Finding the right reporting approach for complex business structures
Sustainability reporting is no longer just a regulatory checkbox, it has become central to corporate strategy. Frameworks like the EU’s CSRD and California’s climate disclosure laws are driving organizations to disclose their environmental and social impacts with greater precision.
At the core of these requirements lies a critical decision: Should companies report at the group level or the entity level? This decision carries implications for compliance, transparency, and operational efficiency.
At the core of these requirements lies a critical decision: Should companies report at the group level or the entity level? This decision carries implications for compliance, transparency, and operational efficiency.
Understanding the challenges in sustainability reporting
- Navigating overlapping regulations:
Global frameworks impose varied and complex requirements. The CSRD demands double materiality assessments, while California’s regulations require comprehensive Scope 1, 2, and 3 emissions disclosures. For multinationals, aligning with multiple standards often leads to inefficiencies and resource strain. - Balancing stakeholder expectations:
Regulators may require localized data, while investors prioritize high-level metrics. At the same time, consumers and NGOs increasingly demand transparency into specific community impacts or supply chain practices.
Strategic solutions for effective reporting
- Leverage technology for reduced reporting burdens: Integrated ESG software can centralize data collection, automate validation, and align reporting with multiple frameworks like the CSRD and ISSB.
- Adopt a tailored reporting strategy: A hybrid approach can combine the benefits of group-level consistency with entity-specific insights. This ensures compliance while addressing local stakeholder needs.
- Focus on materiality to prioritize what matters most: Double materiality assessments help businesses identify and prioritize key impacts, streamlining the reporting process and improving stakeholder trust.
Choosing the right path forward
The decision between group and entity-level reporting reflects a company’s operational realities, stakeholder priorities, and regulatory obligations. By leveraging technology and aligning strategies, businesses can navigate this complex landscape and transform compliance into a competitive advantage.
In case you missed it
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Jason Stanley
Senior Director
Position Green
