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An image of a green circle with a bunch of dots inside it. The Earth.

Definition ESG

The term ESG describes three sustainability-related areas of corporate responsibility. ESG is the abbreviation for “Environmental, Social and (Corporate) Governance.” Below you will find a brief introduction to ESG Reporting, and what challenges this means for your company.

In addition to the abbreviation ESG, the term “sustainable” is often used synonymously in the press and literature.

The word ESG is depicted in a person's hand.
According to the EU Taxonomy Regulation, the following are considered environmental targets:
  • The climate protection
  • Adaptation to climate change
  • A sustainable use and protection of water and marine resources
  • Transition to a circular economy including waste prevention and recycling
  • Pollution prevention and control
  • Protecting healthy ecosystems.

It is important that in the pursuit of individual environmental goals, social and corporate values and issues are not lost from focus. For this reason, in addition to environmental sustainability, a minimum protection of social and corporate values is also included in the ESG criteria.
anchored. This is to ensure, for example, that ecological goals are not implemented through child labor or corruption.

Minimum protection includes the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, including the International Labor Organization’s core labor standards. (Source: BaFin)

The OECD Guidelines for Multinational Enterprises set out principles and benchmarks for responsible business conduct. This includes, for example, respecting human rights, fighting corruption, observing the rules of fair competition and complying with tax regulations. In addition, core labor standards of the International Labor Organization must be observed. This means:

  • No child or forced labor
  • Freedom of association
  • Freedom to form unions and bargain collectively
  • equal pay for work of equal value for women and men
  • Non-discrimination in working life

The ESG Criteria

  • Climate
  • Resource scarcity
  • Water
  • Biodiversity
  • Employees
  • Safety and health
  • Demographic change
  • Food Security
  • Risk and reputation management
  • Supervisory structures
  • Compliance
  • Corruption

Sustainability Assessment

The sustainability of companies and specific business processes is assessed via different information channels. Many companies have already made the first efforts and are producing their own sustainability reports, for example. A first reporting requirement for European capital market-oriented companies has been in place since 2017. The companies affected by this are required to report annually on significant developments in the areas of environmental, employee and social concerns, respect for human rights, and combating corruption and bribery.

In terms of both the quality and the comparability of the information obtained from this, the following two standards have become established:

  1. The German Sustainability Code (DNK)
  2. The Global Reporting Initiative (GRI)

Furthermore, there are so-called sustainability rating agencies (e.g. oekom-Research, imug Rating, Inrate or Sustainalytics). However, sustainability ratings are not assigned on behalf of issuers or investors.

ESG Reporting & new law

In Switzerland, the ordinance on mandatory climate reporting by large companies was adopted at the end of 2022 and will come into force on January 1, 2024. In the EU, the Green Deal applies, with which the 27 EU member states aim to become climate-neutral by 2050. The first step is to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.

The Green Deal is a roadmap with which the EU Commission is moving from the previous voluntary commitment to regulatory intervention in economic activity. With the Green Deal and the associated Sustainable Finance Action Plan, Europe’s economic and financial systems committed to becoming more sustainable and inclusive in the future. Previously, the obligation only applied to large capital market-oriented companies, insurance companies and banks, and is now being continuously expanded.

The gradual introduction of the Corporate Sustainability Reporting Directive (CSRD) means that in future all companies – irrespective of their stock market listing and without the previous threshold of 500 employees – will have to report on their social and environmental footprint.

The Corporate Sustainability Reporting Directive (CSRD) are the new framework for sustainability reports and provide the specifications. The European Sustainability Reporting Standards (ESRS) define the contents. The new reporting standards take up existing frameworks such as GRI, SASB and TCFD and set new standards for mandatory reporting, such as dual materiality.

“European Sustainability Reporting Standards” What will change:

  • Disclosure of ESG information along the entire value chain
  • The first ESRS-compliant sustainability reports must be published in 2024
  • Affects around 50,000 companies
  • Equality of non-financial and financial reporting
  • Tougher rules
  • All divisions and corporate levels are affected
  • ESG must be integrated into the corporate strategy and operations
  • Extension: disclosure of aspects such as Biodiversity and circular economy

ESG reporting - when does it concern you?

You are required to report from 01.01.2025 if you meet two of these three criteria:

  • 250 Employees
  • 20 Mio EUR Balance sheet total
  • 40 Mio EUR Revenue

You are required to report from 01.01.2026 if you meet two of these three criteria:

  • 10 Employees
  • 350.000 EUR Balance sheet total
  • 700.000 EUR Revenue

You are obliged to report (as a non-EU company) from 01.01.2028 if you meet these criteria:

  • At least one subsidiary or branch in the EU
  • 150 Mio EUR Group turnover in the EU

The significance of the new reporting requirements in practice

The new regulations of the CSRD not only massively extend the obligation for ESG reporting / sustainability reporting to companies that were not previously affected, it is also becoming increasingly important. Non-financial information is now accorded the same status as financial information and is subject to comparable requirements in terms of reporting quality, reliability and discoverability.

This poses a number of challenges for the companies concerned:

  • Obtaining and preparing the right data and filtering out high-quality and reliable information
  • An expanded scope of ESG reporting
  • The digital provision of the sustainability report
  • The redesign and expansion of the content of the sustainability report (incl. the ESRS to be taken into account)
  • The external audit requirement for the sustainability report

At the same time, the introduction/implementation of meaningful ESG reporting is also a new challenge for change management: For example, employees who were previously unfamiliar with professional reporting now have to collect, filter and prepare extensive data.

For this reason, the companies concerned should address the new reporting requirements at an early stage and make preparations for implementing the necessary processes. Many affected companies are faced with the problem of having to record and provide financial and non-financial data in a standardized way for the first time. While mid-sized companies have decades of experience in reporting financial data. However, they lack this experience when reporting non-financial data because data source and data format differ, sometimes significantly.

At Bluebird, we help you achieve your sustainability and ESG goals and are always there to support you with our professional know-how as well as our technical expertise.

We look forward to hearing from you.


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Are you looking for an ESG reporting solution?

Since it is a particular challenge for meaningful ESG reporting / sustainability reporting to fully prepare the right data and to filter out high-quality and reliable information, we recommend using a platform solution.

The difference between a single solution and a platform solution is that a platform solution maps all CPM processes and does not just focus on a specific sub-area. In terms of data availability, this results in a seamless transition without redundant data storage. In addition, a comprehensive solution is much more user-friendly and faster to introduce (implement) than individual stand-alone solutions.