New regulations, and why publishing a sustainability report in multiple languages is worth the effort
Corporate social responsibility (CSR) has evolved from being a little-known term to a well-established concept. It covers a broad range of issues and activities linked to companies’ responsibility for their actions and the effects of those actions on society. Ecological, social and economic aspects are just some of the subjects on which companies in Germany must now also report at least once a year, as ever more customers, investors and business partners factor both economic key performance indicators and sustainability criteria into their decisions.
Mandatory since 2017
In countries such as Denmark, France and the Netherlands, companies of a certain size have been required to publish a management report on social and environmental issues for years now. Starting with the current financial year, sustainability reports in line with an EU guideline passed in 2014 are also obligatory for companies in Germany. The obligation applies to
- listed companies
- with more than 500 employees,
- whose turnover exceeds 40 million euros or whose balance sheet total amounts to more than 20 million euros on two successive reporting dates, as well as
- banks, insurance companies and investment companies, irrespective of whether they are listed.
As large corporations have to include details of their own activities as well as those of their subcontractors and suppliers, SMEs are also well advised to invest in social and ecological measures and keep records of any steps they take.
No rigid formal guidelines
Companies have various ways of fulfilling their reporting obligation and can use specific predefined criteria and indicators to document their activities. One of these standards is the German Sustainability Code (DNK), which was developed by the German Council for Sustainable Development (RNE). It is based on the criteria of the Global Reporting Initiative (GRI) and the European Federation of Financial Analysts Societies’ ESG indicators, each of which can also be selected as guidelines for reporting. Integrated reporting, as it is known, offers another option: instead of a separate sustainability report, a company is free to publish its non-financial indicators alongside financial information in its annual report. Companies are even free to choose their own format, although they have to present a valid argument for such an approach.
There are no restrictions when it comes to media formats either. Reports can be published online or in print, using interactive graphics or incorporating video and audio sequences.
The potential of (international) reporting
Despite harsh penalties for companies that fail to fulfil their duty, the DNK has not yet been used as widely as hoped according to the German Council for Sustainable Development. For SMEs in particular, sustainability reporting may seem like just another burden. There is no denying the extra effort involved, as valid processes need to be established to enable transparent CSR reporting. But this apparent burden can also be a blessing. Alongside facts and figures, companies can use sustainability reports to present themselves as actors that are aware of their responsibilities. They can communicate their history, values and vision to customers, investors and future applicants in a clear manner, and strengthen trust. In this way, sustainability reports can become an effective tool for corporate communication.
Companies active on the international stage have to publish their sustainability reports in various languages if they are subject to the reporting obligations of other countries. Voluntarily publishing reports in several languages offers companies of various sizes the opportunity to reach out to new customers and investors, thereby increasing their competitiveness and credibility in new markets.
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