Sustainability Controlling – How to !

24.11.2022

Sustainability Controlling for improving performance.

Learn how to use your CSRD/ESRS reporting indicators for creating transparency and controlling indicators for improving your sustainability performance.

1๏ธโƒฃ ๐— ๐—ฎ๐˜๐—ฒ๐—ฟ๐—ถ๐—ฎ๐—น ๐—ฎ๐—ฐ๐˜๐—ถ๐—ผ๐—ป ๐—ฎ๐—ฟ๐—ฒ๐—ฎ๐˜€ ๐—ฑ๐—ฒ๐˜๐—ฒ๐—ฟ๐—บ๐—ถ๐—ป๐—ฒ ๐—ถ๐—ป๐—ฑ๐—ถ๐—ฐ๐—ฎ๐˜๐—ผ๐—ฟ๐˜€
Be it reporting or controlling: The indicators are derived from the action areas that are material for the company. These differ, for example, for a hospital or an energy company.

2๏ธโƒฃ ๐—ง๐˜„๐—ผ ๐˜€๐˜๐—ฟ๐—ฒ๐—ฎ๐—บ๐˜€: ๐—–๐—ผ๐—ป๐˜๐—ฟ๐—ผ๐—น๐—น๐—ถ๐—ป๐—ด ๐—ฎ๐—ป๐—ฑ ๐—ฅ๐—ฒ๐—ฝ๐—ผ๐—ฟ๐˜๐—ถ๐—ป๐—ด
Be prepared to have two streams: first, a reporting stream for sustainability transparency to your stakeholders. This will be based on reporting requirements such as CSRD and ESRS. Second, a controlling stream for managing the company’s sustainability performance.

3๏ธโƒฃ ๐—ฃ๐—ฟ๐—ถ๐—ผ๐—ฟ๐—ถ๐˜๐—ถ๐˜‡๐—ฒ ๐—ž๐—ฃ๐—œ๐˜€ ๐—ฎ๐—ป๐—ฑ ๐—ฅ๐—œ๐˜€
Have a full list of all reporting indicators (RI) and key performance indicators (KPIs) for controlling, which are required for your material action areas. For example, as a chemical company, โ€œCO2 Emissions (Scope 1+2)โ€ is required as RI for ESRS and โ€œCO2 emissions (Scope 1+2) per product sales volumeโ€ is a meaningful indicator to steer the decarbonization of the business.

4๏ธโƒฃ ๐—จ๐˜€๐—ฒ ๐˜€๐˜†๐—ป๐—ฒ๐—ฟ๐—ด๐—ถ๐—ฒ๐˜€ ๐—ถ๐—ป ๐—ฝ๐—ฎ๐—ฟ๐—ฎ๐—บ๐—ฒ๐˜๐—ฒ๐—ฟ ๐—ฑ๐—ฎ๐˜๐—ฎ
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.

5๏ธโƒฃ ๐—ฆ๐˜๐—ฎ๐—ฟ๐˜ ๐—ฐ๐—ผ๐—ป๐˜๐—ฟ๐—ผ๐—น๐—น๐—ถ๐—ป๐—ด ๐˜„๐—ถ๐˜๐—ต ๐—ฟ๐—ฒ๐—ณ๐—ฒ๐—ฟ๐—ฒ๐—ป๐—ฐ๐—ฒ ๐—ฎ๐—ป๐—ฑ ๐˜๐—ฎ๐—ฟ๐—ด๐—ฒ๐˜ ๐˜ƒ๐—ฎ๐—น๐˜‚๐—ฒ๐˜€
Once RIs and KPIs are defined, start measuring to determine reference baseline values and set target values for KPI controlling. These target values should be in line with context-based or science-based targets, e.g. net zero emissions by 2030.

6๏ธโƒฃ ๐—š๐—ผ ๐—ณ๐—ผ๐—ฟ ๐—ถ๐—ป๐˜๐—ฒ๐—ด๐—ฟ๐—ฎ๐˜๐—ฒ๐—ฑ ๐—ฟ๐—ฒ๐—ฝ๐—ผ๐—ฟ๐˜๐—ถ๐—ป๐—ด ๐—ฎ๐—ป๐—ฑ ๐—ฐ๐—ผ๐—ป๐˜๐—ฟ๐—ผ๐—น๐—น๐—ถ๐—ป๐—ด
Whether it is the resulting KPI scorecard, the team, the processes or the tools: Go for an integrated reporting and controlling approach, where financial and non-financial indicators are managed by one team. This way, sustainability performance becomes an integral part of your company.

sustainability controlling

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.