Alongside the annual report, sustainability reporting is now the most important element of a company’s information policy.
The focus is on providing the information documenting sustainability in a high quality and in a timely manner in order to be able to make decisions quickly and to be able to provide information to market participants at any time.
A comprehensive picture of the standards currently under discussion would go beyond the scope of this article. I will therefore focus on a few essential ones, with an emphasis on social factors, and structure this post as follows:
- The most important standards at a glance
- common social factors of these standards,
- implementation of this content.
The most important standards at a glance
Global Reporting Initiative (GRI)
GRI is one of the most important organizations that publish guidelines for sustainability reporting. The subject-specific standards cover the three areas of environment, social and governance issues (ESG factors) and serve to improve the comparability and quality of information. At the same time, they ensure greater transparency and greater corporate accountability.
Corporate Sustainability Reporting Directive (CSRD)
Regulatory requirements regarding sustainability reporting are regulated in the CSRD, which is currently in draft form. This is intended to create a common approach and a reporting system in the EU.
Sebastian Kühn has summarized the most important cornerstones of the new directive proposal.
The draft standards are prepared by the European Financial Reporting Advisory Group (EFRAG).
The ESG classification provides a logical and clear distinction between the three main drivers and actors of sustainability:
- the planet, i.e. all natural resources and life forms other than humans [“environment”, (E)];
- the people, i.e. human life in all its dimensions, from individuals to communities [“social”, (S)]; and
- the company, i.e. the reporting company itself [“governance”, (G)].
German Sustainability Code (Deutscher Nachhaltigkeitskodex: DNK)
The GSC / DNK is an internationally applicable reporting standard for sustainability aspects with a clear structure and a focus on key issues. In the next two reporting years, 2022 and 2023, reports can be made in accordance with GSC / DNK as usual. From January 1, 2024, if the CSRD is adopted, the companies in Germany that have previously and will have to report would then have to report in accordance with the EU standard in the management report. At first glance, the DNK already covers many of the proposed additions.
International guideline DIN ISO 30414: standards for human capital reporting
DIN ISO 30414 is not a legally binding standard, but a recommendation based on the pooled knowledge of experts from numerous countries. Human capital encompasses the entire knowledge, skills and abilities of a company’s employees, has an impact on its long-term performance, as well as competitive advantages by optimizing results. The evaluation of human capital promotes the ability of an organization to control the only value-adding resource and to keep it in the company for as long as possible – a very important point with regard to “S” within the ESG classification!
Common social factors of these standards
In this section I orientate myself on CSRD with regard to “S”, the social factors; I assign GRI and DIN ISO 30414 respectively:
Social affairs and treatment of employees
- GRI 401 “Employment” and 402 “Management and Labor Relations”.
- DIN ISO 30414 “Leadership” and “Organizational Culture”.
Working conditions
This includes secure and adaptable jobs, wages, social dialogue, collective bargaining and worker participation, work-life balance and a healthy, safe and well-adapted work environment.
- GRI 403 “Occupational Health and Safety”.
- DIN ISO 30414 “Costs”, “Wellbeing, Occupational Health and Safety”, “Productivity”, “Recruitment, Mobility and Fluctuation”, “Succession Planning” and “Employee Availability”.
Respect for human rights
This also includes fundamental freedoms, democratic principles and international standards.
- GRI 412 “Human Rights” and 414 “Supplier Social Assessment” .
- DIN ISO 30414 “Compliance and Ethics”.
Equal opportunities and diversity
This includes gender equality and equal pay for equal work, training and development, as well as employment and inclusion of people with disabilities.
- GRI 404 “Training and Education”, 405 “Diversity and Equal Opportunity” and 406 “Non-Discrimination”.
- DIN ISO 30414 “Diversity” and “Skills and Performance Potential”.
Implementation of this content
STRIM supports sustainability reporting, especially in terms of content. The three areas of sustainability reporting – strategy, execution and performance measurement – are fundamental core competencies in the course of strategy execution [related blog posts].
With a view to the social factors and ISO DIN 30414, STRIM offers an interactive introductory workshop on site as well as ongoing coaching for a fixed or flexible period of time. Consulting services also include the integration of standardized definitions of key metrics and indicators, as well as formulas for determining indices.
Together with Alteryx, the STRIM also supports system-related. With the help of the APA platform, essential challenges encountered in practice can be mastered.
Automation, democratization and scaling
Repetitive processes and tasks often cost analysis teams more than 80 percent of their time. By automating repetitive tasks, more time is available for problem solving. Nevertheless, companies can save between 15 and 20 percent in costs by integrating AI.
Workflows, which are transparently available to all employees in a company, document the logic of data right through to findings.
As the reports grow in size, the ability to scale also impacts the business. Centralized data and processes enable close collaboration and uniform reporting processes across the company.
Default settings
Retrospective and forward-looking information: In the future, it will also be about setting goals and predicting how to achieve them. Integrating Alteryx reduces the time required for finding, preparing and analyzing data, cleaning up the data stock, feature analysis and other preparatory activities, and applying advanced analytics/machine learning for time-series forecasting.
Reporting levels and boundaries: Sustainability reporting goes beyond the level of operations under the control of the reporting entity itself. The value chain should also be covered, as significant impacts of activities performed by a reporting entity may occur in the value chain or through products and services.
Dual materiality – defining and implementing the concept of materiality – requires that both the perspective of impact materiality (severity, scope, likelihood, urgency) and financial materiality be applied independently without ignoring their interdependencies.
Sustainability reporting and financial reporting are not currently formally linked, leading to potential gaps, overlaps and a lack of coherence. If sustainability reporting and financial reporting are to be placed on an equal footing with the same timelines – along with the necessary reconciliations or cross-referencing – then connectivity is essential.
Alteryx Use Cases
I would like to pick three out of a large number of existing use cases:
- Training Metrics: Pulling data from KnowBe4 and Workday and generating metrics on employee completion (20k+ saved).
- Employee Survey Analyses: Understanding drivers of employee engagement and satisfaction as well as analyzing specific sustainability related surveys by analyzing drivers as well as understanding how improvements in various areas would relate to the targeted results.
- Reporting and Audit: From analyzing pay equit (e.g. corporate reporting on pay differences: base salary per person, employee category/job level, employee location, gender, ethnic group, etc.) to a wide array of reports and analyses across enterprises.
By the way: The Global Health, Safety & Environment Dashboard – penultimate slide in attached presentation – shows a 5-year trend for core measures used to evaluate company HSE performance including recordable incidents, process safety events, serious incidents, and environmental events.
Conclusion
Environmental Social Governance – ESG is used as a broad term for CSR (Corporate Social Responsibility). This is the evaluation of corporate social responsibility. ESG can therefore also be seen in the context of overarching corporate governance and sustainability.
Reporting on sustainability issues is more dynamic than ever. New frameworks and standardization are increasing complexity, while regulatory pressure is growing at the same time. Sustainability officers face the challenge of classifying developing reporting standards and making the right deductions for their company.
Many companies are currently falling short with the comment “we pull our data from SAP / Workday / Oracle …”. The standard settings outlined above are therefore not possible. Neither does company-wide automation, democratization and scaling.
As a result, STRIM and Alteryx deliver
- an understanding of strategy, concepts and management approaches,
- an understanding of data collection, data processing and reporting processes, as well as
- an analytical review of quantitative information and qualitative statements.
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