Dear {#party.FirstName},

In the December newsletter, we discovered why small and medium-sized enterprises (SMEs) would be interested in sustainability reporting, even though they are not formally obligated to. But, what information would have to be reported?

To answer this question, we can rely on the information the proposal for a Corporate Sustainability Reporting Directive (CSRD) requires from the large companies and the listed SMEs.

The CSRD proposal foresees a double materiality. A double materiality would change the materiality principle that has been used to date. Up to now, matters are to be classified as significant if they are significant for business success and from an environmental or social point of view. If strictly interpreted, only very few items will need reporting. Matters are to be classified as significant if significant for either one or the other.

But what is meant by matters “from an environmental or social point of view”?

According to the actual Non-Financial Reporting Directive (NFRD), the non-financial information must include information for an understanding of the company’s development, performance, position and impact of its activity, related to:

• Environmental matters: current and foreseeable impacts of the company’s operations, use of renewable and/or non-renewable energy, greenhouse gas emissions, water use, air pollution, etc.;
  
• Social and employee matters: actions taken to ensure gender equality, working conditions, social dialogue, health and safety at work, dialogue with local communities, etc.;
  
• Respect for human rights: prevention of human rights; 
  
• Anti-corruption and bribery matters: instruments in place to fight corruption and bribery.
  

While these topics will differ once the CSRD and the newly developed European sustainability reporting standards take effect, they nevertheless serve as a good
initial basis for preparing a sustainability report.

Should you ever lose track of the big picture, my colleagues and I from the AGN EMEA Accounting, Auditing & Education Committee (AAEC) will be happy to help and guide you safely through the IFRS and CSR jungle. As a member of AGN International, you can make use of the AGN AAEC Helpline at any time or contact me by email at [email protected] or by mobile phone at +49 173 8710322. 

Happy accounting,
Carsten

Carsten Ernst Managing Partner at Wirtschafts Treuhand Group, Stuttgart, Germany
		- Serves as accounting counsel focused on International Financial Reporting Standards (IFRS) - Provides AGN members with support in the context of specific transactions - University Degree in Business Administration		- German Public Auditor and Tax Consultant - Member of the following AGN bodies: EMEA Board of Directors (Vice-Chairman), EMEA AAEC Accounting and Auditing Committee (Chairman) and IACC International Auditing and Accounting Committee

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