According to a study by Crowe and Envirly[1], only 14% of companies in Poland are well prepared for ESG reporting as required by the EU’s CSRD Directive. And 35% of organisations don’t know when they’ll be required to start non-financial reporting.
Many Polish companies are facing the need to adapt to new regulations regarding ESG reporting. Low readiness to meet the requirements of the EU CSRD directive can lead to compliance problems and negatively affect the reputation and competitiveness of companies. In the face of upcoming changes, it is necessary to increase knowledge and accelerate preparations in the field of sustainable development to avoid potential sanctions and build investor and stakeholder trust.
It is worth thinking about ESG today, not only because of the reporting obligation. Building a ‘sustainable’ brand is becoming a key element of the strategy of many companies that strive not only for financial success, but also to build an organisation that supports environmental, social and management goals. Modern companies increasingly recognise that sustainable development is not just a fashionable slogan, but a real strategy that brings numerous benefits.
However, not all companies take ESG reporting seriously – according to a PwC[2] study, only 20% of Polish companies have included sustainable development goals in their strategy. Among entities with foreign capital, this ratio is 67%.
Many Polish companies don’t yet realise that the lack of data on sustainable development can lead to serious legal consequences and the loss of attractive contracts with large corporations that already require such information or will soon start doing so.
ESG reporting – who does it concern?
In the EU, the ESG reporting obligation will cover nearly 50,000 companies by 2026, including around 3,500 companies in Poland. However, these numbers do not include entities that will have to collect data on sustainable development due to their presence in the supply chain of international companies. According to estimates by KIG, the Polish chamber of commerce[3], this could apply to over 135,000 companies in 2023-2026.
In Poland, the ESG reporting obligation applies to different groups of companies depending on the year and the criteria met.
- From 2024, non-financial reporting will apply to large public trust entities, such as listed companies, banks and insurance companies, which employ more than 500 employees and meet at least one of the two financial criteria: balance sheet total above €20 million or net sales revenues above €40 million
- In 2025, this obligation will be extended to all large companies, including private companies, which employ more than 250 employees and meet two of the three criteria: balance sheet total above €25 million or revenues above €50 million
- In turn, from 2026, reporting will also apply to small and medium-sized enterprises listed on the stock exchange, employing more than 10 employees, which means a gradual expansion of the group of entities covered by this obligation
The ESG reporting process requires careful preparation, which can take up to several months. It includes not only collecting and analysing data on the impact of the company’s activities on the environment, social issues and management, but also developing a document in accordance with applicable standards and regulations. Putting off preparations until the last minute is risky, especially since ESG reporting is not only about meeting legal requirements, but above all a strategic step that allows you to identify opportunities and key risks for the organisation.
The process of preparing for ESG reporting typically involves multiple steps, including:
- Establishing a timeline – defining deadlines and key steps in the reporting process
- Training staff – training employees on ESG and reporting requirements
- Identifying key areas – identifying the environmental, social and governance aspects that will be reported on that are important to the company
- Gap analysis – conducting an analysis of current practices and available data to understand what information is already being collected and what gaps need to be filled
- Establishing ESG goals – defining realistic, measurable sustainability goals that the company wants to achieve
- Implementing an ESG management system – developing a strategy and system for collecting and analysing ESG data, which is key to effective reporting
One of the key steps in preparing for ESG reporting is also conducting a dual-materiality analysis. This process allows companies to identify what data should be collected in the context of their business. In accordance with the CSRD Directive, there are over 1,000 information points within the European Sustainable Reporting Standards (ESRS). Therefore, it is crucial to focus on the information that is most relevant to the organisation.
Scope of reporting data
Depending on the sector in which a company operates, the type and scope of data that must be reported can vary significantly. A manufacturing company will collect completely different data than one operating in the service industry. Tailoring reporting to the specifics of the industry is essential to meet regulatory requirements and respond to stakeholder expectations. As sustainability directives become more stringent, companies must carefully analyse their activities and impact on the environment in order to effectively communicate their ESG achievements.
ESG reporting – worth thinking about it today
It is worth remembering that ESG reporting is not only a matter of meeting regulatory requirements, but also an excellent opportunity to strengthen your position on the market.
Additionally, ESG reporting can be a key element in preparing for future legal regulations. As regulations on sustainable development become more stringent, companies that already implement appropriate practices and report their achievements will be better prepared for the upcoming changes.
In this way, they not only meet regulatory requirements, but also build long-term relationships with stakeholders and contribute to a positive impact on the environment.
