Sustainability controlling to improve performance.

Nov 24, 2022

Learn how to use your CSRD/ESRS reporting indicators to create transparency and manage indicators to improve your sustainability performance.

1️⃣ Key action areas determine indicators
Whether reporting or controlling: The indicators are derived from the key action areas for the company. These differ for a hospital or an energy company, for example.

2️⃣ Two streams: controlling and reporting
Be prepared for two streams: First, a reporting stream for sustainability transparency to your stakeholders. This is based on reporting requirements such as CSRD and ESRS. Second, a controlling stream for managing the company's sustainability performance.

3️⃣ Prioritize KPIs and RIs
Have a complete list of all reporting indicators (RI) and key performance indicators (KPIs) for controlling that are required for your key action areas. For example, as a chemical company, "CO2 emissions (Scope 1+2)" is required as an RI for ESRS, and "CO2 emissions (Scope 1+2) per product sales volume" is a meaningful indicator to manage the decarbonization of the company .

4️⃣ Leverage synergies in parameter data
Once the RIs and KPIs are clear, you can leverage synergies in the underlying parameter data. For example, Scope 1 CO2 emissions are a parameter that feeds into RIs and KPIs.

5️⃣ Begin to manage with reference and target values
Once RIs and KPIs are defined, begin measuring to establish reference baselines and set target values for KPI management. These target values should be in line with context-based or science-based goals, e.g., net-zero emissions by 2030.

6️⃣ Rely on integrated reporting and controlling
Whether it's the resulting KPI scorecard, team, processes, or tools, rely on an integrated reporting and controlling approach where financial and non-financial metrics are managed by one team. This makes sustainability performance an integral part of your business.

Mid-sized companies should not get lost in complexity, but can start with a small set of indicators that are relevant for their business. For example, if you deal with physical products, indicators such as CO2, energy consumption or waste are part of the first set. The important thing is to start measuring indicators immediately to get a sense of where you stand, even if you still face many data gaps. Data availability can then be improved iteratively.

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