and shareholders or that constitutes acts of a harmful or illegal nature to the interests and reputation of the company.
A carbon footprint is defined as the sum total of all the greenhouse gas emissions that had to take place in order for a product to be produced or for an activity to take place. In particular, a company’s carbon footprint determines the greenhouse gas emissions from across its operations, including power generation used in building structures, industrial activities, machinery, and equipment.
Some of the biggest advantages of measuring a company’s carbon footprint are:
- Assist the company in understanding its key emissions sources
- It enables the company to become more conscious of its consumption and contribute to making more responsible decisions.
- To be competitive in the marketplace, you must implement sustainable carbon-reduction strategies.
- To improve the reliability and veracity of the data used for Environmental, Social, and Governance (ESG) sustainability reporting.
Carbon dioxide traps heat emitted by both the sun and the Earth's surface and releases that heat into our atmosphere. As we burn fossil fuels and cut down forests, high concentrations of greenhouse gases, specifically carbon dioxide, threaten to raise the average surface temperature of the planet to intolerable levels — and cause a host of life-threatening impacts.
Greenwashing is the process of conveying a false impression or misleading information about how a company’s products are environmentally sound. Greenwashing involves making a dubious claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do.