To measure is to know. Therefore, reporting is crucial to communicate sustainability progress, internally as well as externally. More importantly, sustainability reporting will probably soon become obligatory for quite a number of companies.
"Most people are familiar with financial reporting. After all, it has been around for about 200 years. Sustainability reporting, however, is different and has only been around for 20 to 25 years" says Steven Mulkens, Executive Director at KPMG Bedrijfsrevisoren, explaining why sustainability reporting may still be unknown to some.
Nevertheless, there is a good chance that many companies will be affected by sustainability reporting in the coming years. Whereas the current regulations (NFRD or Non-Financial Reporting Directive) are mandatory for only a hundred or so companies in Belgium, such as listed companies and financial institutions, Europe will probably make it compulsory for a thousand Belgian companies starting in 2023, with the CSRD (Corporate Sustainability Reporting Directive).
Preparing for what's to come
Given that the CSRD will likely come into effect as early as fiscal year 2023, Steven Mulkens recommends that companies prepare now. "They need to set up reporting processes, systems and structures to start enabling solid and accurate reporting of non-financial data," he explains.
Companies should not look at the possibility of sustainability reporting as a legal burden. Steven Mulkens: "There are also benefits to gain from sustainability reporting. Investors are showing increased interest in sustainable investments, so it could have a positive effect on a company's reputation, and it could offer you more insights into your non-financial risks. The latter is often underexposed in current reporting."
That House of HR focuses primarily on the social aspects of its sustainability strategy is no surprise. But by doing so, it takes reporting very seriously.
"Integrating people into society and having them contribute through a job is sustainable in itself," says CEO Rika Coppens. In that regard, HR services provider House of HR – operating from Roeselare mainly in Belgium, the Netherlands, France and Germany – already has the right DNA. "Yet we noticed that CSR was becoming increasingly prominent in our way of working," says Rika . "We felt it was important to make clear in our reports what we wanted to focus on. This also allowed us to align all the different departments and companies within the group."
House of HR started an exercise in the second half of 2020 that led to a focus on some of the UN's sustainability goals (SDGs). "It makes sense that we chose social aspects in particular, including health and well-being, equality and quality education," says Rika.
No choice
The strategy led to the definition of KPIs whose evolution will henceforth be reported in the annual report. Rika is very satisfied with the reporting requirements that House of HR imposes on itself: "In addition to getting everyone on the same page, this is also a way of saying what the company stands for. And it encourages you to be honest with yourself."
According to Rika, companies can no longer avoid reporting their sustainability progress. "It is becoming increasingly important," she concludes. "Banks are increasingly working with ESG bonds. At the same time, in this 'war for talent' era, it is also an important differentiator for attracting people."
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