For a long time, ESG was seen as a separate subject in decision-making and financial analyses. That time is over. Organisations will have to integrate ESG fully into their end-to-end processes due to new extensive EU reporting rules. CFOs and finance professionals have work to do!

New Legislation

In response to the Paris Climate Agreement, the EU has presented its Green Deal. This is an ambitious plan to transform the European economy into a sustainable economy. A lot of public money is required but not enough in order to realise this goal. The European Commission has therefore drawn up a plan to redirect private money flows to sustainable technologies and companies.

This plan consists of a large set of new laws that contain measures to integrate sustainability into financial regulations. It aims to improve transparency and quality of reporting on sustainability and promote sustainable investments. These regulations affect financial institutions, listed companies, large companies and smaller companies that are in the value chain of larger companies.

Beyond compliance

The importance of high quality ESG data and reporting goes beyond simple compliance. It will become crucial in finding new capital and relatively cheaper for companies that can show good ESG performance. It can become harder, more expensive and in some cases impossible to raise capital if ESG performance is poor or unknown.

A company that has excellent ESG reporting that can be shared with partners and customers in their value chain has an advantage in selection processes. Other companies have to report on ESG as well and are dependent on their partners. Excellent ESG information provision will therefore become indispensable.

Finance responsible

It is no longer sufficient to leave this issue to the organisation’s sustainability experts alone. The CFO and finance professionals are in the unique position to integrate ESG into business operations.

All ESG information will be checked by an accountant and must therefore be of the same quality as financial information in the annual report, including the audit trail. Accurate, up-to-date, accessible and comparable information is only achievable with an optimised Business Excellence Hub and starts with proper registration of data in end-to-end processes. ESG must therefore be fully integrated into the organisation.

Finance will play an important role in identifying and quantifying ESG related financial challenges and opportunities. Think of calculating the potential costs of carbon emissions or the benefits of energy efficiency. By doing so, they can help the company make decisions that are financially, socially and environmentally responsible.

Bluefield can set up high-quality dashboards and a reporting cycle in just three steps. This will facilitate compliance with legal requirements and provide clear insights to all stakeholders. Read more!