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Why should my company voluntarily prepare sustainability reports?

In the coming years, sustainability reporting will become mandatory for more and more companies - and thus also an opportunity. Those who establish this practice in their company at an early stage can make their own sustainable development visible to stakeholders and customers. This not only helps to position the company as a responsible player in a competitive environment, but also offers strategic advantages.

Those who plan early, train employees and seek external expertise where necessary can position themselves as pioneers in the industry and benefit from sustainable development in the long term. Even beyond the regulatory requirements, it makes sense to address the issue, as the disclosed information can be used to optimize the business model and strategic planning. It can also serve as a decision-making basis for portfolio management, corporate bonds, lending and investor communication.

Fin.Connect.NRW already offers comprehensive information on mandatory sustainability reporting, including:

In addition to the European Sustainability Reporting Standards (ESRS) - which are mandatory for some companies as part of the CSRD - there are numerous voluntary standards. Companies that are not subject to mandatory reporting or that also follow voluntary standards can set themselves apart from the competition and increase stakeholder confidence. This gives small and medium-sized enterprises (SMEs) in particular the opportunity to position themselves sustainably and make their transformation path visible in the long term. In addition to the competitive advantages, voluntary reporting is particularly relevant for two key reasons: 

Fin.Connect.NRW already offers comprehensive information on mandatory sustainability reporting, including:

  1. Establishing institutional structures: Companies that are not currently required to report but will fall under the extended scope of application in the future or will grow into it will benefit from preparing voluntary reports now. According to the Sustainability Transformation Monitor 2024, companies that have not yet dealt with sustainability reporting significantly underestimate the personnel costs required for CSRD. And while 45.5% of companies with reporting experience felt well prepared for CSRD, only 18.1% of inexperienced companies did. The main obstacles here are the complexity of the regulatory and data requirements. Established platforms and standards offer valuable guidance here with their low-threshold offering.
  2. Trickle-down effects: Non-capital market-oriented SMEs will also be indirectly affected by CSRD, as large companies will increasingly have to request information from their suppliers. Voluntary standards enable SMEs to prepare for these requirements and meet the rising expectations of business partners, banks, customers and investors.

 

What voluntary reporting standards are there?

There are various standards that differ in terms of their target groups, their thematic focus and their complexity. A basic distinction can be made between sustainability frameworks and standards: Frameworks provide principle-based guidelines for structuring and preparing information. Standards contain detailed and comparable requirements for reporting on individual topics, including key figures. Standards therefore make frameworks practicable. Frameworks and standards therefore complement each other and are generally offered as a “complete package”. Six frameworks/standards are presented below:

  • Global Reporting Initiative (GRI)
  • Voluntary Sustainability Reporting Standards for SME (VSME)
  • Eco-Management and Audit Scheme (EMAS)
  • Sustainability and Accounting Standards Board (SABS)
  • International Financial Reporting Standards (IFRS S1/S2)
  • German Sustainability Code (DNK)

It is important to note that the DNK can only be used as a reporting standard until November 2025. From May 2025, the Sustainability Code platform and infrastructure will be gradually adapted for European reporting with the ESRS and VSME. As the SABS and IFRS show, efforts are also being made internationally to harmonize sustainability standards. EMAS is also a comprehensive environmental management system and not just a reporting standard.

1.) Global Reporting Initiative (GRI)

The GRI is an organization that publishes international guidelines for sustainability reports. The guidelines are suitable for companies of all sectors and sizes, but especially for those with complex value chains and multinational operations. The GRI Standards are the most widely used framework for voluntary sustainability reports: In 2024, around 53% of reporting large companies in Germany used the GRI framework. Around 14,000 organizations in over 100 countries worldwide already use these standards. The GRI guidelines are divided into three series:

As the name suggests, the GRI Universal Standards set out general principles that are binding for all reporting companies. These include targets, basic concepts and the application of the GRI, guidelines for structuring corporate information and for carrying out the materiality check.

In addition, the GRI Sector Standards help companies in different sectors to identify the data points that are material to them by bundling relevant information and disclosures. If a GRI standard is available for a particular sector, the companies concerned are obliged to apply it. Only in exceptional cases is it possible to omit individual disclosures if the company can justify this in a comprehensible manner. As the sector-specific standards are still being developed, most companies currently use topic-specific guidelines.

These GRI Topic Standards define concrete data points on specific topics such as biodiversity, occupational health and safety or taxes. Companies report on their material topics, which they have identified with the help of the Universal Standards, but can also provide additional information, for example to specifically address investors.

The reports can be published in various formats, digitally or in paper form, either as a stand-alone sustainability report or as an integrated section in the annual financial statements. The Global Reporting Initiative also offers certified training courses to provide support.

2.) Voluntary Sustainability Reporting Standard for SME (VSME)

The VSME was developed by the European Financial Reporting Advisory Group (EFRAG), an advisory body of the European Commission, and is compatible with the European Sustainability Reporting Standards (ESRS). It complements already established voluntary standards such as the GRI and is particularly suitable for small and medium-sized enterprises (SMEs) that want to gradually approach more comprehensive reporting requirements. The VSME system is less extensive and complex than the ESRS and is therefore aimed specifically at SMEs in the EU that want to provide their sustainability data to banks or major customers, for example. The final version was submitted to the EU Commission by EFRAG in December 2024.

The standards are divided into two modules: A Basic Module, which is designed primarily as an objective for micro-enterprises (fewer than 10 employees) and as a minimum standard for the rest, covering eleven fundamental aspects from the ESG area. There is also a Comprehensive Module, which contains nine additional reporting disclosures.

While the basic module contains general information on reporting practices, environmental indicators such as emissions and energy consumption as well as social standards such as remuneration and health and safety, the comprehensive module expands the framework to include detailed information on climate reporting, such as emissions reduction, protection of human rights and business activities in controversial sectors. Here, too, the principle applies that companies only report on the topics that are material to them - referred to here as the “if-applicable” principle - which reduces the effort involved.

3) Eco-Management and Audit Scheme (EMAS)

EMAS is an environmental management and control framework developed by the EU that supports companies and organizations in systematically improving their environmental performance and presenting it transparently. Based on the international environmental management standard ISO 14001, EMAS also provides for mandatory environmental reporting in the form of a validated environmental statement and regular external audits by environmental auditors. It is therefore not just a pure reporting standard, but a comprehensive instrument that actively supports companies in reducing emissions. 

EMAS is aimed at organizations of all sizes and sectors, especially those that pursue a structured approach to environmental management and wish to have their sustainability measures certified. The environmental statement includes key figures, such as energy and resource consumption, emissions, environmental targets and continuous improvement measures. Thanks to its close integration with ISO 14001, EMAS is compatible with other sustainability standards and offers a solid basis for companies that wish to prepare more comprehensive sustainability reports in accordance with GRI, ESRS or VSME in addition to purely environmental aspects.

4.) Sustainability Accounting Standards Board (SASB)

SASB provides industry-specific standards for a total of 70 industries, which focus primarily on key figures for sustainable financial reporting. SASB focuses on key topics such as the environment, social capital, human capital, business model and innovation as well as aspects of management and governance. The SASB is particularly suitable for listed companies with a US connection and its sector-specific focus has parallels with the GRI Sector Standards. In the course of COP26 in Glasgow, the SASB was integrated into the International Sustainability Standards Board (ISSB) in order to create uniform international standards for sustainability reporting, whereby the SASB standards continue to be applied in the ISSB.

5.) International Financial Reporting Standards (IFRS S1/S2)

The International Sustainability Standards Board (ISSB) is an international expert committee of the IFRS Foundation that published its first two sustainability standards, IFRS S1 and IFRS S2, in 2023. These standards aim to harmonize international financial reporting standards and enable companies to present their sustainability-related opportunities and risks in a transparent manner. Various existing standards have been integrated or replaced - in addition to SASB, requirements from the Task Force on Climate-related Financial Disclosures (TCFD) and the Climate Disclosure Standards Board (CDSB) have also been incorporated.

While IFRS S1 describes the general requirements for the preparation and structuring of financial information, IFRS S2 specifies the requirements for the disclosure of climate-related opportunities and risks. There are currently no legal obligations to apply IFRS S1/S2 in the EU - however, they are internationally relevant for capital market-oriented companies.

6.) German Sustainability Code (DNK)

The DNK has long been a tried-and-tested sustainability reporting tool for German companies of all sizes, but especially for SMEs. In 2024, almost 44% of reporting medium-sized companies in Germany used the Sustainability Code. Originally developed by the German Council for Sustainable Development in 2011, the Code comprised 20 criteria in the dimensions of ecology, economy, social affairs, governance and management.

Since 2024, the Federal Ministry for Economic Affairs and Climate Protection (BMWK) has supported the further development of the Code, which is compatible with relevant political frameworks such as the EU Taxonomy, the ESRS and the National Action Plan for Business and Human Rights. The Code will be fundamentally restructured for 2025 and replaced by a free digital platform that can be used to create CSRD and VSME reports in future.

In addition, a DNK checklist for the ESRS and the DNK Sustainability Campus will support German companies in fulfilling their reporting obligations. The Sustainability Code declarations from previous reporting years will remain in the DNK database as a data management system and orientation aid.

 

Where can I find further information and support?

As a rule, the voluntary standards and other information can be found free of charge on the website of the relevant organization. Some providers, such as the Global Reporting Initiative or the German Sustainability Code, also offer their own training and courses on the standards. However, anyone who has difficulties with the report - for example, because the report is being written for the first time - should not hesitate to seek external advice. This supports companies in applying the reporting standards and verifying data.

General information

  • The IHK North Rhine-Westphalia offers various training courses and seminars with certification on the topics of sustainability and mobility.
  • DAU database for environmental auditors in Germany
  • The IHK's ecoFinder helps you find German companies from the environmental and energy sector, such as sustainability consultancies.
  • Ecoflex can be used to record emissions and environmental indicators for industrial goods and services.
  • Substain software for ESG reporting and sustainability management

European Sustainability Reporting Standards

Global Reporting Initative

Voluntary Sustainability Reporting Standards for SME

Eco-Management and Audit Scheme 

Sustainability Accounting Standards Board

International Financial Reporting Standards

German Sustainability Code

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