Sectorย Sustainability Matters – How to!

20.10.2022

Letโ€™s talk about Sectorย Sustainability Matters!

CSRD and ESRS will require many new companies to report on sustainability. We introduce reporting topics and comment on how companies can comply and generate value out of those. Today, letโ€™s talk aboutย Sectorย Sustainability Matters.

ESRS brings a major change from the previous reporting. Before, companies could self-select the topics they want to report based on their materiality analysis. ESRS now prescribes certain sustainability matters companies need to report depending on their sector.

1๏ธโƒฃ ๐—ช๐—ต๐—ฎ๐˜ ๐—ฎ๐—ฟ๐—ฒ ๐˜€๐—ฒ๐—ฐ๐˜๐—ผ๐—ฟ ๐˜€๐˜‚๐˜€๐˜๐—ฎ๐—ถ๐—ป๐—ฎ๐—ฏ๐—ถ๐—น๐—ถ๐˜๐˜† ๐—บ๐—ฎ๐˜๐˜๐—ฒ๐—ฟ๐˜€
Sustainability matters define sustainability reporting requirements dependent on the company sector. Basis is the sector classification. Each company belongs to a sector.

2๏ธโƒฃ ๐—›๐—ผ๐˜„ ๐—ฎ๐—ฟ๐—ฒ ๐˜€๐—ฒ๐—ฐ๐˜๐—ผ๐—ฟ๐˜€ ๐—ฑ๐—ฒ๐—ณ๐—ถ๐—ป๐—ฒ๐—ฑ ๐—ฎ๐—ป๐—ฑ ๐—ฐ๐—น๐—ฎ๐˜€๐˜€๐—ถ๐—ณ๐—ถ๐—ฒ๐—ฑ
The European Union uses the NACE industry classification standard. The ESRS draft clustered the NACE industries into 14 sector groups and 40 sectors depending on similar sustainability matters.

3๏ธโƒฃ ๐—ช๐—ต๐—ฎ๐˜ ๐—ฎ๐—ฟ๐—ฒ ๐˜€๐—ฒ๐—ฐ๐˜๐—ผ๐—ฟ-๐˜€๐—ฝ๐—ฒ๐—ฐ๐—ถ๐—ณ๐—ถ๐—ฐ ๐—ฟ๐—ฒ๐—ฝ๐—ผ๐—ฟ๐˜๐—ถ๐—ป๐—ด ๐—ฟ๐—ฒ๐—พ๐˜‚๐—ถ๐—ฟ๐—ฒ๐—บ๐—ฒ๐—ป๐˜๐˜€
In ESRS, sector definitions have two implications: sector determines sustainability matters a company must report depending on its sector. And ESRS plans further sector-specific reporting requirements, e.g. sector-specific indicators or actions to be disclosed, which are currently under development.

4๏ธโƒฃ ๐—›๐—ผ๐˜„ ๐˜๐—ผ ๐—ฑ๐—ผ ๐—ถ๐˜
In your strategy and materiality analysis, you must include the sustainability matters predefined for your sector and evaluate their financial and impact materiality for the company. You must comment in your reporting if sector matters are material or not and transparently justify if certain topics are not material in your case. To be on the safe side, however, consider by default to report (and take action in your strategy) on sector sustainability matters, given that investors and stakeholders will expect those.

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๐Ÿ‘‰ For mid-sized companies, the predefined topics by sector are a help, since they donโ€™t have to start the materiality analysis with a blank piece of paper. Use those as a nucleus for your sustainability action and reporting, and add further company-specific material topics.