ESG and sustainability reporting: how the sustainability report works
10 March 2025The concept of sustainability is moving wider and wider interests in the corporate and financial world: it is no longer just about reducing environmental impact or responding to social expectations, but about integrating these aspects into business strategies in an effective and measurable way. ESG (Environmental, Social, Governance) criteria and the sustainability report are crucial tools for companies that want to track their commitment to sustainability. In this context, sustainability reporting plays a key role in ensuring the transparency and reliability of information.
What are ESG criteria?
ESG refers to a set of criteria used to evaluate a company’s performance in three key areas: environmental, social, and governance. These criteria refer to factors that, although not strictly financial, have a significant and lasting impact on businesses and their ability to generate value. The growing focus on ESG by investors, consumers, and regulatory systems is driven by the awareness that companies that integrate environmental, social, and governance aspects into their operations tend to adapt better to change and generate sustainable profits in the long run.
Environmental (E): This criterion relates to the company’s environmental impact. It includes the management of natural resources, reducing CO2 emissions, using renewable energy, waste management, and the sustainability of agricultural or industrial practices. For example, a company might measure its carbon footprint or the use of renewable raw materials.
Social (S): The social factor focuses on the company’s interaction with its stakeholders: employees, customers, suppliers, and local communities. It assesses worker welfare, diversity and inclusion, community engagement, and the promotion of human rights.
Governance (G): Governance criteria refer to business practices related to the management and control of the company. These include transparency in decision-making, the composition of the board of directors, anti-corruption efforts, and the management of conflicts of interest. Companies with good governance are generally better positioned to face challenges and manage risks effectively.
What are ESG companies?
ESG companies are those that do not limit themselves to pursuing economic profits but fully integrate environmental, social, and governance criteria into their business strategy. The ESG approach means that the company adopts a long-term vision, with the goal of generating value for all stakeholders, not just shareholders. A company that adopts solid governance policies, promotes an inclusive culture, and works to reduce its ecological footprint is considered ESG. Transparency in information, impact measurement, and stakeholder involvement are essential.
Today, several large companies, such as Unilever and Patagonia, are cited as examples of successful ESG business models.
What does it mean to draft a sustainability report?
The sustainability report is the document that allows companies to transparently communicate their commitment to sustainability by providing detailed information regarding their ESG performance. It is a tool that enables the evaluation of environmental, social, and governance impacts and highlights progress made in relation to predefined sustainability goals.
The process of drafting a sustainability report usually follows some common steps: defining objectives and KPIs (Key Performance Indicators) to measure progress toward these goals, gathering data related to business activities, and analyzing and processing this data to understand how the company is performing relative to its sustainability objectives.
Then, the report is written: it clarifies the progress achieved, the economic, social, and environmental impacts, and the challenges faced. The company’s direction and future goals are indicated. A good sustainability report is often subject to external verification to ensure the accuracy and reliability of the information. Once verified, the report is published and made available to all stakeholders.
Which reports are mandatory?
In many jurisdictions, sustainability reporting is now mandatory for companies of certain sizes. In Europe, for example, the EU Non-Financial Reporting Directive (NFRD) requires large companies (with over 500 employees) to provide information on how they manage ESG aspects. This standard has recently (September 2024) been replaced by the Corporate Sustainability Reporting Directive (CSRD), which extended reporting requirements to publicly listed SMEs and set more detailed reporting criteria.
In Italy, the sustainability report is regulated by Legislative Decree 254/2016, which implements the EU NFRD directive, requiring companies to publish non-financial information regarding environmental, social, human rights, and anti-corruption aspects.
Sustainability is at the core of many BBS programs: from the MBA Sustainability and Innovation, a full-time, 12-month English-language EFMD-accredited program, to the Professional Master in Business Management – Green Management and Sustainable Businesses, as well as the Executive Masters in Sustainability Transition Management and Sustainability and Business Innovation. These excellence educational paths from the School are among the most innovative in Europe in the field of sustainability.
Bologna Business School is at the forefront of sustainability topics, with the ambition to turn theory into practical actions. Thanks to its Initiatives for Sustainable Society and Business, based on three strategic pillars of learning, dissemination, and impact, BBS is able to offer an unparalleled integration of theoretical knowledge and project development.
In addition to these Master’s programs, there are two vertical programs specifically dedicated to ESG topics and sustainability reporting: the part-time, hybrid Open Program Sustainability Reporting, lasting 4 days across 7 sessions, dedicated to developing the skills necessary for accurate measurement, reporting, and communication of corporate sustainability performance; and the part-time, on-campus Open Program ESG and Sustainable Finance, designed for professionals who want to update their training in economic, social, and environmental sustainability.
Bologna Business School’s international network and top-tier faculty guarantee a pragmatic approach that can immediately introduce you to the world of work that is increasingly looking for professionals in the area of sustainability.
