Takeaways TriFinance ESG Conference: your sustainability journey, from compliance to transformation

Mario Matthys, Expert Practice Leader Corporate Reporting at TriFinance, delivered insights into the evolution of the sustainability reporting landscape. While some companies have taken significant steps to meet industry demands and compliance requirements, others are still developing strategies to ensure timely data delivery.

The impending implementation of CSRD frameworks will standardize reporting, enhancing data availability and audit assurance. TriFinance offers a structured 6-step process to support companies in their sustainability reporting journey:

1. Awareness: Create awareness beyond reporting requirements among the Board and employees.
2. Double Materiality Analysis: Identify material topics and their strategic implications.
3. Fit-gap analysis: Analyze the gap between requirements and your organization’s readiness, and conduct a high-level data availability & quality assessment.
4. Process & Data Framework: Design a framework for future data capture and related data models.
5. Data modeling & Corporate Performance Management: Define business requirements for the data management model, and roll out the implementation of the data collection, validation, and consolidation processes as well as the transformation of raw data into KPIs, metrics, and reporting.
6. Integrated report: Write and validate reports merging financial and non-financial data.

Continuous monitoring, adaptation and improvement of the internal control framework are crucial throughout the journey. Companies must report on a substantial volume of data points (1134 to be precise) with ESG data's significance extending beyond regulatory compliance. Considerations include meeting reporting standards, evolving stakeholder demands, fostering transparency, and risk mitigation. Reliable data is imperative for informed decision-making, highlighting the importance of addressing data governance challenges because data availability and data quality are key.

Mario Matthys is Expert Practice Leader Corporate and ESG Reporting at TriFinance.

More detailed information about the impending sustainability reporting legislation was given by Fredré Ferreira, Governance leader at EFRAG, the organization that developed the European Sustainability Reporting Standards (ESRS), outlining the sustainability information companies must disclose.

These standards, divided into Environmental, Social, and Governance (ESG) categories, are crucial for companies navigating the Corporate Sustainability Reporting Directive (CSRD).

Ten standards based on the Double Materiality Assessment require stakeholder engagement to identify material Environmental, Social, and Governance standards that are important for your business from both an impact and a financial standpoint. ESRS 1, mandatory under CSRD, covers general requirements, serving as the initial focus for a company’s sustainability journey.

The Double Materiality Implementation guidelines

The DMA implementation guidelines cover a number of critical aspects, including defining thresholds for materiality assessment, evaluating impacts from non-financial and financial perspectives, and engaging affected stakeholders through ongoing dialogue, incorporating scientific evidence.

Additionally, the guidelines emphasize the importance of regularly updating materiality assessments to reflect evolving circumstances and incorporating both quantitative and qualitative evidence when assessing impacts on integrated reporting outcomes. 

Furthermore, aggregation of information is allowed as long as it doesn't obscure details, and materiality within a group context is outlined. Establishing a connection with Article 8 taxonomy, including eligible activities and materiality assessment, is also emphasized.

The Implementation Guidance on the value chain emphasizes the inclusion of material impacts, risks, and opportunities (IROs) in sustainability statements, covering both direct and indirect contractual relationships. It highlights the need for entity-specific disclosures, even if primary value chain information is unavailable, encouraging companies to estimate missing information using reasonable and supportable data. The guidance also clarifies reporting boundaries, delineating between own operations and the value chain.

Perfect is the enemy of good

Fredré Ferreira also offered the audience a few tips on how to start their reporting journey. First of all: read! If in doubt: get back to the original text sources. Conduct materiality assessments based on current board discussions, understanding internal products/services and value chains, and prioritizing qualitative information on value chain aspects.

Ms. Fereira emphasized the importance of action over perfection, encouraging companies to begin reporting with their own operations, leverage financial reporting expertise for reskilling, and take advantage of transitional provisions to facilitate the transition.

Fredré Ferreira is a Senior Technical Manager at EFRAG Sustainability Reporting

Mercedes Sanchez Varela emphasized the critical importance of change management and transformation in sustaining businesses amidst evolving risk and opportunity landscapes.

With her extensive experience in ESG and climate-related matters, combined with her roles at prominent organizations like ChapterZeroBrussels and FIPRA EU Affairs, Mercedes brought valuable insights into the imperative for businesses to adapt and innovate within the sustainability domain.

She highlighted the transformative potential of embracing sustainability as a strategic imperative, leveraging compliance obligations such as CSRD to develop a future-proof business strategy.

Mercedes emphasized the importance of addressing scope 3 emissions, notably to be managed and not imposed. KPIs will be a company’s compass. Mapping business critical issues in relation to low/poor ESG performance is therefore key. It is important that companies Identify their important areas to adapt, adjust and engage in transformation.

As regulatory frameworks rapidly evolve, companies are urged to transition from mere compliance to tangible actions, embracing sustainability as a transformative force in today's landscape. Each organization's sustainability journey is unique, requiring fundamental changes to ensure long-term success and generate sustainable value for both business and society. This imperative reshapes various aspects of corporate operations, engagements, procurement processes, production methods, personnel management practices, and environmental impact mitigation efforts.

However, there's a notable lack of knowledge and attention at the board level. Effective governance and oversight are crucial to driving sustainability outcomes, managing short and long-term priorities, and fostering accountability across remuneration and reporting practices. Continuous education and awareness-building efforts are essential for the full board and its chair to navigate this transformative journey effectively.

Mercedes Sanchez Varela is a Board Member of ChapterZeroBrussels and Senior Advisor at FIPRA EU Affairs focusing on ESG, climate reporting, and EU climate policy.

After the plenary session, participants could pick one of three break-out sessions tailored where TriFinance experts addressed different challenges within the sustainability reporting journey.

Break-out session 1: ESG reporting is not a compliance exercise, it’s a driver for transformation. How does this compliance exercise affect your business model?

Led by TriFinance experts, attendees explored how ESG reporting can serve as a catalyst for business model enhancement and transformation, offering practical insights into leveraging ESG principles to unlock new growth opportunities and foster innovation.

Break-out session 2: Gathering non-financial data for your integrated report. Defining business requirements for your data management business model.

This session focused on the complexities of gathering and managing non-financial data for integrated reporting. It provided a comprehensive overview of CSRD requirements and offered strategies for effectively addressing challenges associated with ESG reporting. Attendees gained valuable insights into leveraging data management solutions to drive sustainable transformation and create long-term value for stakeholders.

Break-out session 3: How to find funding through grants for your sustainable projects?

Lastly, the third session explored strategies for securing funding through grants for sustainable projects. While subsidies from the European Union offer substantial funding opportunities, they often involve complex application processes and a difficulty to identify suitable partners. Successful subsidy applications require careful alignment with program objectives and realistic assessments of project feasibility. Leveraging expertise and organizational support can expedite the application process and enhance the likelihood of success.