Sense and sustainability

By Richard Peters

Large multinational companies have been doing it for decades, and now smaller companies are obliged to follow suit: recent legislation makes sustainability reporting mandatory for a widening circle of companies who do business in any of the European Union’s member states. And with this international perspective baked in, these reports are much more effective if they’re produced in multiple languages. At Klein Wolf Peters, we’ve been translating corporate sustainability reports for many years, and we stand ready to assist companies who are only just starting out on their own reporting journey.

Sustainability reporting is a way for an organisation to inform its stakeholders about its nonfinancial performance. It pulls together information on action the organisation is taking with respect to various environmental, social, governance, and general economic issues. A sustainability report builds consumer confidence by helping outsiders to understand a company’s stance on various topics, so people can decide whether it lines up with their own views – because if it does, they’re more likely to want to do business with that company, invest in it, or buy from it.

The practice of reporting on a company’s sustainability activities emerged as a subset of corporate social responsibility (CSR), which itself arose in the 1960s as a way to describe the obligations that a company has to society over and above its role as a law-abiding employer and taxpayer. This view of companies as having not just economic and legal but also ethical and philanthropic responsibility – and hence “environmental, social, and governance”, or ESG, goals – has become increasingly mainstream over recent decades.

In 1989, a handful of large multinationals published the first standalone reports specifically to lay out their company’s environmental activities. Over the next few years, more companies in more countries began reporting on sustainability and ESG. This was a time of growing environmental awareness in industrialised countries: in 1989, the Exxon Valdez oil spill triggered a public outcry; in 1992, the United Nations Framework Convention on Climate Change was signed by 154 countries. A few years later, in 1997, the Global Reporting Initiative (GRI) was founded in order to create “the first accountability mechanism to ensure companies adhere to responsible environmental conduct principles.”

Now, building on initiatives such as the GRI and the UN Global Compact of 1999, sustainability reporting is about to get a lot bigger: the EU Corporate Sustainability Reporting Directive (CSRD), which entered into force on 5 January 2023, applies with effect from the 2024 financial year. This turns sustainability reports from voluntary, standalone affairs into a mandatory section of a company’s management report starting in 2025.

Most consequentially, the CSRD expands the sustainability reporting obligation to non-EU companies whose business within the EU meets certain size and scale thresholds. Mandatory sustainability reporting will be phased in for smaller classes of company over the years ahead.

The CSRD introduces 12 European Sustainability Reporting Standards (ESRS) to keep reports comparable and consistent. The required level of ESG disclosure is both comprehensive and granular across a company’s sustainability impacts: its sustainability strategy, its targets and progress, its products and services, and its business relationships along the value chain. To comply with the ESRS, companies will have to collect thousands of data points relating to their ESG activities and standardize them for reporting purposes.

In our company’s home country of Germany, meanwhile, the Act on Corporate Due Diligence Obligations in Supply Chains (the act’s full title in German is officially abbreviated to the still reassuringly long “Lieferkettensorgfaltspflichtengesetz”) introduces parallel reporting obligations for companies to show that they respect human rights in their global supply chains. It entered into force in January 2023 and initially applied to any company with at least 3,000 employees in Germany. As of 2024, the threshold drops to 1,000 employees.

At Klein Wolf Peters, we’ve built up years of experience in translating sustainability reports for various corporate customers. We’re here to make sure that any translated version of your sustainability report not only fulfils legal requirements and speaks to specialist readers in the relevant ESG fields, but also engages a wider audience and delivers on its role as a brand enhancer that’s a pleasure to read.