As global emphasis on sustainability intensifies, Finnish manufacturing companies are navigating a complex landscape of new regulations and stakeholder expectations. A recent survey conducted by Elisa IndustrIQ sheds light on the current state of Environmental, Social, and Governance (ESG) reporting within the industry, highlighting trends, challenges, and the path forward.
The Rising Tide of Reporting Obligations
The European Union's Corporate Sustainability Reporting Directive (CSRD), being phased in from 2024, is set to transform how businesses approach sustainability reporting. Initially targeting listed companies with over 500 employees, the directive will eventually encompass smaller companies meeting specific criteria, ensuring comprehensive coverage across the sector.
Awareness and Importance of ESG Reporting
The survey indicates that sustainability issues are integral to the business strategies of most Finnish manufacturing companies. An overwhelming 80% of respondents acknowledge the significant or fairly significant impact of ESG factors on their operations. This heightened awareness is driven by legal mandates and stakeholder expectations, highlighting a collective shift towards more responsible business practices.
Current Reporting Practices and Future Plans
Currently, over half of the surveyed companies report broadly on ESG issues, adhering to recognized standards such as the Global Reporting Initiative (GRI). However, a notable portion of companies either report narrowly on specific areas like environmental issues or have minimal to no reporting practices. Interestingly, the survey forecasts a paradigm shift, with all companies planning to adopt comprehensive ESG reporting within the next two years.
The scope of current reporting varies, with many companies focusing on Scope 1 and 2 (direct emissions and energy consumption) and some extending to Scope 3 (supply chain emissions). Data collection remains a challenge, with more than two-thirds of the companies relying on manual methods, such as email and Excel, for compiling their reports. A quarter of the respondents have invested in or developed their own reporting solutions, showcasing a growing trend towards more sophisticated data management.
Environmental Priorities
Greenhouse gas emissions and energy consumption emerge as the top priorities for environmental reporting. These areas are critical for companies aiming to reduce their carbon footprint and improve energy efficiency, aligning with broader global sustainability goals.
Software Solutions: Adoption and Investment Plans
Despite the importance of ESG reporting, two-thirds of the companies have a limited understanding of dedicated software solutions. Currently, only 19% have implemented an ESG reporting software, while the rest rely on manual or self-made solutions. The primary reasons for not adopting dedicated software include the perceived lack of necessity for extensive reporting and the adequacy of existing manual methods. However, there is a clear intent to invest, with about one-third of companies planning to adopt ESG reporting software within the next two years.
Key Requirements for ESG Software Providers
For software providers, understanding the nuanced needs of manufacturing companies is crucial. Expertise in sustainability regulations, industry-specific experience, and flexibility are paramount. Additionally, ease of use and comprehensive features, such as ready-made reporting templates and emission calculation libraries, are highly valued by companies.
Conclusion: A Collaborative Path Forward
The findings from the survey underscore the critical role of ESG reporting in the future of Finnish manufacturing industries. As regulatory pressures mount and stakeholder expectations evolve, companies must embrace more sophisticated, automated reporting solutions to remain compliant and competitive. At Elisa IndustrIQ, we are committed to supporting the digital evolution of the manufacturing sector. With our expertise and collaborative approach, we ensure that our clients are not just compliant but are also leaders in sustainable manufacturing. The journey towards comprehensive ESG reporting is not without its challenges. However, with the right tools and a commitment to continuous improvement, Finnish manufacturing companies can set a benchmark for sustainability and operational excellence.
