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.
1️⃣ 𝗠𝗮𝘁𝗲𝗿𝗶𝗮𝗹 𝗮𝗰𝘁𝗶𝗼𝗻 𝗮𝗿𝗲𝗮𝘀 𝗱𝗲𝘁𝗲𝗿𝗺𝗶𝗻𝗲 𝗶𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿𝘀
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.
2️⃣ 𝗧𝘄𝗼 𝘀𝘁𝗿𝗲𝗮𝗺𝘀: 𝗖𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗶𝗻𝗴 𝗮𝗻𝗱 𝗥𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴
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.
3️⃣ 𝗣𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗲 𝗞𝗣𝗜𝘀 𝗮𝗻𝗱 𝗥𝗜𝘀
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, “CO2 Emissions (Scope 1+2)” is required as RI for ESRS and “CO2 emissions (Scope 1+2) per product sales volume” is a meaningful indicator to steer the decarbonization of the business.
4️⃣ 𝗨𝘀𝗲 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 𝗦𝘁𝗮𝗿𝘁 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗿𝗲𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗮𝗻𝗱 𝘁𝗮𝗿𝗴𝗲𝘁 𝘃𝗮𝗹𝘂𝗲𝘀
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.
6️⃣ 𝗚𝗼 𝗳𝗼𝗿 𝗶𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗲𝗱 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗮𝗻𝗱 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝗹𝗶𝗻𝗴
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.
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.