General
What does ESG mean for our company?
ESG represents a commitment to balancing financial performance with responsibility toward the planet, people, and communities. It guides operations by reducing environmental impact, fostering inclusion, and ensuring transparency and ethical decision-making.
Why is ESG important?
ESG is important because it helps to manage risks, attract investors, improve reputation, and align your organisation with stakeholder expectations.
How does ESG link to risk management?
ESG helps identify and address risks factors which could impact long-term performance. By integrating ESG into risk practices, the company can anticipate challenges such as regulatory changes, reputational issues or supply chain disruptions and respond more effectively.
How can we embed ESG into our strategy?
Embed ESG by integrating sustainability, social responsibility and governance into decision-making, ensuring growth aligns with reducing environmental impact, supporting communities, and upholding ethical practices.
What challenges do organisations face in ESG adoption?
Organisations often face challenges such as balancing ESG goals with financial pressures, adapting to evolving regulations, and ensuring consistent practices across complex supply chains. Challenges can be overcome through clear priorities, strong data, early stakeholder engagement, and a culture of ESG.
How does ESG differ from Corporate Social Responsibility (CSR)?
CSR focuses on voluntary charitable initiatives, while ESG involves measurable, performance-driven requirements often linked to regulatory compliance.
What are Scope 1, 2, and 3 emissions?
Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by a company, such as fuel combustion in company vehicles or boilers.
Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by a company.
Scope 3 emissions are all other indirect emissions in a company’s value chain, including those from suppliers, business travel, employee commuting, and the use of sold products.
Sustainability reporting and frameworks
How can companies demonstrate their alignment with the UN Sustainable Development Goals (SDGs)?
Through mapping business activities and ESG initiatives to relevant SDGs, setting measurable targets, and reporting progress against these goals.
How can small- and medium-sized enterprises (SMEs) approach ESG reporting?
Start small, focusing on material issues, using simplified frameworks (e.g., VSME and GRI), and leveraging expert and government support.
How will the integration of Sustainability into the Charities Statement of Recommended Practice (SORP) impact reporting?
SORP encourages charities to report on how they manage ESG matters. Tier 1 and 2 trustees may choose to explain how the charity manages ESG matters, with encouragement to consider stakeholder needs. In addition to the above, Tier 3 trustees must also provide a clear summary of ESG activities, including key performance indicators for climate-related risks and opportunities, governance issues such as privacy, cybersecurity and ethics, and social factors like employee wellbeing, diversity and community support.
What is the EU Corporate Sustainability Reporting Directive (CSRD)?
CSRD is an EU regulation requiring companies within scope to disclose detailed information about their sustainability practices and impacts.
How have CSRD reporting requirements recently changed?
In early 2025, the EU Commission put forward an Omnibus Directive aiming to simplify sustainability reporting obligations under CSRD. In November 2025, this was voted on by the EU Parliament with following results:
- The vote reduces the number of companies covered by CSRD to a new threshold of 1,750 employees and €450 million in revenues
- Under CSDDD, only companies with more than 5,000 employees and revenues of over €1.5 billion fall within scope
- Companies not in scope will only be required to provide information set out in voluntary sustainability reporting standards (VSME)
Companies covered by CSDDD are directed to rely on information that is already available. They are to only request additional information from their smaller business partners as a last resort.
Negotiations between the Parliament and Council are ongoing, with the aim of finalising the legislation by the end of 2025.
How does the CSRD differ from the Non-Financial Reporting Directive (NFRD)?
The CSRD expands on the NFRD by requiring more detailed disclosures and aligning with mandatory European Sustainability Reporting Standards (ESRS).
What is the EU’s Voluntary Sustainability Reporting Standard for Micro, Small, and Medium-sized Enterprises (VSME)?
The VSME is a voluntary framework designed for SMEs to simplify and standardise their sustainability disclosures. With recent CSRD changes, businesses that fall outside the CSRD scope under the Omnibus Directive should also consider adopting it. This is because banks and large companies still within the scope of the CSRD will request the information set out in the VSME by their value chain, which helps simplify reporting and reduces the information-gathering burden for those not in scope.
What is double materiality, and why is it significant in ESG reporting?
Double materiality considers both how sustainability impacts a company’s financial performance and how the company impacts the environment and society. This dual focus is a cornerstone of ESG regulations and is mandatory under CSRD.
