Faced with the economic, social and environmental challenges of our time, last November the European Union voted to extend its CSRD directive, which will require over 50,000 companies in Europe to publish extra-financial reporting based on ESG indicators. This is encouraging organisations to review their strategy and adopt a more transparent and sustainable model without compromising their economic performance.
1. Publication of extra-financial reporting : a new challenge for CFOs
From 2024, the European directive will require all companies with more than 500 employees to disclose an ESG (environmental, social and governance) report in addition to their financial report. This assessment is based in particular on the following indicators :
- CO2 emissions, electricity consumption, waste recycling
- Quality of social dialogue, employment of disabled people, employee training
- Transparency of executive remuneration, fight against corruption, women on boards of directors
Although large French companies are well ahead of schedule in applying the new regulations, extra-financial reporting remains a major challenge for many organisations, and therefore for CFOs.
Companies’ commitment to society has become a strategic issue, and it is up to finance departments to take account of societal and environmental risks in the same way as financial risks. To achieve this, CFOs will need to integrate a real-impact approach into their risk management by including reliable and justified ESG criteria in the new corporate reporting.
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2. Transforming financial data into sustainable data
When creating a non-financial report, it is important to consider first and foremost the quality of the data collected. However, traditional communication channels can quickly reach their limits when it comes to collecting large quantities of data, which is often spread across different departments within the company or supplied by external partners, making it difficult to aggregate and analyse.
This is why the most experienced companies in this field use digital solutions integrated into their information systems to generate workflows that validate data at every stage. The aim is to ensure that the information provided is reliable and backed up by accurate data, so that we can build a high-quality CSR report and management system.
For example, to produce a carbon footprint and assess greenhouse gas emissions, it is essential to collect detailed and accurate data on energy consumption, waste production and business travel. This data can then be integrated into the company’s accounts to provide an overall picture of its environmental impact.
3. Linking financial management and the Carbon Footprint
In this context, it is important to link financial management and the greenhouse gas emissions balance sheet in order to achieve specific sustainable development objectives. The finance function is particularly well-suited to this race towards carbon neutrality, as it already uses the key information needed to draw up a simplified carbon balance sheet. Companies must therefore mobilise their resources to focus on both their direct expenditure and its indirect impacts, such as employee travel costs.
To facilitate the implementation of these measures, the use of automated systems is recommended. However, not all standard accounting software yet includes carbon management functions. It is therefore essential to introduce complementary IT tools, such as Vertical Expense, to achieve this objective.
Our digital expense management solution automatically calculates the carbon footprint of your employees’ travel and reports all the data in the dashboard. It can be easily integrated into your company’s information system. In particular, Vertical Expense helps you to identify the items that have the greatest impact, and contributes to greater profitability while respecting your commitments to sustainable development.
In short, non-financial reporting based on ESG indicators is a major challenge for companies wishing to commit to transparency and sustainability. For CFOs, this means changing their risk management practices and integrating reliable ESG criteria into their corporate reporting. To achieve this, the use of digital solutions and automation are essential. By taking these issues into account, companies will be able to meet the expectations of their stakeholders and contribute to a more sustainable world.
