The Fidugius Accounting & Reporting Manual assists companies to ensure ESG reporting is reliable as it shows the company’s material ESG topics, its kpi’s, the framework in place, how to maintain accurate records by following the accounting treatments and informs on the appropriate policies. It helps to train and educate new staff members and is a reference for your auditors.
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The importance of ESG reporting
ESG is an acronym for Environmental, Social, and Governance and refers to the framework used by companies to assess their impact on the environment and society, as well as their management practices. Companies report to their stakeholders on their policies and efforts to manage ESG risks and opportunities in their ESG report. Until recently, ESG reporting was voluntarily and companies were not bound to any directive. However, more and more regulators are requiring companies to report on ESG in accordance with a certain framework.
For example, the EU requires all large EU-listed companies to report on ESG from 1 January 2024 in accordance with the Corporate Sustainability Reporting Directive (CSRD). As of 2025. large companies and from 2026, small and medium-sized EU-listed companies have to adhere to the directive.
Objective of ESG reporting
ESG reporting serves several purposes, including:
- Transparency: ESG reporting provides transparency on a company’s sustainability performance, which can help build trust with stakeholders and enhance the company’s reputation.
- Risk management: ESG reporting can help companies identify and manage ESG risks, such as climate change, resource scarcity, labour practices and supply chain issues.
- Opportunity identification: ESG reporting can help companies identify new business opportunities, such as energy efficiency, circular economy initiatives or community engagement programmes.
- Stakeholder engagement: ESG reporting can help companies engage with stakeholders and understand their concerns, priorities and expectations.
- Regulatory compliance: In some cases, ESG reporting is required by law or regulation, such as the EU’s Corporate Sustainability Reporting Directive (CSRD).
ESG Report
An ESG report contains qualitative and quantitative data on the three factors. It is important for each company to assess the most relevant or material topics, as diversity exists in what is relevant to each company. For example, the environmental impact of an oil and gas company may differ from that of a telecom company.
- Step 1: Understand the organization’s context
Prepare a long list of topics to use as a starting point by referencing international reporting standards (such as the GRI and SASB), media research, a peer review and a risk and trend analysis of the industry. - Step 2: Identify actual and potential impacts
Determine the specific relevance of each topic to the company through (online) surveys and interviews, collecting input from customers, associates, investors, NGOs, suppliers, producers and governmental organizations. Examine the management’s view on the most important topics and how they relate to the strategic growth drivers. - Step 3: Assess the significance of the impacts
Based on long list of ESG relevant matters, determined their significance and impact and prioritise them to create a short list of material topics. - Step 4: Prioritize the most significant impacts for reporting
Create a list of material topics, discuss them with management and get their approval.
Following the ESG materiality assessment, the ESG material topics for a retail food store and e-commerce business may be as follows*:
| Environmental topics | ||
| CO2 emissions and climate change | Reduce greenhouse gas (GHG) emissions in our supply chain and own operations (stores, DCs and logistics) and increase energy efficiency in our own operations. | |
| Food waste | Promote responsible handling to reduce food waste and increase reuse of food waste along the supply chain, in distribution and operations as well as in customers’ homes. | |
| Sustainable agriculture | Promote agricultural practices that support healthy ecosystems, economic viability and social equity | |
| Sustainable packaging | Reduce the use of plastic and other packaging materials, decrease the weight of packaging, and increase the recyclability, reusability and recycled content of packaging.
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| Social topics | ||
| Healthy products | Increase the share and availability of healthy products in our brands’ assortment and provide information to enable healthier and more sustainable diets for customers and associates. | |
| Fair labour practices in the supply chain | Promote respect for human rights, wages and incomes and labour practices throughout the supply chain and pay a fair price to suppliers and farmers. | |
| Associate safety, health and wellbeing
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Create a healthy and safe work environment that fosters associate well-being. | |
| Governance topics | ||
| Product safety and quality | Guarantee the highest safety and quality standards for the products our brands sell and, at minimum, comply with applicable local legislation. | |
| Available and affordable products | Ensure product availability and affordable pricing of our brands’ products to meet the (dietary) needs of customers. | |
| Diversity and inclusion | Ensure equal treatment of all associates independent of gender, age, religion, race, caste, social background, disability, ethnicity, nationality, membership in workers’ organizations, political affiliation, sexual orientation, or any other personal characteristic protected by law. | |
* Derived from the Ahold Delhaize annual report 2022.
Process on ESG
Once the material ESG topics have been determined, the following actions should be taken:
- Collect data and information: The company will need to collect data and information about its performance on its ESG topics. This may involve gathering data from internal sources, such as operational records and management reports, as well as external sources, such as industry benchmarks, stakeholder surveys and third-party assessments.
- Account on ESG: The company will account on the collected data and information in an information system to have a single point of truth for all ESG data.
- Analyse and interpreting data: The next step is to analyse and interpret the data and kpi’s to identify trends, patterns and areas for improvement to meet targets. This may involve conducting quantitative and qualitative analysis to assess the company’s performance on each ESG issue and to identify potential risks and opportunities.
- Report on ESG performance: The final step is to report on the company’s ESG performance to stakeholders. This involves preparing a sustainability report that provides information on the company’s ESG performance, goals and strategies. The report should be accurate, comprehensive and relevant to stakeholders’ information needs.
Ensure timely and reliable reporting on ESG
For any company, it is important that reporting on ESG is timely and reliable. While financial reporting processes have developed over 100 years, ESG reporting has to be realised fast. To ensure reporting on ESG is timely and accurate, the following should be considered:
- Establishing governance and accountability: A company should establish a clear governance structure and accountability framework for ESG reporting. This should include defining roles and responsibilities, setting performance targets, and establishing processes for data collection, analysis, and reporting.
- Using recognised frameworks and standards: A company should use recognised ESG reporting frameworks and standards, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), or the Task Force on Climate-related Financial Disclosures (TCFD), to guide its reporting process and ensure consistency and comparability across different reporting periods and companies.
- Set up accounting & reporting manual: A manual provides guidance and instructions for the collection, analysis and reporting of ESG data and ensures that the reporting process is consistent, transparent and auditable. All employees are informed of requirements and can be held accountable for non-compliance.
- Conducting independent verification: A company should engage an independent third party to verify its ESG data and reporting. This could involve obtaining an assurance opinion from an external auditor or engaging a specialised ESG verification firm to review the company’s data and reporting.
- Engaging stakeholders: A company should engage with its stakeholders, including investors, customers, employees and community members, to understand their information needs and to ensure that the reporting is relevant and useful to them.
- Continuously improving: A company should continuously review and improve its ESG reporting process to ensure that it remains accurate, relevant and reliable over time. This could involve updating performance targets, refining data collection and analysis methods, and incorporating stakeholder feedback.
A comprehensive solution with all necessary information for accurate accounting of transactions and timely submission of information all available in one place.
The Fidugius solution and ESG reporting
The Fidugius Accounting & Reporting Manual is developed by auditors and specialists in the field of ESG reporting and offers all the features to achieve your company’s objectives.
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