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.

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.