ESG Reporting with Odoo

In the last few years, Environmental, Social and Governance (ESG) factors have become a cornerstone of corporate strategy and investor decision-making. ESG reporting, which involves disclosing a company's performance in these areas, is transforming the business landscape. Here are some facts for the importance of reporting and how Odoo can help the company individually. 

ESG reporting is vital for fostering transparency, managing risks, attracting investment, improving operational efficiency, gaining a competitive edge, engaging employees, complying with regulations, and ensuring long-term sustainability. The EU-wide "Non-Financial Reporting Directive" (NRFD) has required certain companies to report since 2014. Large companies in the financial sector are particularly affected. 
Since the beginning of 2024, the NFRD has been gradually extended by the new Corporate Sustainability Reporting Directive (CSRD), obliging significantly more companies, including those with fewer employees. All other large companies under accounting law will follow in 2025 and even capital market-oriented SMEs from 2026. 

Here are the most important changes: 

• Extended, standardized reporting obligation: Companies must report more comprehensively and according to more uniform standards. Greater quantification of the report content by means of key figures is also intended to improve the measurability and comparability of the information.

• New understanding of materiality: Companies are required to report on the effects of their business operations on people and the environment, as well as on how sustainability aspects impact the company. Previously, reporting was only mandatory if both materiality aspects were relevant.

• External audit: In the future, sustainability reporting, akin to financial reporting, will require external audits. The EU Commission is currently establishing the standards for these audits. Initially, the audit will be conducted with limited assurance. Over time, this will progress to a reasonable assurance audit, which will be as comprehensive as the audits performed for financial reporting.

• Part of the management report: To make sustainability information more accessible, it will become a mandatory part of the annual report. This demonstrates the importance of sustainability reporting, which should gradually be given the same status as traditional financial reporting.

• Standardized electronic reporting format: From January 2020, certain listed companies will be required to file their accounts in the European Single Electronic Format (ESEF), which is equally readable by humans and machines. Consolidated financial statements in XHTML format will be marked with XBRL tags. Under the CSRD, this requirement is to be extended to sustainability reporting. To this end, the European Commission plans to publish its own XBRL taxonomy.

The rules have also become stricter in the USA. In March 2024, new SEC climate disclosure rules were adopted, adding to the existing rules including the European CSRD and the Californian disclosure rules. The changes pose a major challenge for strategic and transparent alignment, particularly in the long term but can also offer enormous new opportunities.

Having a complete overview about any topic can be very complicated and overwhelming. Odoo's modules can help with that! Here are a few examples:

We have already successfully implemented field extensions and reports. As a result, HR data, for example, can flow directly into the ESG report without having to use an external program. This saves time and a lot of effort, while at the same time complying with all regulations.