Public-interest entities (PIEs) with more than 500 employees are required to disclose information on environmental, social and governance aspects if they meet one of these requirements: a threshold of 20 million euros in balance sheet total assets or 40 million euros in total net revenues from sales and services.
Companies operating in sectors considered high-risk in terms of environmental or social impact are also particularly subject to regulations concerning the Sustainability Report.
It is important to stress that the report required by the decree in question is essential for sustainable finance. It provides investors and other stakeholders with the information they need to assess companies’ ESG performance and to make informed investment decisions.
In this way, the decree indirectly helps to promote sustainable finance, as it improves the availability and quality of information on corporate sustainability, which is fundamental for sustainable investors.
With the introduction of the Corporate Sustainability Reporting Directive (CSRD), which will broaden and strengthen the Non-Financial Reporting Directive (NFRD), the scope will cover all companies listed on EU regulated markets, regardless of their size. This means that a larger number of companies will be required to report in greater detail on their sustainability practices and performance.
These requirements may vary depending on the specific national implementations of the European directive and on any updates or new regulations introduced subsequently. We refer you to the European Commission page containing the relevant regulation.
With the help of an expert, check the applicable national rules or the updated EU directives to confirm the current parameters. Knowing these rules is essential for companies subject to the legal obligation, as they affect their reporting obligations and the risk of penalties for non-compliance.
But why is this information so important, and why should it involve SMEs, encouraging them to consider voluntarily integrating such reporting into their business processes, even in the absence of an immediate legal obligation?
The European Green Deal aims to make Europe the first climate-neutral continent by 2050, promoting a clean, circular, energy-efficient and competitive economy. For companies, aligning with the Green Deal means not only complying with evolving environmental regulations but also positioning themselves as active players in the green transition. This can lead to:
- Preferential access to funding and incentives for sustainable projects.
- Greater competitiveness in markets where consumers and business partners value sustainability.
- Reduced risks linked to climate change and resource price fluctuations.
But that is not all. From a market perspective, consumers are increasingly aware and demanding about the environmental impact of the products they buy, while investors assess climate-related risks in their portfolio decisions. In this context, communicating one’s intentions and actions on sustainability in concrete terms can:
- Differentiate the company’s offering, attract customers and increase loyalty.
- Improve access to equity capital thanks to growing demand for sustainable investment.
Reasons of resilience
Business resilience in a context of climate change and environmental challenges requires proactive adaptation and the adoption of sustainable practices. Companies that anticipate and manage environmental risks not only protect their value chain from shocks and disruption but can also discover new opportunities for efficiency and innovation.
Resilience translates into:
- Lower vulnerability to regulatory changes, resource price fluctuations and extreme weather events.
- The capacity to adapt and innovate in order to seize emerging opportunities in a green economy.
At the heart of this is the need to communicate one’s intentions effectively, for example in these ways:
- Adopting and following recognised sustainability and reporting standards, such as the GRI or the EU Taxonomy.
- Setting clear, measurable targets for emissions reduction, efficient use of resources and social responsibility.
- Engaging stakeholders in an open dialogue on sustainability, including suppliers, customers, local communities and investors.
- Innovating in products, services and processes to reduce environmental impact and improve energy efficiency.
The ecological transition requires a strategic and operational commitment that goes beyond mere regulatory compliance. For this reason, even companies that are not obliged to do so could be favoured, for the reasons set out, in adopting a sustainability report or sustainability reporting.
