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Environmental awareness and sustainability are becoming increasingly important. Companies are faced with the challenge of making their business activities and their environmental impact transparent and credible. This is not only due to a moral obligation, but also to legal requirements, which are reinforced by directives such as the Green Claims Directive (GCD) and the Corporate Sustainability Reporting Directive (CSRD).

CSRD and GCD: a brief overview

The Corporate Sustainability Reporting Directive (CSRD) represents an important step towards sustainability. As part of its "Green Deal" strategy, the EU is gradually expanding the disclosure obligations for companies and promoting the comparability of sustainability reports. Companies must now report on their impact on the environment as well as on social and governance aspects.

The Green Claims Directive (GCD) supplements the existing ban on greenwashing at EU level and specifies what information companies must provide to substantiate their environmental claims. This directive is expected to come into force in 2027. Companies are already preparing for the associated changes.

Data required for sustainability reporting

The required information covers the three ESG dimensions (environment, social, governance). In the environmental area, they include greenhouse gas emissions, pollutant quantities, water and land consumption and other environmental aspects. In the social area, the focus is on employee remuneration, safety in the workplace and other social aspects. Governance covers issues such as corruption, bribery and payment practices.

Challenges and opportunities for companies

These reporting obligations pose major challenges for companies, particularly in terms of data management and data quality. They must be able to draw on reliable data sources and optimise their IT systems for data collection and processing. Finally, they must be able to verify all environmental claims with data and have them validated or certified in a way that is comprehensible to stakeholders.

What are the challenges?

Even for companies with experience in sustainability reporting, these requirements are challenging. However, small and medium-sized companies in particular are confronted with new fields of action in this context if they are part of the supply or value chain of larger companies and are therefore indirectly affected by the regulation.

Building sustainability expertise

A central aspect of sustainability reporting is the development of corresponding expertise within the company. This requires not only an intensive examination of the relevant standards and guidelines, but also the implementation of suitable processes and structures for the collection and processing of sustainability data. Companies must acquire the necessary expertise in order to fulfil the reporting requirements.

Data quality and availability

Sustainability management is essentially a data-driven issue. Reliable data is the basis for meaningful information. In their supply chain, companies are dependent on relevant data from their business partners. This can lead to challenges, especially if this database was not previously available. Partners in the supply chain must ensure that their data sources are up-to-date, correct and transparent in order to be able to produce credible sustainability reports at a reasonable cost.

Optimisation of IT systems and processes

Efficient data collection and processing is crucial for successful sustainability reporting. This requires suitable processes and procedures to ensure data quality and availability. Companies should therefore review their existing IT landscape for optimisation potential. This can also include adapting existing processes and IT systems in order to reduce the effort required to process and analyse sustainability data now and in the future.

Validation of environmental claims

The aim of the regulation is to combat misleading statements and improve the transparency and comprehensibility of environmental claims. Companies must therefore ensure that their communication is transparent and credible. One way of increasing the credibility of a company's own environmental claims is to draw up reliable life cycle assessments based on relevant international standards and have them verified by independent experts. This also enables external stakeholders to make a well-founded assessment of the environmental impact of products and services.

And where are the opportunities?

Despite the challenges described above, a structured approach to setting up your own sustainability management also opens up numerous new opportunities: sustainability is increasingly seen as a competitive advantage that enables innovative companies to differentiate themselves and be successful in the long term.

Sustainability as an attractive factor on the labour market

Sustainable companies are also increasingly being recognised as attractive employers. Employees are increasingly looking for companies that correspond to their values and convictions. In a tight labour market characterised by a shortage of skilled workers and the desire for meaningful work, companies must therefore increasingly position themselves as employers that are committed to a sustainable future. Data provides the basis for making their own messages consistently tangible for stakeholders at all touchpoints.

Sustainability as a driver for optimisation potential in business processes

The obligation to report on their sustainability performance provides companies with the necessary incentives to review and optimise their own business processes. By looking into the "internal engine room", companies can search for optimisation potential in a structured manner and thus achieve efficiency gains. Data provides the necessary basis for meaningful business cases. By saving energy and materials, companies can reduce costs and increase their competitiveness.

Data as a basis for forecasts and planning

Collecting data on sustainability performance remains an ongoing issue, not least due to constantly changing regulations and markets. Innovative companies that develop their modelling and forecasting capabilities can evaluate and plan scenarios more accurately. Companies that collect and analyse data on energy consumption, greenhouse gas emissions and other environmental metrics can not only optimise their own business capabilities, but also help their customers achieve their climate goals and position themselves as a top supplier in the supply chain.

Outlook: Data as a driving force

Data is the backbone of all sustainability reporting - it enables companies to measure their performance, track progress and make informed decisions on a valid basis. However, data is not only important for reporting - it plays a crucial role in sustainability management, in the development of new sustainable business models and in the realisation of climate targets.

The demand for technologies to increase energy efficiency and reduce greenhouse gas emissions will continue to rise. Companies that invest in innovative solutions can strengthen their competitiveness.

In view of the challenges posed by climate change, companies will be increasingly reliant on suitable control and management technologies. Data-based tools for climate risk analysis will help to identify risks and develop measures to minimise them.

Overall, data will play an increasingly important role in sustainability management. Innovative companies that continue to expand their modelling and forecasting capabilities and use data as a driving force for sustainable decisions will strengthen their future viability.

The next blog post will present a process model for building a solid database for sustainability management.

You can find out more about exciting topics from the world of adesso in our previous blog posts.

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Picture Tobias Kosten

Author Tobias Kosten

Tobias Kosten is Lead Digital Sustainability Management (DSM) at adesso. As part of the Cross Industry (CI) Line of Business, he focusses on the use of digital solutions to increase sustainability performance across all industries. By taking a holistic view of the tasks involved, he supports companies in increasing their long-term success.

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