Reporting on sustainability and the energy transition with Deloitte

Wim Bartels, Risk Advisory Europe lead sustainability, Deloitte

From 2024, large listed companies will need to report on their impact on people and the environment in greater detail, in accordance with the Corporate Sustainability Reporting Directive (CSRD). From 2025, this new EU directive will also apply to other large[1] companies. Because the supply chain is becoming increasingly important, changes to reporting will also have consequences for smaller suppliers. This development introduces challenges, while also creating greater urgency.

Some 20 years ago, I worked with listed companies such as Shell, Heineken, DSM, and KPN on their sustainability reports, as an accountant. At an early stage, they realized they needed to act in relation to sustainability, even though this was not yet mandatory. These and other large  companies  took the lead, but now I see more and more small companies and startups developing sustainability policies. They wonder how they can contribute to a sustainable world. This involves, for example, reducing CO2 emissions, but also effective use of storage. Or developing revenue models where products are made available to customers, and then fully or partially recycled. New standards try not to place more strain on smaller companies than they can reasonably handle. However, the companies to which they supply products and services may set requirements that go beyond what the CSRD prescribes.

Demonstrating that work is being carried out in accordance with CSRD is, therefore, essential to companies of all sizes. This requires reporting that clearly shows how companies deal with electricity and energy in the context of the climate objectives. You need to map out the path to improvement on the basis of your reporting. To do this, you not only need data, but also clear objectives and a strategy. What are your goals? What are your KPIs? A baseline measurement, to which you can continuously compare new developments, is also required. You need to map out sustainability and link it to your core activities in all areas.

Last year, the Directive on Corporate Sustainability Due Diligence was also introduced by the European Commission. This is likely to be ratified by the Parliament and Council in the spring of 2024. The new European standards, which will be mandatory for all large companies, not only require that measurements and reporting are carried out, but also that an auditor validates the figures. Explicit reporting on the supply chain is also mandatory. Companies can’t say, “We’re compliant, and that’s where our responsibility ends” – energy consumption needs to be examined throughout the supply chain, and this needs to be considered in business operations. 

For years, companies have used the UN’s Sustainable Development Goals to guide policies in the field of people and the environment. But these goals are primarily intended for governments: they are rather high-level and not directly measurable. Now, however, companies need to conclusively show what they have achieved. As a result, they often come to realize that the best energy is energy that is not used!

Personally, I think the CSRD is a good initiative, because we now have uniform requirements for all large companies. These developments will undoubtedly help boost urgency among businesses. The financial sector, especially banks, but also investors, are now paying more attention to this. The fact that the energy grid is no longer always available also creates urgency.

I believe that we can only solve energy and sustainability challenges by setting a long-term agenda and then really acting on it. For a long time, I was strongly opposed to regulation, but now I think this is the right way to go. People are often focused on the short-term, unfortunately. If we knew that water would not always be available in 20 years’ time, which in fact we do, we’d tend to think: by then, someone will probably have come up with new technology that will solve the problem…

We no longer live in a fully ‘cost and benefit’-based society. We also need to look at other impacts and risks arising from our actions. This means companies not only need to file reports, but also uncover their impact on the chain. You can provide insight into how much energy you consume – but how much oil or coal has been used for this? Can you optimize your consumption or create a plan of action? What’s happening in the supply chain? 

That means we need to measure all sorts of things, provide insight into consumption, and develop plans to reduce this. Only when all relevant parameters are measured will you gain real insight into how you can use electricity more efficiently. You can use metrics and indicators to make comparisons with past performance, or with other companies and the industry as a whole. It will also be possible to check whether you are compliant with standards and achieving your goals. You have to know what to measure, how to measure it, and what to do with that data. Deloitte works with organizations to identify the challenges and opportunities of the energy transition – as well as other transitions. We provide insight so that companies can make the right choices and formulate solutions: for example, using other energy carriers, dealing with energy management differently, or relocating certain activities.

We need to optimize use of the current grid by changing our energy consumption patterns. Not nearly enough attention is being paid to solutions for this. Companies that don’t have an action plan in place aren’t likely to stay in business for long. If your company has set a zero target but hasn’t put any plans into action to achieve that goal, customers, shareholders, and employees will start asking questions!

Wim Bartels has been a senior partner in the field of sustainability for 20 years. He focuses on reporting, assurance and climate-related risks based on his membership of the Taskforce on Climate-related Financial Disclosures and of the EU Sustainability Reporting Board. Wim is currently focusing on reporting transformation in light of upcoming regulations and required changes at companies.

[1] The criteria for being ‘large’ are a minimum of 250 employees, more than EUR 25 million in total assets and more than EUR 50 million in turnover – meeting at least two of these three criteria makes a company ‘large’.


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