The focus on sustainability in the business world comes not only from legislative bodies but also from stakeholders such as investors and customers. Although sustainability legislation currently applies only to large enterprises, this has significant ripple effects on everyone doing business with these large companies. In sustainability reporting, the entire value chain must be accounted for, which creates these widespread ripple effects illustrated in Figure 1. Data is requested and sent across various entities, and the future increasingly resembles a web of sustainability documentation and data.

What Can Be Expected to Be Requested:

• Sustainability report that supports initiatives.

• Specific data such as consumption, emissions, etc.

• Compliance with customer sustainability guidelines for suppliers.

• Documentation of compliance with regulations and standards.

What Is Required from a Business to Meet Expectations?

It is easy to think that a business must be sustainable to have a sustainability report, sustainability management, or a sustainability profile. That is entirely wrong. In these times when everything is new, results are not the focus. Instead of good results, businesses are required to work towards a goal purposefully and show results over time. Therefore, the first task lies in having an overview, management, and control of the elements of sustainability - and from there, you are in a position to make a difference.

The 10 Key Elements of Sustainability

Double Materiality

Double materiality is simply a principle that all sustainability issues should be viewed from two perspectives:

1. Impact Materiality - Does the company have an actual or potential impact on the planet, people, or surroundings, either positively or negatively?

2. Financial Materiality - What risks and opportunities can affect the company's future economy or value?

Read More About Double Materiality Here

Working with sustainability without conducting a double materiality process first is like saying "I am going on a trip," walking out the door, and running in a completely random direction - it makes no sense.

Managing Risks, Opportunities, and Impacts

You may have heard the term "sustainability risk"? Sustainability risk refers to threats or challenges for businesses related to lacking sustainable practices or unforeseen changes in the environment or society. This can include climate change, resource scarcity, changing consumer preferences, and reputational risk. It is important for organizations to identify, evaluate, and manage these risks as part of their sustainability strategy.

Policy

In terms of sustainability, "policy" is a set of guidelines or rules designed to promote sustainable practices at various levels, including businesses, governments, and communities. Examples include policies for material selection, supplier selection, and hiring processes. Policy should align with the risks and opportunities identified in the double materiality analysis.

Actions

Actions in the context of sustainability are concrete steps taken to promote more sustainable practices, supporting goals and policies set. Actions should align with the risks and opportunities identified in the double materiality analysis.

Goal Management

Goal management in the sustainability context involves defining, setting, and tracking specific goals. Goals should align with the risks and opportunities identified in the double materiality analysis.

Climate Accounting

A simple climate accounting system should be set up to have an overview of the company's direct emissions (Scope 1 and 2) to identify where the largest emissions are - in other words, where the potential is greatest. Scope 3 can also be calculated but requires significantly more effort.

Data Flow

Establishing a data structure that allows automatic updates and simplifies registrations gives the company a significant advantage by making it easy to retrieve data flexibly and measure progress effectively.

Monitoring KPIs

To ensure progress towards sustainability goals is on the right track, it is important to establish KPIs related to sustainability indicators, providing a measurable overview of the performance and success of sustainability initiatives.

Compliance with Reporting Requirements

Compliance with reporting requirements, such as CSRD, the Transparency Act, and ARP, is crucial to working in the right direction with sustainability topics throughout the year.

We have identified five steps that businesses can take to get started with their sustainability efforts (see Figure). These steps include establishing an overview, governance and control, and most importantly, setting a clear direction for the company's sustainability. It is important to note that only the final step actually yields results. With these steps, the company has set a direction for sustainability and can say: “We know where we are going, and we have started on the path.”