8.4 Recommendations for Internationally Oriented Sustainability Reporting

In recent years, ESG has become a key issue in the investor community. The following tips can help to develop an effective and targeted system for sustainability reporting:

• ESG should form an integral part of a company’s broader equity story and its approach to long-term value creation. It should therefore be embedded in corporate strategy and existing management processes to ensure that relevant issues are effectively managed across the entire value chain.

• Conduct a robust materiality assessment that enables both internal and external stakeholders to focus on the most relevant issues. From an investor relations perspective, the primary emphasis should be on financially material ESG factors, including the risks and opportunities they present for the company.

• Robust risk assessments covering climate scenarios, nature-related risks and human rights, including considerations across the supply chain, can help protect enterprise value. At the same time, companies should identify sustainability-related business opportunities that have the potential to create additional value.

• Prioritise climate change mitigation through a clear decarbonisation strategy and corresponding targets, ideally aligned with the Science Based Targets, while also addressing climate change adaptation.

• Prevent greenwashing and SDG-washing through transparent, balanced and credible reporting.

• Involve the CFO and finance functions in sustainability reporting. This helps to link and reconcile non-financial information with financial data, and also improves processes and quality by building upon tried-and-tested financial reporting processes.

• Obtain external assurance for the sustainability reporting. This helps to bring it up to the same level as financial reporting and to boost its credibility.

Last but not least, the company should engage with its shareholders and key investors to understand their expectations in relation to sustainability – after all, they may have differing views and priorities.