ESG is no longer a trend but a business necessity that is becoming deeply embedded in the corporate world. With the introduction of the Corporate Sustainability Reporting Directive (CSRD), many organizations were initially required to provide detailed reports on their environmental, social, and governance (ESG) performance. Recently, however, the European Commission implemented an important adjustment with the Omnibus package: the reporting obligation now only applies to the largest companies in Europe.

This change means a significant relief for SMEs, but it does not alter the increasing expectations from investors, customers, and other stakeholders regarding transparency and sustainability. For the largest organizations, CSRD reporting still poses a challenge that requires a strategic approach.

Why ESG reporting goes beyond compliance

The amended CSRD requires that the largest companies produce comprehensive, standardized ESG reports. Although smaller organizations are now exempt from this formal obligation, ESG reporting offers strategic benefits to all companies that extend far beyond merely complying with regulations.

ESG reporting delivers several concrete advantages:

• Increased investor confidence: Transparent ESG performance attracts sustainable investors and can lead to better financing conditions.

• Improved operational efficiency: Systematically measuring and analyzing consumption data leads to cost savings through energy conservation, more efficient use of materials, and reduced waste streams.

• Strengthened reputation: Consumers and business customers increasingly choose brands and suppliers that can substantiate their sustainability claims with concrete data.

• Future-proofing: By investing now in robust ESG data collection and analysis, you prepare for future obligations.

The trend towards greater sustainability and transparency continues unabated. By being proactive in your ESG reporting, even when it is not legally required, you position your company as a leader in your market.

The challenge: Where to find the necessary ESG data?

One of the biggest challenges in ESG reporting is gathering accurate and relevant data from different areas of your organization. This data is often spread across departments and systems, making it complex to compile a coherent report.

Sources of environmental data

To get a complete picture of your environmental performance, you need to look at various sources within your organization:

• Facilities management and operations: Energy invoices, energy audits, waste reports, and emission data form the basis of your environmental reporting.

• Supply chain: For scope 3 emissions, you need data from suppliers and logistics partners about their environmental impact.

• Compliance department: Here, you will find essential documentation regarding environmental permits and compliance with environmental regulations.

Compiling this data gives you insight into your overall ecological footprint, from direct emissions to indirect impacts in your value chain.

Sources of social data

The social component of ESG revolves around people, both within and outside your organization:

• HR systems: These contain crucial information about workforce composition, diversity, training investments, and compensation structures.

• Health and safety: Here you will find data on incidents, accidents, preventive measures, and safety audits.

• CSR initiatives: Documentation about social projects and social impact is often maintained by communication or PR departments.

This data together tells the story of how your organization interacts with employees and contributes to society.

Sources of governance data

For the governance aspect, you work closely with the leadership layer and supporting departments:

• Board secretariat: Information about board composition, diversity, and decision-making processes.

• Financial and legal departments: Documentation regarding compensation policies, anti-corruption measures, and compliance.

• Procurement department: Data on supplier due diligence and ethical standards in the supply chain.

Good governance data demonstrates that your organization is governed responsibly, with attention to ethics and integrity.

What exactly needs to be reported under CSRD?

The CSRD lays out comprehensive reporting requirements across three main areas, which together provide a holistic view of an organization's sustainability performance.

Environmental aspects

In the environmental domain, measuring and reporting greenhouse gas emissions is central. This includes not just your direct emissions, but the entire chain:

• Greenhouse gas emissions (Scope 1, 2, and 3)

• Total energy consumption, broken down into renewable and non-renewable sources.

• Detailed information about waste production, processing, and recycling rates.

• Water consumption and recycling, an increasingly important aspect given rising water scarcity.

These data must not only be qualitatively described but also quantitatively substantiated with measurable indicators.

Social aspects

The social domain focuses on the impact of your organization on people, both internally and externally:

• Diversity and inclusion within the workforce, including gender ratios, age distribution, and cultural diversity.

• Pay disparities between different groups of employees.

• Health, safety, and development of employees, measured through accident statistics, absenteeism, and training investments.

• Bigger societal impact, such as initiatives for local communities.

Transparency about these social factors is becoming increasingly important for stakeholders, from potential employees to investors.

Governance aspects

The governance aspect highlights how your organization is governed and what ethical frameworks are employed:

• Board structure, diversity, and expertise of governing bodies.

• Ethical policies, including anti-corruption measures and whistleblower protections.

• Linkage between the remuneration policy of executives and ESG performance.

These aspects indicate how seriously sustainability is taken at the highest levels in your organization.

The Omnibus Package: What does this mean for your organization?

The recent amendment by the European Commission via the Omnibus package has significantly changed the landscape for ESG reporting. This revision stems from the need to reduce administrative burdens, especially for small and medium-sized enterprises (SMEs).

Impact per type of organization

The Omnibus package has different implications depending on the size of your organization:

• For large companies: The CSRD obligation remains in place, although possible simplifications have been introduced to make the process more efficient. The exact definition of "largest companies" is detailed in specific threshold values.

• For medium-sized and smaller organizations: There is now an exemption from the legal obligation to publish comprehensive ESG reports according to CSRD standards. However, this does not diminish the strategic advantages of voluntary reporting.

Despite these changes, the trend towards greater transparency and sustainability continues unabated. Stakeholders increasingly expect insight into the sustainability performance of all companies, regardless of size.

The solution: Analytics as the key to efficient ESG reporting

Manually collecting and analyzing ESG data is a time-consuming and error-prone process. Modern analytics solutions provide an effective answer to this challenge by streamlining the entire reporting process.

Benefits of analytics for ESG reporting

Analytics transforms your ESG reporting process in various ways:

• Integrated data flows: Modern platforms bring data from various sources together into a single source of truth, breaking down data silos.

• Automated calculations: Complex metrics such as CO₂ footprints are consistently and accurately calculated, eliminating human errors and ensuring reproducibility.

• Real-time monitoring: By integrating IoT sensors and continuous data feeds, you can track critical performance indicators directly and quickly adjust where necessary.

• Visual dashboards: Interactive visualizations make complex ESG data accessible to different stakeholders and support evidence-based decision-making.

• Robust audit trail: Automated systems maintain a digital history of all data sources and calculations, which is crucial for credibility and verification.

These advantages make analytics not only a tool for more efficient reporting but also a strategy to derive greater value from your ESG efforts.

How VDS transforms your ESG reporting process

At VDS, we understand that effective ESG reporting requires more than just technology. Our approach combines advanced analytics solutions with practical expertise to elevate your ESG reporting to a higher level.

Our comprehensive ESG reporting approach

VDS supports your ESG reporting process with a comprehensive package of solutions:

• Custom analytics platforms: We implement solutions like Power BI dashboards that perfectly align with your organizational structure and reporting needs.

• IoT solutions for accurate data collection: Our sensors measure and report real-time data on energy consumption, emissions, and other environmental indicators.

• Automated workflows: We eliminate manual processes by seamlessly integrating data sources into one reporting framework.

• Scalable solutions: Our systems grow with your organization and adapt flexibly to changing reporting requirements.

What truly sets VDS apart is our approach as a strategic partner. In addition to technology, we offer advice and training to help your team maximize the potential of your ESG analytics. We share best practices, interpret trends, and help you translate data-driven insights into concrete sustainability initiatives.

From legal obligation to strategically valuable insights

Whether you fall under the amended CSRD obligation or not, ESG reporting does not have to be a burdensome task. With the right approach, it transforms from an administrative burden into a strategic tool that delivers valuable insights for your entire organization.

Effective ESG reporting illuminates hidden inefficiencies, identifies cost-saving opportunities, and reveals opportunities for innovation. It helps you anticipate risks before they materialize and enables you to seize opportunities before your competitors do.

By automating and optimizing your ESG reporting together with VDS, you position your organization as a leader in sustainability. You turn conscious transparency into a competitive advantage in a market where authenticity and accountability weigh increasingly heavily.

Let’s take this step towards a more sustainable future together, where responsible business practices go hand in hand with commercial success. A future where ESG is no longer seen as an obligation but as an integral part of modern business that creates value for all stakeholders.

Ready to optimize your ESG reporting? Contact VDS for a no-obligation conversation about how we can help you.