Sustainability Reporting Boosts Company Competitiveness
Source: Äri-IT Spring 2025
Author: Antti Loks, Consultant at BCS Itera
Climate change, social responsibility, and the growing importance of ESG (Environmental, Social, and Governance) criteria demand a strategic approach from business leaders.
Sustainability reporting is no longer just a trend; it’s a vital tool that helps organizations move toward a more responsible and successful long-term future.
What Is Sustainability Reporting?
Sustainability reporting is the process by which companies collect, analyze, and publish data on their environmental, social, and governance impacts. This includes areas such as:
- Energy consumption and reducing greenhouse gas emissions
- Water and other resource usage
- Employee well-being and diversity
- Community involvement and ethical management
- Implementing circular economy principles
In Europe, sustainability reporting is becoming increasingly regulated, especially with the European Union’s Corporate Sustainability Reporting Directive (CSRD), which requires companies to disclose detailed information about their ESG activities.
Who Is Required to Submit Reports?
Starting in 2025, companies that meet at least two of the following criteria must submit a report:
- 250 or more employees
- A turnover of over €50 million
- Total assets of over €25 million
The obligation will extend to nearly all publicly traded companies in 2026. By 2028, non-EU corporations with an EU turnover exceeding €150 million will also be required to report.
There’s a common misconception that ESG only affects large, public-interest companies. In reality, it also impacts smaller players. Large organizations need data from their smaller suppliers and partners to compile their own reports. This is why a voluntary SME standard has been created, offering a simplified framework for small and medium-sized enterprises to collect and disclose ESG data.
The bottom line: if you want to be part of a large company’s supply chain or partner network in the future, you should definitely be addressing ESG.
How to Achieve Sustainability Through Reporting
While sustainability reporting is an important tool, it doesn’t automatically make a company sustainable. The real benefit comes only when the underlying data is high-quality, strategically collected, and consciously used to make processes more efficient.
The first step in this direction is a double materiality analysis. This means assessing how the company’s activities impact the environment and, conversely, how environmental factors impact the company’s operations. A similar assessment is made for social and governance factors. The analysis covers both risks and opportunities for mitigating them. The result is an overview of which impact areas need attention and what data needs to be collected and analyzed.
For example, companies usually have a good overview of costs associated with business trips—the price of flight tickets, accommodation costs, etc.—but may not know the CO₂ footprint of each trip or how to calculate it accurately. Or consider delivery notes, which show a product’s route and delivery time, but this data has not been systematically saved for carbon emissions analysis.
To collect new data and make optimal use of existing data, it’s crucial to modernize the business management software. Tailored to the specific needs of the company, this software can automate processes and enable in-depth data analysis.
Data Alone Isn’t Enough—Leadership Attitude Is Key
Sustainable principles can only be successfully implemented if leadership consciously embraces them. If reporting is seen merely as a formal obligation, the collected data and analysis results will go unused, and the company’s true sustainability won’t improve. Truly useful sustainability reporting must be more than just a document that complies with regulations; it must help in making strategic decisions and lead to real changes in business processes.
How Sustainability Reporting Supports Sustainability
Systematically collecting and publishing sustainability data increases a company’s credibility with customers, investors, and employees. Transparency is highly valued in capital markets, as institutional investors are paying increasing attention to ESG performance.
By analyzing data, a company can identify ESG-related risks, such as environmental impacts from operations, climate change threats, employee dissatisfaction, or corruption risks within the industry. Proactive risk management can reduce unexpected costs and reputational damage.
Optimizing operations and managing resources more efficiently by tracking sustainability metrics can lead to cost savings. For instance, reducing energy consumption through improved processes and technologies results in lower electricity and heating bills.
Engaging with sustainability motivates companies to seek new and innovative solutions that reduce their environmental impact and increase efficiency. This, in turn, can provide a competitive advantage in the market.
Sustainability reporting helps leaders understand which company activities have the most impact and how to allocate resources for maximum results. Regular data collection and analysis improve the decision-making process and strategic planning.
Summary
Sustainability reporting is not just a regulatory requirement; it’s a strategic opportunity for a company’s long-term success. It helps build transparency, manage risks, reduce costs, foster innovation, and improve management decisions. While sustainability reporting alone doesn’t guarantee sustainability, integrating it into a company’s strategy can be a crucial step toward becoming a responsible and successful business. Is your company ready to take that step?