Sara Tikka, our sustainability and life cycle expert, writes about what’s behind the new legislation – and how Kuusakoski can help its customers meet the new reporting obligations.

Climate change and environmental degradation are serious threats to Europe and the entire world. The European Green Deal aims to tackle the challenges of climate change and biodiversity loss, providing a clear pathway to a more resource-efficient and competitive economy. With the European Union’s goal of reducing net greenhouse gas emissions to zero and decoupling economic growth from resource consumption, concrete regulatory changes are needed to achieve these goals.

More and more companies will have to be able to report in more detail on, for example what happens to their waste and what impact it has on their overall emissions.

Thus, the EU Green Deal was created to meet these ambitious targets. For the future and our business environment, it is particularly important that both current and forthcoming regulations guide us towards a growth model rooted in a clean and circular economy.

Circular economy and recycling are therefore at the heart of our business and of a changing Europe. But in addition to this, more and more companies need to take an interest in these issues, because in future they will have to be able to report in more detail on, for example what happens to their waste and what impact it has on their overall emissions.

UNDERSTANDING THE NEW REPORTING STANDARDS – CSRD, ESRS and NFRD

The Corporate Sustainability Reporting Directive (CSRD), which came into force at the beginning of this year, introduces new sustainability reporting obligations for companies in the form of the European Sustainability Reporting Standards (ESRS). The Directive requires companies to assess and report more comprehensively on the impact of their activities on society and the environment, as well as on the impact of society and the environment on their own activities. The CSRD aims to harmonise sustainability reporting, improve comparability and make sustainability reporting more reliable, as in future sustainability data will also have to be verified by a third party.

Smaller companies in the supply chain may also be required to report in accordance with the standards for large companies to meet their own obligations.

The aim is probably to increase the transparency of the activities of reporting companies, on the one hand, and to make responsibility a more integral part of companies' strategies, on the other. Reporting will be phased in gradually, and from 2024 onwards, listed companies with more than 500 employees that are already covered by the Non Financial Reporting Directive (NFRD) will have to report. From the next operating period onwards, other large companies not previously covered by the NFRD reporting requirements will also become subject to reporting, including us in Kuusakoski. Large companies are defined as companies that meet 2/3 of the following thresholds: a turnover of more than EUR 50 million, a balance of more than EUR 25 million, or more than 250 employees.

However, it is good to note, that even if your company does not fall under the reporting obligations in terms of turnover or number of employees, reporting under CSRD may still make sense. As in practice, the reporting obligations of larger companies mean that smaller companies in the supply chain may also be required to report in accordance with the standards for large companies to meet their own obligations.

WHAT SHOULD WE REPORT THEN?

Reporting should be at the heart of emission reduction targets and sustainability strategies, so that both companies themselves and investors have an understanding of what is being reduced, where and why. While financial figures have been reported diligently for a long time, public reporting on sustainability and emissions figures has remained a side issue for many. So, the EU's Corporate Sustainability Reporting Directive, is in my view a welcomed change. The Directive and the reporting standards will make reporting more consistent and transparent and make it easier to compare sustainability figures across sectors. It will also give us the opportunity to better understand and know the sustainability of our customers and our supply chains.

We can provide our customers with CO2e calculations for each stage, as well as the environmental benefit generated through recycling.

So, what kind of reporting will the ESRS bring? From an environmental perspective, companies will have to report on climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy figures in accordance with the requirements. In addition to these, the Commission will subsequently publish, among other things, sector-specific standards that will regulate reporting according to a company's sector of activity.

HOW CAN KUUSAKOSKI HELP?

Kuusakoski is able to provide its customers with ESRS E1 compliant information, including information on the carbon footprint of recycling and the transport of materials to Kuusakoski. We are also able to provide our customers with ESRS E5 compliant information on the flow of materials in Kuusakoski and their recyclability and utilisation at their end of life.

Example: We get 10 metric tonnes of steel scrap and 2 metric tonnes of cables from our customer. These are transported to us from the customer's premises and the transport to us produces a certain amount of emissions, as does the processing of materials, such as crushing, in our yards. Most of the materials can be recycled as raw materials, while some may end up in incineration with energy recovery. The process may also generate waste that has to be sent for final disposal. The emissions generated by these processes, as well as the flow of materials through our yards, can be accurately mapped and we can provide our customers with CO2e calculations for each stage, as well as the environmental benefit generated through recycling. These figures can be used directly by the customer in their own sustainability reporting.

About the writer:

Sara Tikka works as a sustainability and life cycle expert in our sustainability team.