Kick-start your ESG efforts with digital solutions

Social responsibility, sustainability, CSR, and now ESG. There are many different names, but there is nothing new in the fact that companies should help take good care of our world.

What is new is that the EU is implementing new requirements and standards for how we work with sustainability and how we report on it.

Therefore, we have on kompasbank navigator gathered an overview of what ESG means, what the new requirements are, and how you, as a small and medium-sized company, can relate to the new rules and get started with ESG most efficiently.

What is ESG – and what rules apply when?

The three letters E-S-G stand for "Environmental," "Social," and "Governance" and are about how a company works with and influences environmental, social, and governance conditions.

In the long term, most companies will have to report on ESG data per EU rules and taxonomy to create greater transparency and consistency in relation to sustainability work in Europe.

The new rules can be found, among other things, in the EU's new directive on sustainability reporting, CSRD, which in the coming years will gradually enter into force for different types of companies:

• For listed companies already covered by the Non-Financial Reporting Directive, the CSRD will enter into force from the financial year beginning on or after 1 January 2024. This means that reporting published from 2025 must follow the Directive.*

• For other large companies (which meet two out of three criteria in terms of turnover (EUR > 40 million), balance sheet total (EUR > 20 million), and number of employees (> 250 employees), the rules will enter into force in the financial year beginning on or after 1 January 2025. This means that reporting published from 2026 must comply with the Directive.*

• Listed SMEs, small and non-complex credit institutions, and captive insurance companies* will only be covered in the financial year starting on 1 January 2026 and thus apply to reports published from 2027.*

As SMEs, you may find that a larger company already demands your ESG data because they need it for their reporting – and in the worst case, you may be rejected as a supplier if you cannot provide the necessary data. Conversely, you can gain a competitive advantage if you control your ESG data.

Get started with digital solutions

Getting started can seem complicated and confusing. In addition to getting an overview of the new requirements and rules, it is also essential to find out how you will approach it in practice on a strategic, tactical, and operational level. The tactical and operational level on the E part gives many companies a headache. Still, several digital solutions can significantly help create an overview of your direct footprint (scope 1 and 2) and then across your value chain (scope 3). To make it easy, we have compiled an overview of five relevant solutions below that can kick-start your ESG efforts.

Klimakompasset

A digital tool that you can use to calculate your company's climate footprint, get an overview of how greenhouse gas emissions are distributed across different activities, and get inspiration on how you can purposefully reduce the company's climate footprint. The Danish Business Authority has prepared the tool in collaboration with the Danish Energy Agency, mainly aimed at SMEs.

Climaider

A Danish company that has developed a platform that your company can use to make a CO2 calculation of your product, service, or the entire organization. You can also include a climate compensation for each employee for a slightly higher monthly payment.

Goodwings

Another Danish company has built a booking platform that calculates and compensates for CO2 emissions concerning company travel. With the help of Goodwings, you can get data on your business trips and the opportunity to travel "net zero" – i.e., completely without a climate footprint.

The 0-Mission

The 0-Mission offers companies a subscription to solar parks. As their customer, you help drive the development of green energy for the benefit of the climate, and they ensure that your total electricity consumption is matched 1:1 with power from their solar park(s). They are a flexible alternative to having to build solar cells yourself. They also offer a greener and more sustainable solution than just buying certificates from your electricity company.

Prduct

Prduct is an intuitive sustainability solution for businesses seeking to manage their product and supplier data and enable closer collaboration with suppliers. By integrating environmental, social and governance data across your value chain and automating tasks, the platform seamlessly enables your company to achieve your sustainability and compliance goals.

BeCause

A sustainability hub that helps companies collect, coordinate, and communicate sustainability data to stakeholders. With BeCause, you can get help managing the data that must be used in reporting on ESG.

*Source: PWC – CSRD: Corporate Sustainability Reporting Directive

*Captive insurance companies are an insurance company within a company that deals with insurance covering the company's needs (source: Lexly)