Are you ready for ESG reporting? Achieve Sustainability Compliance with Business Central

How can you stay ahead in this eco-conscious era?

To understand how the Business Central Sustainability feature can assist in meeting regulations and reporting requirements, it's important to consider the relevant sustainability management legislation. Key legislation includes:

• The Corporate Sustainability Reporting Directive - CSRD requires large companies and listed SMEs to submit detailed sustainability reports annually, covering environmental, social, and governance (ESG) factors. This directive is an amendment to previous EU regulations and directives, including the Non-Financial Reporting Directive (NFRD), and it significantly expands the scope of sustainability reporting requirements for companies.
• The European Sustainability Reporting Standards - ESRS, outline the format and content requirements for sustainability reports. Companies must follow these guidelines starting in the 2024 financial year, with the first reports due in 2025.
• The EU taxonomy, is a classification system defining which economic activities are environmentally sustainable. Starting in the 2024 financial year, companies must disclose how their activities align with criteria for six environmental objectives, including climate change mitigation and biodiversity protection.
• The Corporate Sustainability Due Diligence Directive - CSDDD requires companies to ensure their supply chains are sustainable and responsible. Companies must identify, prevent, and mitigate adverse environmental and human rights impacts throughout their supply chains. Starting in the 2024 financial year, companies must implement due diligence processes and report on their findings and actions to comply with these requirements.

These regulations provide a comprehensive framework aimed at minimizing negative environmental impacts while ensuring companies comply with sustainability standards and maintain profitability.

Sustainability management in Business Central

As sustainability management becomes an increasingly critical aspect of modern business operations, Business Central provides a new feature that enables organizations to monitor and manage their environmental impact. This feature is designed to oversee and regulate environmental footprints by tracking various greenhouse gas (GHG) emissions and offering insights that facilitate improved environmental oversight. Key features include:

• Emissions Tracking: Business Central allows for the tracking of GHG emissions across three scopes defined by the ESG standard. These include direct emissions from owned or controlled sources (Scope 1), indirect emissions from the generation of purchased energy (Scope 2), and all other indirect emissions that occur in the value chain of the company (Scope 3).
• Sustainability Chart of Accounts: This forms the foundational structured list used to record all emissions data. It categorizes and organizes sustainability accounts based on their attributes, such as the scope or other groupings.
• Sustainability Journals: Organizations can record emission data via sustainability journals. This can be done manually or by using built-in methods for calculating emissions footprints.
• Sustainability Ledger: After recording, emission entries can be posted to the sustainability ledger, where they can be viewed and analysed by various dimensions.
• Reporting: Business Central enables the generation of sustainability reports that showcase an organization’s GHG emissions performance.

Enhancing environmental oversight

To fully leverage these features, start by defining a chart of sustainability accounts, creating structured data for all emissions. Each account has categories and subcategories defined by emission scope, gas type, and calculation formulas, ensuring accurate tracking and reporting.

Next, use sustainability journals to meticulously record emission data, either manually or by using built-in calculation methods. These entries are then posted to the sustainability ledger, where they can be analyzed in detail.

Based on these ledger entries, Business Central enables the generation of three key reports: Total Emissions, Emissions per Facility, and Emissions per Category. These reports, enhanced with pivot tables and graph charts, provide a comprehensive view of sustainability performance, facilitating informed decision-making and improved environmental oversight.

Aligned with global environmental standards

The introduction of sustainability management features in Business Central represents a significant step forward for businesses looking to manage their environmental impact. With the ability to track, manage, and report on GHG emissions, organizations are better equipped to make informed decisions that align with their sustainability goals and global environmental standards. Future releases will further expand these features, introducing new functionalities that will drive progress toward an eco-friendly future.