22 min read
A sustainability report is not just a legal obligation for companies, it’s also a tool to create transparency and strengthen market position. Here you’ll find the key steps and requirements:
- Why a sustainability report?
It documents ESG performance (Environmental, Social, Governance), fulfills legal requirements (e.g., CSRD), builds stakeholder trust, and enhances your sustainability strategy. According to PwC, companies that proactively report on ESG factors are better equipped to identify risks and opportunities, which can lead to improved financial performance and reputation (source). - Essential components of a report:
- Company overview: Goals, strategy, and contribution to the UN Sustainable Development Goals.
- Topic analysis: Materiality analysis with stakeholder engagement.
- Key figures: CO₂ emissions, energy and water consumption, employee turnover.
- Legal requirements:
Companies with >1,000 employees or >€50 million in revenue must report according to CSRD and ESRS. The European Commission’s CSRD directive aims to standardize sustainability disclosures, making them more comparable and reliable (source). - Tools and standards:
Choose suitable standards like GRI, ESRS, or DNK. Tools such as VERSO or Envoria make data collection and reporting easier. - How to get started:
Plan your report, gather accurate data, create a clear structure, and have the report externally audited.
A sustainability report is more than just a requirement, it’s an opportunity to showcase progress and secure long-term competitive advantages. In fact, research from the Institute of Sustainability Studies highlights that companies with robust sustainability initiatives often experience increased stakeholder loyalty and improved access to capital (source).
Main Components of a Sustainability Report
A sustainability report consists of three main areas that clearly and transparently present a company’s ESG performance (Environmental, Social, Governance). This transparency is increasingly demanded by investors and consumers alike, who are seeking evidence of genuine progress rather than greenwashing.
"With a sustainability report, you inform about all of your company’s sustainability achievements.", SAIM
Company Overview and Goals
| Report Component | Required Information | Purpose |
|---|---|---|
| Company Profile | Business model, locations, number of employees | Provides necessary context |
| Sustainability Strategy | Goals, timeline, responsibilities | Clarifies the strategy |
| SDG Alignment | Contribution to UN Sustainable Development Goals | Establishes global relevance |
Once company goals are defined, the next step is selecting and prioritizing relevant sustainability topics. Aligning with the UN SDGs not only demonstrates global responsibility but also connects company actions to internationally recognized priorities, which can enhance credibility and stakeholder engagement.
Topic Selection and Prioritization
This process involves four steps:
- Context analysis: Examine the environment and framework conditions.
- Identification of material impacts: Analyze internal and external influences.
- Stakeholder engagement: Engage with stakeholders through surveys or workshops.
- Materiality analysis: Assess and prioritize topics in a materiality matrix (source).
Based on this, measurable outcomes and key figures are defined. According to Sustain.Life, companies that conduct thorough materiality analyses are better able to focus their resources on the most impactful sustainability issues, resulting in more meaningful reporting (source).
Results and Key Figures
The report focuses on concrete KPIs (Key Performance Indicators) and their development. These should be quantifiable, comparable, and in line with ESRS standards (European Sustainability Reporting Standards). For example, tracking year-over-year reductions in CO₂ emissions or improvements in employee retention rates provides tangible evidence of progress.
"Reporting documents the sustainable development of the company. This helps improve its sustainability performance.", SAIM
Key figures include:
- CO₂ emissions (t)
- Energy consumption (kWh)
- Water consumption (m³)
- Waste generated (t)
- Employee turnover (%)
The data should be machine-readable and externally audited to meet CSRD (Corporate Sustainability Reporting Directive) requirements. Presenting key figures over several years makes it easier to assess progress and identify trends, which is essential for continuous improvement.
How to Create a Sustainability Report
An effective sustainability report requires careful planning and structured implementation. Here are the key steps to create a clear and informative report.
Planning the Report
Solid planning is the first step. Assemble a team from various departments familiar with your company’s sustainability strategy. This team selects the appropriate reporting standards and sets the strategic direction. Involving cross-functional teams ensures that all relevant data points are captured and that the report reflects the organization’s full range of sustainability activities.
| Planning Phase | Core Tasks | Responsible Parties |
|---|---|---|
| Strategic Direction | Define goals, select reporting standards | Management, sustainability officers |
| Team Building | Assemble the team, assign roles | Project management |
| Frameworks | Select suitable standards such as ESRS or GRI | Sustainability officers, external consultants |
With a clear plan, you can focus on data collection and analysis.
Data Collection and Analysis
The foundation of a good report is precise and reliable data. Collect relevant key figures systematically and document the methods to ensure transparency. Standardized data collection processes, such as those recommended by GRI, help ensure consistency and comparability across reporting periods (source).
Key steps in data collection:
- Identify data sources: Find reliable internal and external sources.
- Apply standardized methods: Establish clear procedures for consistent data collection.
- Ensure quality: Control mechanisms ensure data is accurate and verifiable.
Creation and Review
After collecting data, it’s time to actually create the report. Make sure the report meets CSRD requirements.
Key points when writing:
- Structure: Divide the report into clearly organized sections.
- Visualization: Use charts and graphics to make complex data easy to understand.
- Review: Have the report reviewed internally and externally. An external audit is required under CSRD and ensures the data is reliable and the KPIs are relevant.
"Reporting documents the sustainable development of the company. This helps improve its sustainability performance.", SAIM
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What a sustainability statement contains
Under the ESRS the report is not a standalone brochure. It is a clearly identifiable section of the management report, and the official term is the sustainability statement. That distinction matters in practice: it sets the filing location, the assurance scope and the digital tagging obligation, and it is the reason a designed PDF alone no longer satisfies the requirement.
The contents follow a fixed spine. Two standards apply to everyone in scope, and the topical standards attach only where your double materiality assessment says they do.
| Block | What goes in it | Applies to |
|---|---|---|
| ESRS 1, general requirements | Reporting boundary, value chain treatment, time horizons, how estimates and comparatives are handled | Everyone in scope |
| ESRS 2, general disclosures | Basis for preparation, governance, strategy and business model, and the impact, risk and opportunity process | Everyone in scope |
| E1 to E5, environment | Climate, pollution, water and marine resources, biodiversity, circular economy | Where material |
| S1 to S4, social | Own workforce, workers in the value chain, affected communities, consumers and end users | Where material |
| G1, governance | Business conduct, corruption, payment practices, political influence | Where material |
Within each material topic the structure repeats: the policy you have, the actions you are taking, the targets you have set, and the metrics that show movement. A topic where you have a metric but no target, or a target but no action, reads as incomplete to an assurance provider, and that pattern is the single most common finding in first-year statements.
One asymmetry to plan for. Reporting that a topic is not material still requires you to say so and to show how you concluded it. Companies routinely budget for the material topics and forget that the negative conclusions need the same evidence trail.
If you are a smaller company reporting because a customer or a bank asked, not because the law requires it, the structure above is more than you need. The voluntary standard for non-listed SMEs is the proportionate route, and the VSME guide sets out what it asks for instead.
Sustainability strategy and sustainability report: how they connect
Two documents get conflated, and the conflation costs a reporting cycle. A sustainability strategy is a forward commitment: where you intend to be, by when, and what you will spend to get there. A sustainability report is a backward account: what happened in the reporting period, measured. The report cannot invent a strategy that does not exist, and this is exactly where first-time reporters stall in month three.
The dependency runs in one direction. ESRS 2 asks you to disclose your strategy and business model and how sustainability sits inside it, and the topical standards then ask for targets. A target is a strategic decision, not a reporting decision. If nobody has decided what the 2030 emissions target is, the report has nothing to disclose, and no amount of data collection fixes that.
The practical sequence I use: run the double materiality assessment first, because it tells you which topics you are obliged to have a position on. Then set targets only for those topics, in a management meeting, with the person who owns the budget in the room. Then build the data collection. Teams that reverse the order collect three hundred data points and discover that two thirds of them attach to topics nobody will report on.
For the assessment step itself, the materiality assessment guide covers the method, and the core ESG metrics shows which figures carry weight once the topics are fixed.
Reporting Standards and Guidelines
After data collection and planning, it’s important to choose the right reporting standard to present information clearly and comparably. Companies must consider different frameworks, each with specific requirements. Here’s a summary of the three most important standards, GRI, ESRS, and DNK.
Overview of the Global Reporting Initiative (GRI) standards
The Global Reporting Initiative (GRI) standards are widely used worldwide and serve as a basis for sustainability reporting. They cover economic, environmental, and social aspects and provide a clear structure for reporting. According to GRI, over 10,000 organizations in more than 100 countries use these standards, making them the most widely adopted framework globally (source).
| Area | Main Aspects | Details |
|---|---|---|
| Economy | Financial performance, market presence | Concrete figures |
| Environment | Resource consumption, emissions | Focus on impacts |
| Social | Working conditions, human rights | Societal impact |
ESRS Requirements
The ESRS were developed specifically for the EU and are mandatory for large companies under the CSRD. This standard emphasizes precise and quantifiable reporting.
- Machine readability: Reports must be available in a digital format.
- Double materiality: Considers both financial risks and impacts on the environment and society.
- Focus on numbers: Requires concrete data instead of general descriptions.
DNK Guidelines
The German Sustainability Code (DNK) is a national framework long used by German companies reporting voluntarily. Its role has shifted: since 2 March 2026 the DNK offers a VSME module, and existing users are migrating onto the voluntary European standard rather than maintaining a separate national format. If you are choosing a route today, treat the DNK as the platform and VSME as the content standard.
Key elements of DNK:
- Environmental indicators: Clear metrics on resource use and climate protection.
- Social indicators: Focus on employee rights and social engagement.
Choosing the right reporting standard is crucial to ensure transparent and comprehensible sustainability reporting.
Tools and Methods for Better Reports
The right combination of software and methodological approaches can significantly improve a sustainability report. With modern tools, companies can efficiently collect, analyze, and visually present their results. According to EcoVadis, digital reporting platforms can reduce reporting time by up to 40% and improve data accuracy (source).
Software and Data Tools
Selecting suitable software not only makes data collection easier but also analysis and presentation. Here are some tools particularly well-suited for this purpose:
| Tool | Main Functions | Practical Example |
|---|---|---|
| VERSO | LkSG compliance, CSRD reporting | RATIONAL uses VERSO for LkSG compliance |
| Envoria | CSRD, EU taxonomy, CO₂ reporting | ElringKlinger AG uses Envoria |
| Code Gaia | CSR reports, carbon footprint | Seibert Media GmbH creates CSR reports with it |
"We chose Envoria as our ESG software solution because it supports us in implementing our CSRD, EU taxonomy, and CO₂ reporting. It was especially important to us that the solution could be tailored to our company’s specific needs. The expertise of the consultants is also noteworthy."
In addition to pure data collection, the visual and comprehensible presentation of results also plays a major role.
Tips for an Appealing Report Layout
A well-structured layout makes reports not only more readable but also more persuasive. Key elements include:
- Graphics and charts: Help make complex data easy to understand.
- Digital readability: Reports should be easily readable on various devices.
- Clearly structured outline: Logical chapter sequence and clear hierarchies improve navigation.
One example is Simply V, which successfully visualized its resource consumption and waste reduction measures in March 2023 using impactful graphics and stakeholder testimonials. Such approaches can increase engagement and make sustainability achievements more tangible for readers.
Building Trust Through External Audit
External validation ensures greater credibility and strengthens trust in the report. According to PwC, an external audit can help companies identify gaps in their reporting processes and enhance the reliability of disclosed information (source).
Key verification measures include:
- Engaging external auditors to review KPIs
- Transparent disclosure of methods and data sources used
- Regular updates and reviews of report content
With a combination of powerful tools, a clear layout, and independent validation, a sustainability report becomes not only informative but also compelling.
Conclusion: Next Steps
Regular Updates and Adjustments
A sustainability report must be continuously updated. Pay particular attention to the following points:
- Legal requirements: Observe regulations such as CSRD, ESRS, and the Green Claims Directive.
- Stakeholder feedback: Use feedback to improve the materiality analysis and meet information needs.
- Data basis: Clearly and transparently document KPIs, methods, and data sources.
A report that discloses current key figures and their foundations provides a solid basis for sustainable business growth. Regular updates ensure that the report remains relevant and continues to meet evolving stakeholder expectations and regulatory requirements.
Growth Through Targeted Reporting
A well-structured sustainability report can be an effective tool for business growth. Three key points are crucial:
- Engage stakeholders
Actively involve internal and external stakeholders to identify relevant topics and set priorities. This increases the report’s impact and ensures alignment with stakeholder expectations. - Ensure data quality
Use systematic collection methods, validated processes, and transparent procedures to ensure data quality. This strengthens trust among all parties and supports informed decision-making. - Develop a communication strategy
Tailor your communication to your target audiences and choose the right channels to effectively convey your results. This increases the impact of your sustainability initiatives.
With regular adjustments and a clear focus on growth, you can not only meet legal requirements but also strengthen your market position. As global expectations for transparency and accountability continue to rise, companies that lead in sustainability reporting are better positioned to build trust, attract investment, and drive long-term value.
FAQ on Sustainability Reporting
1. Why should companies create a sustainability report?
It’s not only a legal requirement (e.g., under CSRD) but also builds stakeholder trust, improves ESG strategy, and supports risk management and market positioning.
2. Which companies are legally required to report?
Companies with more than 1,000 employees or over €50 million in revenue are required to report under CSRD and ESRS.
3. What are the key components of a sustainability report?
Company overview and goals, materiality analysis, and key figures such as CO₂ emissions, energy/water consumption, and employee turnover.
4. What standards and tools are available?
Common standards include GRI, ESRS, and DNK. Tools like VERSO, Envoria, and Code Gaia support data collection and reporting.
5. How should companies begin the reporting process?
Assemble a cross-functional team, choose a suitable framework, define goals, and plan the structure of the report.
6. What makes data in a sustainability report trustworthy?
Reliable data stems from clear documentation, standardized methods, and external audits as required by CSRD.
7. How does sustainability reporting contribute to growth?
It strengthens stakeholder relationships, increases transparency, and can improve access to capital and long-term competitiveness.
8. What is the difference between CSRD, ESRS, and GRI?
CSRD defines reporting obligations, ESRS specifies EU-wide standards, and GRI is a global standard used internationally for ESG reporting.
9. How often should a sustainability report be published?
Typically, reports are published annually, aligned with the financial reporting cycle.
10. What are the benefits of external auditing for sustainability reports?
External audits enhance credibility, ensure compliance, and identify areas for improvement. Under CSRD, they are mandatory.
11. What are “material topics” and how are they determined?
They are key ESG issues identified through stakeholder engagement, impact analysis, and prioritisation in a materiality matrix.
12. Can sustainability reporting help attract investors?
Yes, clear ESG reporting demonstrates transparency, risk awareness, and long-term strategy, important factors for many investors.
13. What are the most common challenges in sustainability reporting?
Data availability, complexity of standards, stakeholder involvement, and report clarity are key challenges.
14. Which software tools are recommended for sustainability reporting?
VERSO, Envoria, and Code Gaia are commonly used to manage sustainability data and ensure CSRD/ESRS compliance.
15. How can SMEs approach sustainability reporting?
SMEs can start with simplified frameworks, prioritise material topics, and use digital tools to reduce effort and cost.
16. What is “double materiality” and why is it important?
It means reporting on both how sustainability affects the company and how the company affects the environment and society.
17. How can companies avoid accusations of greenwashing?
By providing transparent, data-driven, externally audited reports that align with recognised standards and stakeholder input.
18. Are there penalties for non-compliance with CSRD?
Yes. Non-compliance can result in regulatory penalties, reputational harm, and loss of investor confidence.
19. How do you write a sustainability report?
Six steps, and the order saves the most time. 1. Fix the scope: which entities, which sites, which reporting year. 2. Decide the standard before collecting anything, because it determines the data model. 3. Run the materiality step to cut the topic list to what actually matters. 4. Collect against a metric dictionary that fixes definition, unit, boundary and owner per figure. 5. Draft around the decisions the data supports, not around the standard's table of contents. 6. Review for claims that outrun the evidence. Most delays come from starting at step four.
20. What is the difference between a sustainability report and a sustainability strategy report?
A sustainability report documents performance over a period: what was measured, what changed, against which standard. A strategy report looks forward: which topics the company considers material, what targets follow, which measures are funded and how progress will be tracked. In practice the two are often published as one document, with the strategy part at the front giving the numbers their context. Where they are separated, the strategy document is usually the one investors and lenders read first.
21. What should a company sustainability report contain?
Five blocks carry most standards: governance (who is responsible and how it is overseen), material topics with the reasoning behind the selection, targets and the progress against them, the quantitative KPIs with their methodology, and the risks and opportunities the company sees. Beyond that, the differentiator is not completeness but traceability: every figure should be walkable back to its source, because that is what an assurance provider and a sceptical reader both test first.
