ESG – Environment, Social, Governance, has become a concept that is mainly associated with indicators of sustainability and responsible behaviour of companies towards the environment, as well as the impact of their social and governance activities on society. It is a new differentiating business indicator that can differentiate a company in a competitive environment and convince investors, business partners, as well as customers and the public of the sustainable aspects of its business activities. Investing in companies with a high ESG rating will be more attractive and less risky for investors.
ESG reporting will become mandatory for many companies
The non-financial ESG reporting, which will become mandatory for approximately 700 large companies in Slovakia from 1 January 2025 and a year later also for listed small and medium-sized enterprises, will measure the intangible parameters by which a particular company influences its surroundings. In order to “measure” its ESG profile, a company will need quite a lot of data from different areas, especially regarding HR, energy supply, production, etc. European sustainability standards rely on collecting and evaluating a large amount of data, which may seem very challenging for companies at first. But that’s what we’re here to help you find the right solutions.
Our GAMO specialists are ready to work with you to address your company’s sustainability issues. They can deploy a comprehensive software tool in any corporate environment that delivers a detailed view of audited ESG data. Not only does it offer reporting tools for the reporting the company will need to provide next year, but it also uses analytical tools to identify opportunities to meet ESG goals towards sustainability and efficiency.
Which companies are affected by ESG
In August 2023, the European Commission endorsed the ESRS European Sustainability Reporting Standards, effective from 1 January 2024, as a set of rules that companies will need to follow when preparing ESG reports. This is the measurement of the non-financial parameters by which a particular company’s business activities impact its environment, social and governance standards.
Companies will therefore face a new obligation to collect data and subsequently conduct non-financial ESG reporting. Based on legislative criteria, this will be mandatory for approximately 700 large companies in Slovakia that meet at least two of the following three criteria:
- assets with a value of more than EUR 20 million
- net turnover above EUR 40 million
- number of employees over 250
Benefits of ESG rating
ESG is expected to become a global trend, so even smaller companies should start collecting data and taking ESG measures early. Sustainability reporting can become one of the deciding factors in business transactions and investments. Banks are already assessing the ESG profile of companies when approving loans, it is increasingly required by buyers and customers, not to mention foreign investors. ESG is definitely becoming a new business differentiator that will bring many benefits to businesses:
- get more favourable conditions when accessing the financial resources of banks
- they will be more competitive and more promising for customers and investors
- will have better financial performance, more inclusive and engaged teams
- progressively reduce risks and increase process efficiency
- improve dialogue with stakeholders
- lower capital costs
- raise awareness and understanding of the risks and opportunities associated with climate change within the business
How Slovak companies perceive ESG
In practice, the application of ESG may look different and vary from industry to industry. For a Slovak transport company, it meant replacing its fleet, where within a year and a half they purchased buses with the highest ecological level of EURO 6 internal combustion engines. The retail company, for its part, reduced its huge food waste, which had long been a major problem, to a minimum. A manufacturing company has switched to recycling up to 98% of its production waste, and so on.
We make your ESG goals a reality
The ESG profile covers all processes and assets in the company. It’s not just about meeting a legislative requirement or measuring your carbon footprint. Evaluated data from multiple areas of a company’s operations is a means of demonstrating continuous improvement, revealing the company’s perspective for the future, as well as informing customer interest and demand.
Monitoring and recording operational data from an organization’s physical assets and real estate is a good start. The data collected can spark insights that can achieve significant energy savings, optimize waste management or provide predictive maintenance data to help reduce unplanned downtime.
Data centres also provide multiple opportunities to improve sustainability and ESG ratings. Upgrading information technology (IT) infrastructure with newer, more energy-efficient equipment can help reduce energy consumption and eliminate wasteful, outdated hardware. Additionally, the same steps taken to improve business resilience across the organization can also help improve customer experience and productivity.
We will be happy to set up a data collection and reporting process for you for sustainable, responsible and ethical business. We are also helpful in completing the self-assessment questionnaire and will recommend a comprehensive tool that simplifies collection, is suitable for consolidation, management, reporting and analysis of ESG data.
