What is ESG?
ESG is an abbreviation for Environmental, Social, and Governance, encompassing an organisation’s impact and value in three key areas: environmental, social, and governance.
The better a company performs in these areas, the more responsible it is perceived to be. For example, a positive ESG rating can influence a company’s ability to obtain loans from banks.
You can not only understand but also reduce your company's environmental impact with Acubiz
Our CO2 account, part of our Company Policy feature, allows you to measure the CO2 footprint based on transportation activities, helping to adopt a more responsible approach within ESG.
Environmental aspects
Environmental aspects include an annual report from the company on its carbon emissions and water usage. The report showcases the company’s CO2 emissions and water usage resulting from its operations.
Here are examples of what this area covers:
- Reducing the impact of climate change
- Sustainable use of water and marine resources
- Efficient resource utilisation and promotion of a circular economy
- Pollution control
- Conservation of biodiversity and protection of ecosystems
Social aspects
Social responsibility involves how the company manages relationships with employees, suppliers, customers, and the community.
It includes:
- Working conditions
- Activities in conflict areas
- Health and safety in the workplace
- Promotion of equality and diversity
- Ensuring good working conditions
- Respect for human rights
Governance aspects
These data concern the company’s management practices and ethical guidelines. This includes reporting, transparency, and integrity in all aspects of the organisation’s operations.
This covers:
- Implementing sustainability principles in management practices
- Establishing internal control and risk management systems
- Promoting business ethics
- Combating corruption and bribery
- Protecting whistleblowers and animal welfare
- Transparency about political influence
- Clarity about the company’s business relationships
Is ESG reporting mandatory?
ESG reporting requirements can vary depending on your company’s nature and size.
Generally, the following applies:
Mandatory reporting
Voluntary reporting
CSRD requirements
CSRD timetable
CSRD requirements apply from different dates depending on the size and nature of the company.
Listed companies and financial institutions with over 500 employees must report from 2025, while other large companies must report from 2026.
CO2 account - gain an overview of your CO2 impact
CO2 account is an add-on to Company Policies designed to help companies measure the CO2 impact from their transportation activities.
The tool enables the calculation of the CO2 footprint after a completed journey related to company mileage.
This add-on is crucial for companies seeking a clear overview of their CO2 impact. By analysing and settling the CO2 footprint after each trip, companies can gain an overview of their environmental impact – directly related to the environmental aspects of ESG.
You can read more about CO2 accounting here.
Why is ESG important?
Today, customers, partners, and employees increasingly focus on sustainability, environmental considerations, and equality.
ESG emerges as a crucial step for an organisation’s reputation. Therefore, lacking ESG reporting can harm a company’s competitiveness.
Sustainability is no longer just an ideal – it has become a necessity. Thus, running a successful business without addressing and managing the organisation’s impact on the environment and society has become more challenging.
Given the global focus on climate change and sustainable development, ESG could become mandatory at some point.
Therefore, integrating ESG into your company now is a good idea. This way, you’ll stand strong in the competitive field against other companies concerning potential future regulations.
Want to know more?
For more insight into green transition, CO2 accounting, and sustainability in the business world, we recommend listening to the podcast “Regnskabets Time.”
Here, Jesper Holm Pedersen from Eifac shares expertise on paperless bookkeeping and how companies can handle current challenges related to the new accounting act.
If you have other questions, feel free to contact us.
FAQ
What is ESG?
ESG stands for Environmental, Social, and Governance. It represents three key areas that companies focus on to achieve sustainable and responsible business practices. ESG encompasses an organization’s impact and value in these areas, influencing its overall responsibility and sustainability.
Why is ESG important for companies?
ESG is crucial because it reflects a company’s commitment to sustainable and responsible practices. A positive ESG rating can influence a company’s ability to obtain loans and attract investors. It also aligns with the growing global focus on sustainability, environmental considerations, and equality, impacting a company’s reputation and competitiveness.
Is ESG reporting mandatory?
ESG reporting requirements vary depending on the company’s nature and size. In Denmark, under the Financial Statements Act, certain companies have mandatory reporting obligations. However, companies not covered by these legal requirements may choose to report ESG information voluntarily.