What is Sustainability Accounting?

Sustainability reporting is about mapping the company's efforts to create long-term and sustainable development. Therefore, the sustainability report itself should contain information that helps the company's stakeholders understand how the business affects and is affected by its environment, and what efforts are being made to counteract any negative consequences. There are also certain requirements for a sustainability report, which are important to include in order for the sustainability report to be considered accurate.

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What should a sustainability report provide information about?

Since 2017, a new law came into force, which imposes tougher requirements on reporting on sustainability and diversity polcysis. The Act obliges medium-sized and large Swedish companies to present a sustainability report in connection with their annual report. The law requires a sustainability statement to address the following 5 areas:

• Environment

• Social conditions and personnel

• Respect for human rights

• Combating Corruption

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Thus, a sustainability report should provide information on how the company's operations affect these areas, both positively and negatively, and how it works to achieve better results in these areas.

How should a sustainability report be designed?

The objective of a sustainability report is to provide sufficient information to be able to understand the development, performance, position of the company and the implications of its operations for the aforementioned issues (environment, social conditions and personnel, respect for human rights and the fight against corruption and bribery). In view of this, the information or information should therefore include:

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1. A brief description of the company's business model.

2. A description of the policies that the company adheres to in these matters.

3. Results and outcomes of this policy

4th. the material risks relating to these matters and related to the company's operations, and how the company manages those risks;

5. Non-financial core performance indicators that are relevant to the current business and to be able to make comparisons to understand how the company performs in the different areas over time.

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It happens that companies do not always have a given policy for any or some of the issues, and this does not have to be wrong per se. However, if this is the case for you and your company, it is necessary that you clearly justify and explain the reason for this in order for your sustainability report to be approved.

Sustainability Accounting and GRI - a good body for support and assistance

The guidelines and directives contained in ÅRL (ÅRL) on sustainability reporting can sometimes appear somewhat vague. The five areas that you are required to report around are in themselves very broad and it can be difficult to know where to start. Fortunately, there are also other guidelines and reporting tools developed to facilitate the writing of a sustainability report and, by extension, sustainable entrepreneurship.

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An example of such guidelines are those that the organization GRAY brought out. GRI is an independent, not-for-profit organisation with a stated aim to promote corporate reporting on sustainability issues. In other words, it is a perfect body to draw inspiration from and help with issues related to your sustainability report. The framework developed by GRI for sustainability reporting describes how different types of companies and organizations, regardless of size, industry or geographic location, can and should think when it comes to accounting for issues related to the economic, social and environmental impact of the organization.

Who needs to do a sustainability report?

As mentioned earlier, all medium and large Swedish companies need sustainability reports in connection with their annual report. Medium-sized and large Swedish companies may not be a super-specific measure. However, if we look more closely at the text of the law, we can see that companies that meet more than one of the following conditions are obliged to submit a sustainability report.

• The average number of employees in each of the last two financial years has been more than 250.

• The balance sheet total for each of the last two financial years amounted to more than SEK 175 million

• Net sales for each of the last two financial years have been more than SEK 350 million.

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In other words, you need to make a sustainability statement if your company meets two of the above conditions.

Why do you make a sustainability report?

The basic idea of sustainability accounting is actually very simple. It is about promoting long-term and sustainable development that everyone can benefit from, both socially and environmentally. By prosecuting sustainability accounts, not only transparency increases, but also the possibilities for comparisons between companies. Stakeholders of larger companies gain a completely different view of operations when they are required to report sustainability issues. It is transparency and openness that the Swedish Law Council sees as central building blocks in the process of building a more long-term sustainable society.

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