How Business Central Can Help You with Your Sustainability Reporting
What do sustainability and sustainability reporting actually have to do with ERP systems?
That’s exactly the question I asked myself, and I ended up writing a term paper on the topic for university. I’m very interested in sustainability, and given my work at PROTAKT, it made perfect sense to explore the relationship between sustainability and ERP systems.
What exactly is sustainability?
Fundamentally, sustainability describes a model for conserving natural resources, and as early as the 1987 Brundtland Report, the concept was expanded to include the goal of integrating ecological, social, and economic objectives in such a way that these resources remain available to future generations. In short: We should treat the environment in a way that ensures others after us can still benefit from it.
Especially in our modern economy, which is constantly striving for new heights, this may seem somewhat contradictory at first. After all, the global population is growing, and these people need to be provided for. There are more and more consumer goods on this planet, and these need to be produced somehow. This requires natural resources, which, however, are only available in limited quantities. That is precisely why it is so important to manage our resources sustainably. Otherwise, we run the risk of consuming more resources than we and the environment can actually provide. In doing so, we harm not only our environment which would be bad enough on its own but also ourselves.
The Relevance of ESG Reporting
Of course, sustainability is an ever-present topic. Whether in advertisements, across all media, or in your personal life, each of you is regularly confronted with it. And so it doesn’t stop at the business world either. That is precisely why the CSRD Regulation was created. CSRD stands for Corporate Sustainability Reporting Directive and refers to the European legislation governing sustainability reporting.
This topic is relevant because, starting in early 2023, there will be a legal obligation to disclose so-called “ESG reporting,” which directly affects many companies. However, the Omnibus packages include changes and relaxations, some of which have already come into effect. In March of this year, the European Parliament adopted the first part of the Omnibus Directives. You can find more information about the contents of the Omnibus I package on our Sustainability page.
But wait. What does ESG mean? The acronym ESG stands for the three words Environmental, Social, and Governance. Companies can be evaluated based on these criteria. This involves examining, for example, how actively a company addresses its own sustainability, what measures are taken in this regard, and how effective they are. These three criteria are then used to calculate the so-called ESG score, which your company may already be required to report. The score itself is calculated by relevant rating organizations. Here, the standards for evaluating companies vary depending on the organization. However, the calculation is always based on data regarding the company being evaluated, the relevant industry, and structures within the respective business sector.
The ESG score, for example, makes it easier for investors to select companies that are a good fit for them. If your company can report a high ESG score, it is statistically more stable in the long term, and an investment in your company carries lower risks. Part of this lower risk stems from the expected greater resilience to disruptions in ESG areas, such as the impacts of climate change. All these aspects can, in turn, have an overall positive effect on your company’s public image, competitiveness, profitability, and reputation.
In the long term, companies can benefit from the advantages of increased resilience or enhanced reputation described above through sustainable business practices. But you don’t just benefit in terms of public perception. Adopting sustainable practices within your company offers you the opportunity to increase your efficiency and thus reduce your costs.
Sustainability Made Easy with Business Central
Of course, it’s not always easy for a company to keep track of just how sustainable it really is. What is the environmental impact of buying your new laptop? Is your supplier even operating sustainably? And for the sake of the environment, should we all drink just one cup of coffee a day instead of five?
This is exactly where an ERP system can help. Even though these features are still in their infancy due to the relatively new legal regulations and the recently enacted relaxations, the collection and analysis of environmental footprints can be significantly simplified with the help of ERP systems like Business Central.
Sustainability reporting within Business Central initially focuses on the recording, collection, and processing of data regarding your company’s greenhouse gas emissions. The entry of emission values for products, for example, can be done manually or calculated via an integrated feature in Business Central and reported directly in proportion to the quantity at the time of sale. The Microsoft feature enables both manual and predefined recording of emissions data in sustainability journal entries. Direct recording of incurred emissions via purchase documents, the tracking of purchases of emission allowances, or the calculation of an internal CO2 fee are also possible. You can also analyze emissions data and generate sustainability reports in Business Central. Emissions from your production steps or the environmental impact of your suppliers can also be stored in the system, where they can then be automatically retrieved. Additionally, you can define your own scorecards and target emission values, which can be compared to predefined baseline values.
This allows you to immediately identify areas where there is still potential to reduce CO2 emissions. With your ERP system, you can thus monitor, document, and optimize the processes within your company. This allows you to monitor your carbon footprint and take measures to reduce it. The resulting transparency regarding processes and data creates the foundation for you to analyze and optimize your entire process structure, transport routes, or supply chains in a targeted manner.
For example, you can reduce emissions through more efficient route and load planning, or adjust your delivery volumes flexibly so that fewer deliveries are required. You can also keep track of your consumables such as energy, water, or other scarce resources.
Our conclusion
So even though the topics of sustainability and ERP systems might initially seem unrelated, a closer look reveals that digital systems can play a significant role in keeping a company’s environmental footprint low. They can be a powerful driver of a successful sustainability strategy.
Would you like to learn more about sustainability and ERP systems?
We’d be happy to meet with you to discuss how you can implement sustainability reporting in your company using Business Central.
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About the author
Katharina Falkenstein · Marketing
Having always been passionate about language, communication, and creative ideas, I’ve found my calling in marketing. Since September 2023, I have been supporting the PROTAKT marketing team as a dual-track student while gaining valuable experience through my business administration studies.
Here at PROTAKT, I work closely with our solutions and services, manage our blog, and keep an eye on website and social media topics. In doing so, I learn something new every day and enjoy sharing this knowledge through clear and practical posts.
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