ESG reporting and preparation of a Sustainability Report

Report on Responsible Business Conduct / Sustainability Report

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

An ESG report or Sustainability report is a report published by a company or organization about environmental, social and governance (ESG) impacts. It enables the company to be more transparent about the risks and opportunities it faces. 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 supported by the fact that the investors and other stakeholders are calling on companies to disclose more about their sustainability and environmental, social and governance strategies.

Many legislative documents requiring companies to disclose non-financial information are currently being prepared or have become effective:

  • 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, draft)
  • Directive on Corporate Sustainability Due Diligence (CSDD, draft)
  • Legislative proposals of the European Commission for sustainable products (draft)

How should companies report non-financial information?

GRI – Global Reporting Initiative

  •       International organization for independent standards
  •       It issues GRI standards for companies to report non-financial information.
  •       These standards help businesses identify impacts on climate change, the environment, human rights, and corporate governance.
  •       The most widely-used standards among global corporations
  •       Standards are non-mandatory and non-binding; however, the proposed Corporate Sustainability Reporting Directive (CSRD)
          and the forthcoming mandatory European Sustainability Reporting Standards (ESRS) are based on the GRI structure
  •       ESRS is a set of standards (analogous to IFRS) companies must comply with when reporting sustainability information.
  •       Via high quality reporting (GRI), organizations are able to better understand, communicate, and manage their contributions
          to the United Nations Sustainable Development Goals (UN SDG).

Sustainability report is an ideal and effective means of enabling companies to answer in a single document a wide variety of questions that stakeholders may raise.

However, creating an Sustainability report can be challenging, as it must meet the requirements of the reporting methodology and have the right balance of information from the individual agendas. Moreover, the companies need to determine how to communicate relevant information and what ESG information and indicators to report.

Basic areas that should be covered in a Report on Responsible Business Conduct / Sustainability Report:


Internal Benefits
  • Increased understanding of risks and opportunities
  • Emphasizing the link between financial and non-financial performance
  • Influencing long-term management strategy and policy, and business plans
  • Streamlining processes, reducing costs and improving efficiency
  • Benchmarking and assessing ESG performance with respect to laws, norms, codes, performance standards, and voluntary initiatives
  • Avoiding being implicated in publicized environmental, social and governance failures
  • Comparing performance internally, and between organizations and sectors
External Benefits
  • Improving reputation, brand awareness and loyalty
  • Company leaders who regularly publish a report on ESG development, can receive feedback on the programs and activities they reported on in the past period via the report
  • Mitigating negative ESG impacts
  • Enabling external stakeholders to understand the company’s true value
  • Demonstrating how the company influences, and is influenced by, expectations about sustainable development
  • Investors monitor the values and trends of non-financial indicators to receive an overall picture of the company's future performance
  • Journalists can find inspiration for their articles in the report and often promote the company's reputation by expanding the topics
  • Many credit rating agencies incorporate ESG factors into their methodology.

Taxes as part of ESG reporting

Modern companies perceive taxes as a tool that supports the implementation of environmental projects and the long-term sustainability of a social and economic oriented company.

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

1. Financing projects of sustainable value

Taxes are an important source of financing 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 Regulation

Directive 2014/95/EU – the non-financial reporting directive (NFR Directive) – lays down rules on disclosure for non-financial and diversity information by large companies. Companies are required to include non-financial statements in their annual reports.

The NFR Directive requires that companies provide with relation to these matters as a minimum the following information:

  • A brief description of the undertaking’s business model,
  • The outcome of policies,
  • The principal risks related to those matters linked to the undertaking’s operations including, where relevant and proportionate, its business relationships, products or services which are likely to cause adverse impacts in these areas, and how the undertaking manages such risks,
  • Non-financial key performance indicators relevant to the business.

The NFR Directive encourages the use of voluntary standards and frameworks for sustainability and ESG reporting.

Slovak regulation

The NFR directive has been implemented into the Slovak Act on Accounting No. 431/2002 Coll. as amended.

A public-interest entity with an average number of employees for the accounting period exceeding 500, must also provide in its annual report non-financial information regarding the development, performance, position and effect of the accounting unit activity on:

  • Environmental, social and employment issues,
  • Information regarding the respecting of human rights and
  • Information concerning the fight against bribery and corruption.

The company may apply for an exemption if its parent company prepares and issues an ESG report in line with an acceptable framework or standard.

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

Reporting frameworks and standards

Currently, companies have significant flexibility regarding disclosure of relevant ESG information and may undertake this in the way they consider most useful. It is encouraged to use reporting which relies on recognized frameworks and standards.

Frameworks provide principles-based guidance that helps identify ESG topics to determine how to structure and prepare the ESG information companies disclose.

The Task Force on Climate-related Financial Disclosures (TCFD) is a framework that provides principles-based recommendations for managing and reporting on climate risks.

The European Commission has published non-binding guidelines to help companies disclose relevant non-financial information in a more consistent and more comparable manner.

Under the Slovak Act on Accounting, companies may use the European Union framework or another international framework governing non-financial information as a basis, provided which framework was used is specified.

Standards provide specific and detailed information requirements that assist in determining which specific metrics or indicators to disclose for each topic.

The most common standards in Europe used by companies in their ESG disclosures are those issued by the Global Reporting Initiative (GRI). GRI Standards enable companies to report the impact of their social and environmental activities to stakeholders and can be verified.

Overview of key reporting areas

1. Prepare and Set ESG Strategy

  • Create a strategy and business case to help companies be sustainability-driven
  • Cover topics and indicators reflecting the company’s significant ESG impacts (materiality matrix)
  • Include topics which will substantially influence the assessments and decisions of the stakeholders

2. Connect with Stakeholders

  • Identify stakeholders and explain in the report how the company has responded to their reasonable expectations and interests

3. Define Metrics & Goals

  • Understand impacts and work with companies to quantify these to better inform their decisions.
  • Set metrics to capture activities with an impact on the ESG areas.
  • Set goals for the future to support company decision making.

4. Monitor Metrics & Goals

  • Quantify the company’s impacts and track progress.

5. Communicate the results – report

  • Assist companies with reporting non-financial information to meet stakeholder needs.
  • Reflect on all significant ESG impacts for the reported period.
  • Enable stakeholders to assess the reporting company’s performance in the reporting period.
  • The report should present the company’s performance in the wider context of sustainability and ESG topics.

Assurance over ESG report

The professional standards set forth requirements and guidance for the auditor’s involvement when other information is included in the document with audited financial statements. Sustainability reports and ESG information are often included in company reports that do not include audited financial statements. In these instances, the auditor has no responsibility for the ESG information in a financial statement audit.

However, the information reported by a company needs to be credible and well supported, so stakeholders are able to make informed decisions. As for the audits of financial statements, third-party assurance from an audit firm enhances the reliability of ESG information presented by companies to investors and other stakeholders.

An auditor’s report is designed to enhance the reliability of such information for the intended users of the ESG report by providing an objective and impartial assessment of the assertions, data and other disclosures made by management. Obtaining any level of assurance by the audit involves the evaluation of processes, systems, and data, as appropriate, and then assessing the findings in order to support an opinion.

The key benefit is to verify non-financial data and information to help companies gain stakeholders’ trust.

Assurance is performed in accordance with International Standard on Assurance Engagements 3000, 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.

Key sustainability issues PwC helps companies to address

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 moving beyond traditional approaches.

PwC helping hand in the ESG reporting process

1.  Aspects of ESG Consulting
  • Identification, collection and evaluation of the relevant requirements of all stakeholders through structured stakeholder dialogue questionnaires and subsequent assessment.
  • Set up the concept and compilation of contributions to the ESG report based on GRI Standards methodology. Ensure the structure of the strategic framework of the sustainability and ESG development goals, verification according to GHG protocol or the AA1000 standard.
  • Management of risks and opportunities arising in connection with ensuring sustainable company growth.
  • Ensure the coordination of cooperation with representatives of individual programs or departments.
  • Supervision of the information balance of the report with regard to the strategic importance of individual topics with an emphasis on accurate and transparent reporting.
  • Reporting process automation; identification and implementation of technologies that can be used in monitoring goals and metrics and in preparing an ESG report.
  • Set the optimal communication strategy, external and internal communication, including the preparation of supporting materials.
  • Evaluate the annual results, identify weak points and formulate recommendations for the next period in order to achieve the declared goals of the medium- or long-term strategy.
2.  Assurance
  • Undertake an independent audit of the data and metrics published in the ESG report and verification of compliance with the methodology or the declared level of methodology.

We will be your trusted adviser and assist you in your sustainability and ESG reporting journey.

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