ESG reporting and preparation of a Sustainability Report

Sustainability Report

Boards can lead the way on ESG. We share the why, what, and how of effectively overseeing ESG.

A sustainability report is a report published by companies on the environmental, social and governance (ESG) impacts of their activities. It enables addressees and users to understand more clearly the impacts of a company’s business activities on the environment and society and to assess the risks and opportunities companies face, or which are offered to them. It is a communication tool that plays an important role in convincing sceptical observers that the company’s actions are sincere.

The growing importance of sustainability reports is due to the fact that investors and other stakeholders are calling on companies to disclose more information about their sustainability activities and environmental, social, and governance strategies.

Many new legislative documents on ESG requiring companies to disclose sustainability information have already become effective or are currently being prepared:

  • REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (EU Taxonomy Regulation, in force since July 2020)
  • Corporate Sustainability Reporting Directive (CSRD, in force since January 2023)
  • Directive on Corporate Sustainability Due Diligence (CSDD, draft)
  • Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework for setting ecodesign requirements for sustainable products

How should companies report on sustainability information?

The CSRD introduced detailed requirements for sustainability information reporting across the EU, creating a common, standardized language for sustainability reporting.

The main CSRD features are:

  • Mandatory sustainability information in annual reports
  • Mandatory external limited assurance
  • Introduction of mandatory European Sustainability Reporting Standards (ESRS) – 12 mandatory sectoral standards
  • Subsidiaries are exempt from reporting if covered by a consolidated report meeting CSRD requirements and if other conditions for applying an exemption from individual reporting are met
  • Digital tagging of sustainability reports for automated machine reading

A sustainability report allows companies to answer a wide variety of questions raised by stakeholders in a single document. The CSRD obliges companies to include a sustainability report in the annual report.

However, creating a sustainability report can be challenging, as it must meet the conditions stipulated by the relevant legislation and standards and have the right balance of information from the individual agendas. The information must be relevant, comparable, verifiable, easy-to-understand, and give a true and fair view. Furthermore, companies must determine via a double materiality assessment what information, impacts, risks, and opportunities are to be disclosed. Disclosure of information in accordance with the ESRS requires, in addition to the relevant metrics, a description of the company’s existing policies, objectives, and measures. This creates expectations that companies will adopt such policies, objectives, and measures.

In addition to the CSRD, the EU has also issued the EU Taxonomy which classifies economic activities and defines which activities are environmentally sustainable. The EU Taxonomy has set 6 environmental objectives that represent an EU strategic vision:

  • Climate change mitigation
  • Climate change adaptation
  • Sustainable use and protection of water and marine resources
  • Transition to circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems

It provides companies, investors, and politicians with definitions of what activities can be considered environmentally sustainable.

An environmentally sustainable economic activity contributes substantially to one or more of the environmental objectives, does not significantly harm any of the environmental objectives, and is carried out in compliance with the minimum safeguards related to human rights and workers’ rights.

Before the adoption of the CSRD, the voluntary Global Reporting Initiative (GRI) standards were most frequently used by European companies and, together with the TCFD, became the basis for the preparation of the ESRS standards.

Basic areas that should be covered in a Sustainability Report:

Basic areas that should be covered in a Sustainability Report

In addition to topics and subtopics set out by the ESRS, companies must also consider the specifics that are characteristic for them and are not included in the ESRS.

ESG pillar


Internal Benefits


  • Better understanding of sustainability-related impacts, risks, and opportunities
  • Emphasizing the link between financial performance of the business and its sustainability-related actions
  • Impact on long-term management strategy and policy, and business plans
  • Streamlining of processes, reduction of costs, improvements in efficiency and internal controls
  • Benchmarking and assessment of sustainability-related performance with respect to laws, norms, codes, performance standards, and voluntary initiatives
  • Avoidance of jeopardizing the company’s reputation by environmental, social, and governance failures
  • Monitoring the development within a company, between organizations and sectors

External Benefits

  • Improves reputation, brand awareness, and loyalty
  • Business leaders who regularly publish a report on their company’s progress in sustainability receive feedback on the programmes and activities they have reported on in the past period via the report
  • Mitigates negative sustainability-related impacts
  • Enables external stakeholders to understand the company’s true value
  • Demonstrates how the company influences, and is influenced by, expectations as regards sustainability
  • Investors are able to monitor sustainability indicators to receive an overall picture of the company's likely future performance
  • The report can inspire journalists and assist promotion of the company's reputation
  • Many credit rating agencies incorporate ESG factors into their ratings

Taxes as part of ESG reporting

Modern companies are beginning to perceive taxes as a tool that supports the implementation of environmental and social projects in the local community and wider society.

Why are taxes, which historically have only been seen as a company cost item, part of the discussion on ESG objectives?

  • 1. Financing projects of sustainable value
    Taxes are an important source of financing for public sustainability projects.
  • 2. “Green deal”
    Green taxes as an incentive for new environmental projects and compensation for damage with a societal impact.
  • 3. Interest of investors and the public
    Transparent disclosure of the tax footprint


EU Regulations

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 (Corporate Sustainability Reporting Directive (CSRD)) modifies the previous directive on non-financial reporting, expands the scope of companies obliged to disclose information, and increases the requirements on the content of disclosures as defined in the ESRS standards. Companies that fall under its remit must include sustainability-related information in their annual reports.

Timeline for obligations:

  • From 1 January 2024, large public interest entities with 500+ employees are obliged to report sustainability-related information in their sustainability report (ESG report).
  • In the second phase (from 1 January 2025), this obligation will also apply to all large companies that meet at least two of the three criteria related to turnover (> €50 million), net assets (> €25 million), and number of staff (> 250).
  • In the third phase (as of 1 January 2026 with possible postponement until 2028), it will apply to listed SMEs, small and non-complex credit institutions and captive insurance companies.
  • In the last phase (as of 1 January 2028), this obligation will also apply to non-EU companies with a net turnover of €150 million+ a year if they have at least one subsidiary or branch in the EU.

Slovak law

The CSRD will be transposed into the Slovak Accounting Act (Act No. 431/2002 Coll., as amended) in the first half of 2024.

However, more and more companies are voluntarily preparing and presenting sustainability information over and above industry and legal requirements, to detail their long-term value creation strategies and meet the demands of investors and other stakeholders.

Overview of key areas for ESG reporting

1. Develop sustainability strategy

  • Develop a strategy and business case to help companies be sustainability-driven
  • Cover topics and indicators reflecting the company’s significant sustainability impacts (materiality matrix)
  • Set company ESG objectives for defined time frames

2. Connect with stakeholders

  • Identify stakeholders for the validation of significant sustainability-related topics

3. Define metrics and objectives

  • Understand impacts and cooperate with companies to quantify these impacts;
  • Set metrics to capture activities with an impact on sustainability;
  • Set goals for the future to support company decision-making.

4. Monitor metrics and objectives

  • Quantify the company’s impacts and track progress.

5. Communicate the results – report

  • Disclose sustainability information in line with the CSRD and EU Taxonomy requirements and the stakeholder expectations
  • Reflect on significant sustainability-related impacts for the reported period
  • Enable stakeholders to familiarise themselves with activities and events that took place in the reporting period
  • The report should present a picture of the company’s performance in the wider context of sustainability and individual sustainability-related topics



Sustainability report audit

The information reported by a company needs to be credible and well documented, so stakeholders are able to make informed decisions. As is the case for audits of financial statements, a third-party audit enhances the reliability of sustainability information presented by companies to investors and other stakeholders.

The goal of an auditor’s report is to enhance the reliability of information for users of the sustainability report by providing an objective and impartial assessment of the assertions, data and other disclosures made by management. Obtaining assurance from the audit involves the evaluation of processes, systems, and data, as appropriate, and assessing the findings to support the final opinion.

The CSRD introduces the requirement for mandatory limited assurance on sustainability information in the first year of reporting under CSRD/ESRS. Limited assurance is mandatory, but in a later phase it is expected that reasonable assurance, i.e. the same standard of assurance as for financial information, will be mandatory.

As part of the limited assurance on the sustainability report as required by the CSRD, the auditor assesses compliance with the CSRD as regards how significant topics were determined, with requirements for digital tagging of the sustainability report, and with EU Taxonomy requirements.

The key benefit is to verify sustainability information to help businesses gain stakeholders’ trust.

Assurance is currently performed in accordance with International Standard on Assurance Engagements 3000 (Revised)Assurance Engagements other than the audit and review of historical financial information and International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements.

PwC helps companies address the following key sustainability-related issues:

Manage emerging sustainability risks and opportunities within organizations and across value chains

Build trust by understanding, managing, and communicating on social and environmental impacts

Create value by making better-informed decisions and moving beyond traditional approaches

PwC assistance with ESG reporting

1. Sustainability consulting

  • Establishing a strategic framework structure to ensure sustainability
  • Identifying, collecting, and evaluating the relevant requirements of stakeholders
  • Performing double materiality assessment and determining significant topics that will be the subject of the sustainability report
  • Performing a gap analysis as regards ESRS data requirements and making recommendations to eliminate identified deficiencies
  • Setting and compiling input information for the sustainability report in line with the ESRS
  • Managing risks and opportunities arising in connection with sustainability
  • Coordinating cooperation with representatives of individual programmes or departments
  • Supervising the information balance of the report with regard to the strategic importance of individual topics with an emphasis on accurate and transparent reporting
  • Automating the reporting process, identifying and implementing technologies that can be used for monitoring goals and metrics and preparing a sustainability report
  • Setting the optimal communication strategy, external and internal communication, including the preparation of supporting materials
  • Evaluating annual results, identifying weak points and deficiencies, formulating recommendations for the next period to achieve the declared goals of the medium- or long-term strategy

2. Assurance

  • Performing an independent limited assurance in accordance with ISAE 3000 (Revised) on sustainability report or carbon footprint calculation, and verifying compliance with the methodology or the declared level of methodology

We will be your trusted adviser and assist you in achieving your sustainability-related objectives and preparing your sustainability reports.

We will support the growth of your company to give you a competitive advantage and provide a value-adding service by applying our knowledge and hands-on experience in the relevant area.

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