Until now, setting ESG (Environmental, Social, and Governance) goals and the reporting has been voluntary for businesses. In January 2023, the European Union’s Corporate Sustainability Reporting Directive (CSRD) came into effect, along with its implementation schedule, which obliges companies to report on the impact of their business activities on the environment, human rights, social aspects, and ethics.
Factors that organizations previously considered optional have now become essential for long-term success. In addition to financial goals, companies must consider environmental, social, and governance issues. Employees also expect engagement in current sustainable development topics and want to be part of organizations committed to a higher purpose.
While CSRD requires reporting, its actual purpose is the seamless integration of sustainable development principles with processes and activities, business objectives, and risk management. The directive requires leaders to analyze sustainability-related issues such as climate change, biodiversity loss, and human rights, connecting them to their company’s risks and their impacts on society and the environment. Transparency in company management and activities is also a crucial aspect.
Nasdaq recently published the results of its 2023 ESG and climate survey, revealing that 45% of companies have been engaging with ESG for less than three years, and only 9% have been involved with ESG for more than five years. This statistic suggests that a significant portion of companies is not dealing with an ESG strategy at all.
However, progress towards sustainable development goals should not be an additional burden but an integral part of our daily tasks and a necessary step toward a more sustainable future.
Simply describing sustainable development goals and storing information in various spreadsheets and documents accessible only to selected members of the management is not enough. Sustainable development principles must be integrated into operational processes and performance management systems. Once the main strategic directions, action plans, and monitoring frameworks are developed, they need to be communicated to employees. An ESG strategy typically encompasses initiatives in individual departments as well as projects that affect the entire company, involving employees from various units.
An ESG project may not succeed without the support of tools that structure objectives, key performance indicators, and help implement plans.
PlanPro software supports companies and public sector institutions in achieving sustainable development goals – executing strategy, implementing action plans, monitoring and managing risks. With PlanPro, you can define specific long-term goals and sub-goals, establish timelines and performance metrics with target levels, and plan the necessary key activities. You can involve the entire workforce in achieving these goals. It’s essential that all stakeholders know their contributions and what is expected from them. Everything is in one place, from your strategic vision to individual task checklists.
Many organizations have integrated ESG strategy goal implementation into the PlanPro performance management system.
For instance, the Republic of Estonia’s government is actively pursuing global sustainable development goals as outlined in the nation’s long-term development strategy, “Estonia 2035.” The coordination of tasks and work plans across different ministerial areas is facilitated by the use of the PlanPro software.
The sustainable development goals of the city of Tallinn are described in the “Tallinn 2035” development strategy, and PlanPro has also been adopted for its implementation and key indicator monitoring.
ESG reporting is mandatory for the following entities according to the established schedule:
Starting from 2024: Large Public Interest Entities: ESG reporting becomes mandatory for large public interest entities with more than 500 employees and subject to the current Non-Financial Reporting Directive (NFRD).
Starting from 2025: All Large Enterprises: ESG reporting extends to all large enterprises not currently covered by NFRD and meeting at least two of the following indicators in the two consecutive years: 250 or more employees, revenue exceeding 40 million EUR, and a balance sheet total exceeding 20 million EUR.
Starting from 2026: Other publicly listed companies (excluding micro-enterprises): ESG reporting becomes mandatory for other publicly listed companies, excluding micro-enterprises.
Starting from 2028: Companies with at least one subsidiary or branch in the European Union with a net turnover of over 150 million EUR.
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