02 Sep ESG in 2024: What is the current state of ESG reporting in companies?
When the Finance Ministers (G7) announced on 7 June 2021 that ESG reporting would become mandatory, the question arose: what is the current state of ESG reporting, and for who is it mandatory? If you are as curious as we are, be sure to read on.
What is meant by ESG regulations?
ESG regulations have been designed to promote the ‘Green’ aspect by encouraging sustainable investments. The European Union currently has the most comprehensive regulations, creating a strong framework around various objectives, including climate goals.
One of the main consequences of the regulations is that companies must communicate transparently about both the positive and negative impacts of their activities in terms of ESG, as well as their sustainability initiatives. This must be done in accordance with the established regulations:
- EU taxonomy
This classification system provides standard definitions for what is considered environmentally sustainable. These standard definitions help prevent ‘greenwashing’ by companies and encourage sustainable activities. - Sustainable Finance Disclosure Regulation (SFDR)
This regulation, which entered into force in March 2021, requires companies to be transparent about how they integrate sustainability risks into their decision-making processes - New Corporate Sustainability Reporting Directive (CSRD)
The revised version of the EU regulation entered into force in early 2024. This directive for sustainability reporting defines the minimum information that companies must disclose.
What is meant by an ESG score?
The ESG score or rating is used to assess how well a company performs on ESG criteria. It indicates the extent to which a company is able to meet its ESG obligations. This score is awarded by external parties based on a range of different indicators. Some of the most well-known organisations that assign these scores include:
- Bloomberg ESG data services
- Sustainalytics ESG risk assessments
- Dow Jones Sustainability Index Family
- RepRisk
What about the obligation of ESG reporting?
Listed companies that fall under the Non-Financial Reporting Directive (NFRD) are required to submit their ESG reporting according to the CSRD in 2025. This reporting pertains to the financial year that started on 1 January 2024. For large companies, this obligation will apply as of 2026 for the financial year beginning on 1 January 2025.
What ESG insights does Trends Business Information offer?
You can see how well a company is meeting its ESG obligations through the ESG indicator. You can compare it to our score that indicates how creditworthy a company is.
You can get an overview of sustainability efforts, including ratios based on social balance, electrification of vehicle fleets, installation of solar panels, sustainability labels such as B-Corp, SBTi, Green Key, and more, thanks to detailed ESG insights from official and exclusive sources.