The season for listed companies to publish their reports lasts four months. Few companies publish their reports by the end of February. Most decide to do so in the second half of March or April. With two to about six weeks to prepare, not much can be changed in the report, but a few details can still be taken care of:
1. Am I reporting compliance with the Taxonomy correctly?
A year ago, companies were learning about Taxonomy by reporting only what percentage of their turnover, capital expenditures, and operating expenses qualify for classification, i.e., relate to the types of activities described in the delegated acts. This year, we have to conduct a tedious examination of compliance with the Technical Qualification Criteria and verify whether our activities meet the Minimum Guarantees. We should also remember that reporting must be carried out in accordance with the provisions detailed in the so-called delegated act to Article 8 (Commission Delegated Regulation (EU) 2021/2178), which was amended in 2022.
2. Do I provide the data required by financial institutions under the SFDR in my report?
The SFDR Regulation (2019/2088) requires financial institutions, including investment funds, to report on a number of indicators relating to PAI (Principal Adverse Impacts). In just two years, the provision of data for calculating these indicators will be almost automatic, as every report prepared in accordance with ESRS standards will contain the relevant source information. In the meantime, it is worth ensuring that our report contains all the data that will help funds calculate PAI indicators. Preparing a report in accordance with GRI or SIN will not automatically ensure this; additional work is required.
3. Is the management board fully aware of the content of the report?
Theoretically, yes, because every management board knows exactly what is in the report signed by all its members. In practice, in recent years, the preparation of non-financial reports has often been delegated to the relevant organizational unit, and the report itself has been treated as a burdensome but necessary mandatory element. I know of cases where at most one member of the management board reviewed the report in general, and the others trusted his judgment. In the last several months, the importance of sustainability factors has increased significantly. It may turn out that during the year, various board members will ask questions about the content of the report, and these questions may come from suppliers, customers, banks and insurers, the media, and investors cooperating with the company. It is particularly important to make all board members aware of the content, data, and information contained in the report.
4. Does the report describe the due diligence processes in place at the company?
Two or three years ago, most report recipients were interested in climate change and greenhouse gas emissions data. Today, biodiversity and human rights are at the forefront. Few companies (apart from selected industries required to do so by other regulations) have conducted an analysis of their impact on biodiversity and ecosystems, and if we do not have such an analysis today, we will not be able to complete it before the report is published. On the other hand, due diligence processes with regard to human rights should be in place in every organization, and at least elements of these processes certainly exist in every company. It is worth devoting sufficient space in the report to describe them.
The current annual reporting season is the penultimate one before a fundamental change in the rules, which will result from the implementation of the CSRD directive. However, it is already possible to gradually prepare to meet these requirements, which will come into force in two years' time.
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