The sustainability reporting landscape is undergoing a major transformation. Legal disclosure requirements are becoming the norm and it is now a widely held view that supply chains are a critical lever for sustainability. Purchasing departments are therefore assuming a key role in gaining supply chain insights needed for reporting obligations and driving progress on environmental, social and governance matters.
IntegrityNext helps you to stay on top of the ever changing and demanding reporting landscape. Our platform allows you to collect supply chain data across all relevant sustainability topics, identify gaps and ultimately improve your KPIs. Based on 30 supply chain metrics and more than 90 data points, you obtain a comprehensive and GRI-certified report for your disclosures.
The reporting landscape
Companies are faced with increasingly stringent demands from regulators, consumers and other stakeholders to report on their sustainability performance. Large corporations operating in different markets often have to meet a vast array of requirements simultaneously. Among the most relevant initiatives are:
The European Corporate Sustainability Reporting Directive (CSRD) and its mandatory European Sustainability Reporting Standards (ESRS);
The global standards of the International Sustainability Standards Board (ISSB), which consolidates several previous initiatives (including SASB);
The Global Reporting Initiative (GRI), which has developed the most widely used standards for sustainability reporting;
The framework of the Taskforce on Climate-Related Financial Disclosures (TCFD), which provides recommendations on climate-related risk disclosures. TCFD-aligned reporting has become mandatory in several countries.
How IntegrityNext can help
In many industries, the social and environmental impacts of upstream activities outweigh those of companies’ own operations. Supply chains are therefore taking centre stage as a major lever for sustainability. This puts purchasing departments under immense pressure to collect relevant data and deliver on corporate goals.
Our platform allows you to assess your suppliers based on a wide range of sustainability topics material to your industry and in line with the GRI Topic Standards ‘308: Supplier Environmental Assessment’ and ‘414: Supplier Social Assessment’. The results are synthesised in a GRI-certified report at the click of a button and can be readily used for your disclosures. The analysis comprises 30 KPIs and more than 90 data points which provide critical insights into your supply chain and shed light on areas in need of improvement so that you can boost your sustainability performance. Among the metrics are:
New suppliers screened against environmental/social criteria
Suppliers assessed for environmental/social impacts
Identified suppliers with negative environmental/social impacts
Negative environmental/social impacts identified along the supply chain
Relevant suppliers with whom improvements were initiated
Relevant suppliers with whom relationships were terminated
Going forward, we will also ensure alignment with the European Sustainability Reporting Standards and the ISSB standards to the greatest extent possible.
Who is affected by the CSRD?
The CSRD places reporting requirements on
Large EU companies, regardless of whether they are listed, which exceed at least two of the following thresholds: average annual workforce of 250 employees, balance sheet of €20 million and net turnover of €40 million
Listed SMEs in the EU exceeding at least two of the following thresholds: 10 employees, balance sheet of €350,000 and net turnover of €700,000
Non-EU companies meeting the following criteria: non-EU parent has a minimum of €150 million net turnover in the EU and at least one large EU subsidiary (see above) or EU branch (more than €40 million net turnover in the EU)
Some exemptions apply, for example for non-listed SMEs and micro-enterprises.
The role of supply chains
The first batch of the European Sustainability Reporting Standards (ESRS) is to be adopted in June 2023. The drafts of these cross-sector metrics are mindful of the role that supply chains play in corporate sustainability efforts. Relevant references highlight the importance of supplier engagement in terms of topics such as:
- Emissions reporting and
- Pollution prevention
- Management of water and
- Human and labour rights
- Biodiversity and ecosystem
- Enhanced product circularity
- Community impacts
- Business conduct
There will be standards for large companies and a separate set of simpler standards for SMEs to take account of their limited resources.
The CSRD applies a double materiality perspective. It considers how companies affect society and the environment (impact materiality) and how sustainability aspects affect companies (financial materiality). This is in contrast to many other reporting initiatives which focus on one approach only.
Mandatory Assurance Checks
In an effort to strengthen the quality and credibility of companies’ sustainability disclosures, ‘limited assurance’ checks by qualified and independent third parties will be mandatory. More demanding ‘reasonable assurance’ assessments will likely become compulsory at a later stage.