After the EU's Corporate Sustainability Reporting Directive came into force on January 1, 2023, the EU Commission adopted the European Sustainability Reporting Standards into legislation. This does not initially affect the group of companies subject to reporting requirements, but it does affect the way in which they must report.
EFRAG, as the creator of the standards themselves, already provided guidelines for implementation in August(Materiality analysis - Getting started with sustainability reports in accordance with ESRS). By adopting the standards into legislation, European companies now have certainty as to how they can make their sustainability reports compliant.
In addition, a convergence of reporting standards has been observed since the adoption. At the beginning of September, the Global Reporting Initiative and EFRAG issued a joint declaration on the compatibility of the ESR standards with the GRI standard[https://efrag.org/news/public-444/EFRAG-GRI-Joint-statement-of-interoperability-]. In it, they state that the standards are compatible and will remain so in future. At the end of September, the German Sustainability Code stated that it would take the ESR standards into account in its further development and thus establish compatibility[https://www.deutscher-nachhaltigkeitskodex.de/de-DE/Home/News/Sustainability-Code/2023/Weiterentwicklung-des-DNK-unter-Berucksichtigung-d].
This development means greater security for companies in Europe. At the same time, international agreement on a single standard would be desirable in order to further tame complexity.
Against this background, I expect a leap in the development of applications to support sustainability reports in the medium term. With the Sustainability Control Tower, Sustainability Footprint Management, the Environment Health and Safety applications and the cloud platforms, SAP has an excellent basis to start this development leap.
