ESG reporting; ‘nice to have’ becomes ‘need to have’
Dutch version: click here.
Thinking that transparency on sustainability is a choice to make? Think again, both regulatory bodies, governmental organization, and financial institutes (e.g. banks) will make you pay, even literally, if you don’t. In this article, you will read about why it is so important to prepare for ESG reporting now and not tomorrow and certainly not next week!
A Report about your environmental, social and governance impact
ESG reporting is a soon to be mandatory report for companies to report on your Environmental, Social and Governance impact. Currently some foodservice companies are already doing this from an intrinsic motivation. In this article we discuss for which companies ESG reporting is becoming compulsory and if not, why you still need to move today to prepare your organization for it.
ESG reporting becomes mostly mandatory from 2024
ESG reporting will be mandatory from 2024 for the following companies:
- Companies with 250 or more employees.
- Companies with a turnover of at least EUR 20 million.
- Companies with a balance sheet total of EUR 40 million.
Regulatory bodies as the European Communities as well as national government are pushing for swift regulations on mandatory reporting as well are using the financial sector as their leverage factor to reward or penalize on compliance or non-compliance by applying differentiation on interest rate levels based on ESG-requirements.
Don’t belong to the above companies? Then we still encourage you to report ESG because of the benefits it provides. These are described below:
Transparency results in customer loyalty
First, there is consumer demand. For example, a recent study by Label Insight found that 94% of consumers show more loyalty when a brand shows transparency and 73% of consumers are willing to pay more for products that comply (Label Insight, 2023). So, when a company takes steps in ESG reporting, it will be beneficial to its reputation and attract consumers who value sustainability.
Transparency results in preferred positions
If not, the financial sector rewarding compliance, there are plenty of other occasions you want to be in a preferred position when applying for permitting, participation in tenders (e.g. catering) or trying to get into real-estate schemes with ownership/management having a clear view on sustainability and related transparency.
Transparency results in a more conscious organisation
In addition, ESG reporting will also contribute to becoming a more conscious organisation. For instance, reporting can help in identifying areas for improvement, and reducing environmental impact. This includes reporting on waste, water consumption, and impact on ecological footprint. By having insight into this, targets can be set, and this can also save costs in the long run (Zantinge, 2021).
Transparency results in employee loyalty
The impact on society will also have to be reported. This includes working conditions, equality, health and safety regulations, and the impact of this. By being transparent, areas for improvement can be identified and could lead to more satisfied employees. Also, ESG performance is hugely important for attracting and retaining talent (Mclennan, 2022). Research by KPMG shows that ESG policies of companies play a role in the job they choose for about half of employed people. Especially younger generations consider it to be of decisive importance in their choice. One in five of those surveyed said they had even once thanked for a job because the company was not sustainable enough. These are the so-called Climate Quitters (McCalla-Leacy, 2023).
Time to move
Whether you are intrinsically or extrinsically motivated towards sustainability. Everyone will have to move. So, it becomes rapidly important to have transparent data, set goals and have a pragmatic action plan. As F&B strategists and concept developers we can help you in sustainable F&B solutions and operationalizing a sustainable strategy. We will do so in a pragmatic and transparent way. Please contact us when you need help in your transition.
 (Large companies must report on sustainability, 2023)