6.4 Support from External Specialists

Given the immense speed at which regulatory requirements are evolving, a structured and comprehensive approach from the start is necessary to minimize the implementation costs of additional disclosure obligations that the future will likely bring.

External specialists can support companies when the necessary expertise is not readily available in-house. This may lead to reduced costs and less effort in the long run, while providing a solid foundation for efficient and continuous stakeholder management.

Gap analysis

Companies should ensure that they keep abreast of any regulatory changes. If a company decides to centralize sustainability reporting in its financial report, it should ensure that the global report covers regional differences, including variations in material topics. If many differing local requirements need to be monitored, external support may be beneficial and more efficient to ensure compliance.

Double materiality

Every company should perform a materiality analysis to identify and define material sustainability topics. The assessment should describe topics that reflect the company’s significant impact on the environment and society, and sustainability topics that create or erode enterprise value and are therefore financially material. The ESRS in the EU demands disclosure according to this double materiality concept, and companies should plan and execute a structured process of identifying industry and benchmark-specific aspects and independently interviewing stakeholders.

Data

Data management and data quality should be a top priority. To ensure transparency, data completeness and integrity are key. Reporting on Scope 1, 2, and 3 greenhouse gas emissions, for example, requires access to accurate and complete data, as well as an understanding of emission sources and emission calculation methods.

Reporting

The reporting process requires timely planning and an appropriate governance framework. Robust processes and controls over non-financial reporting are critical to ensure materially correct disclosures. Companies should ensure that adequate resources are available for the company reporting cycle and that processes and controls would be adequate enough to receive external assurance. This applies in particular when managing new regulatory requirements on a busy schedule.

Assurance

According to the CSRD and the SEC, assurance of sustainability disclosures is mandatory for large companies operating within the EU and for public companies in the US. Third-party assurance increases credibility and fosters sustained trust between companies, stakeholders, and the capital markets.

All company decisions and tasks related to sustainability reporting should be aligned with the company strategy and supported by a governance model – including top-level support and the necessary financial resources. The aim of these regulations is to increase transparency regarding the impacts of ESG factors, create incentives for resilient business models, and facilitate a viable transition toward a sustainable economy. To survive and be successful, ESG reporting is no longer a nice-to-have, but a must-have.