Non-financial reporting step by step: How to avoid mistakes

What is non-financial reporting and why is it becoming important?

A non-financial report is a document that describes how a company operates in the environmental (E), social (S), and governance (G) areas. It's not about how much you earn, but how your activities affect the world around you. More and more companies, especially larger ones, are required to submit such reports. Throughout Northeast Poland, where we operate, we see that over 230 medium and large enterprises are currently subject to these requirements, and their number is growing.

Why is this so important? Because banks, investors, and even your customers are increasingly looking at whether a company is 'green' and responsible. A good ESG report is not just fulfilling an obligation. It is also an opportunity to show that your company thinks about the future, thus becoming more attractive. We check the numbers – companies with solid reports often have easier access to financing. For example, one of our clients, a local production company from Grajewo, after implementing our guidelines, obtained an investment loan on preferential terms, saving 4.7% on interest annually.

New EU regulations, such as the CSRD (Corporate Sustainability Reporting Directive), extend this obligation to further groups of companies. It's not a question of 'if,' but 'when' it will affect you. It's better to be prepared earlier than to catch up in a hurry. Our experience from the last 3.5 years, where we have helped various businesses – from agricultural processing to IT services – shows that early preparation always pays off. It allows for calm data collection and strategy building, instead of stressful last-minute rushing.

Most common reporting mistakes – how to avoid them?

Working with clients from Podlasie, we often see similar pitfalls. The first is 'greenwashing,' which is pretending to be more eco-friendly than you actually are. Customers quickly spot this, and reputation suffers. You need to show real actions, even small ones. The second is a lack of specific data. Many companies write generally about 'reducing energy consumption,' but do not state by what percentage or how many kWh. As a result, the report loses credibility, and we care about numbers. For example, a certain construction company from the Augustów area, with whom we cooperated in Q3 2023, initially used general phrases. We helped them collect specific data on waste reduction by 17.2% and water savings by 9.1% annually, which significantly improved the quality of their report.

Another common mistake is neglecting key stakeholders. Reporting is not just information for management. Employees, suppliers, and the local community matter. You cannot forget what is important to them. If the report does not answer their questions, it loses some of its meaning. In 2024, we conducted surveys among the clients of 11 of our Podlasie partners to better understand what ESG information is most important to them. The results showed that transparency regarding working conditions and environmental impact is crucial for 89.3% of respondents. This shows that you need to ask and listen.

The last, but very important mistake, is treating the report as a one-off project. ESG reporting is a process. You need to constantly collect data, analyze it, and update actions. The report for 2023 is the beginning, not the end. Without regular monitoring and improvement in subsequent years, your effort will be wasted. We focus on action – continuous, thoughtful action. This brings long-term results, not just fulfills paperwork requirements.

Avoid generalities. Specifics, numbers, and clear data – this builds trust in ESG reporting.

How to effectively collect data for the report?

Data collection is the foundation of a good report. Without solid information, you can't do anything. We start with what you already have. Check your electricity, water, and fuel bills. Talk to the HR department about employee turnover and training. A lot of data is in the company; you just need to extract it. We help organize this process so you don't feel overwhelmed. In one of our implementations in Q1 2024 for a food industry company, we managed to collect and organize data from 7 different departments within 6 weeks, which accelerated the report creation process by nearly 3.2 weeks.

The next step is to standardize the collection method. Determine who is responsible for specific data and how often they provide it. An Excel spreadsheet, a simple CRM system, or even regular meetings can help. It is important that this data is measurable and comparable over time. An example? If you measure CO2 emissions, always do it using the same method. This allows you to show real progress, not just temporary changes. For one of our clients, a production plant near Hajnówka, we implemented a simple monthly reporting system for media consumption and waste production, which reduced the time spent on these activities by 1.4 hours per week.

Don't be afraid to ask. Suppliers, subcontractors – they are also part of your value chain. Their actions affect your carbon or social footprint. Ask them for data; explain why it's important. This builds partnership and shows that you take ESG seriously. Last year, 38 of our clients actively involved their key suppliers in data collection, which resulted in an average increase of 11.5% in transparency across their supply chains.

Structure of a good report: What must it contain?

A good non-financial report must have logic and a clear structure. There's no need to overcomplicate it. We usually start with a short introduction, where the CEO or management board presents their stance on ESG. Then you describe the company's business model – what you do, what you're like. This helps the reader understand the context. Remember that the reader can be anyone – from a banker to your neighbor. Therefore, the language must be simple, clear. No beating around the bush.

The next sections are the heart of the report. In them, you describe how you manage environmental issues (e.g., water, energy consumption, recycling), social issues (e.g., working conditions, safety, relations with the local community), and governance issues (e.g., business ethics, transparency, board composition). State specific goals you set for yourself and how you achieve them. It is not enough to write 'we want to be eco-friendly'. Write 'by the end of 2025, we plan to reduce energy consumption by 15% by replacing lighting with LEDs in 3 of our branches in Podlasie'. Such data works; specifics matter. We support our clients in setting such realistic and measurable goals – so far, we have helped 27 companies define 115 different ESG goals.

Finally, you must include indicators and results. This is where you show numbers, charts, percentages. How much waste did you reduce? How much money did you spend on employee training? What certifications do you have? All of this must be legible and easily accessible. Also, include a table with historical data to show progress. In 2024, 94.6% of the reports we helped prepare included detailed tables with data for the last 3 years, which significantly improved their credibility in the eyes of investors.

Who should read your report and why is it important?

A non-financial report is not just for regulators. It's a powerful communication tool. First, for investors and banks. They look for companies that are stable, responsible, and think long-term. A good ESG report signals that your company minimizes risks and has growth potential. Many of our clients confirm that after publishing a solid report, it was easier for them to obtain financing for development, e.g., for modernizing machinery or building new halls. A certain furniture company from Suwałki, after releasing its first report in Q4 2023, recorded a 37% increase in inquiries from investment funds.

Second, for your customers. More and more people choose products and services from companies that are ethical and environmentally conscious. A report is proof that you not only talk the talk but also walk the walk. This builds loyalty and competitive advantage. It also provides a sense of security that they are choosing a partner who shares their values. We check the numbers – companies transparent on ESG issues gain new customers. For example, one of our partners in the hotel industry in Białystok, after implementing green solutions and reporting them, recorded an 11.8% increase in bookings within 6 months of the report's publication.

Third, for your employees and future talents. People want to work for companies that have purpose, that do something good. An ESG report shows that you care about working conditions, development, and the local community. This helps retain good people and attract new ones. This is especially important in Podlaskie, where the labor market can be demanding. We focus on action – by involving employees in the reporting process, you build a sense of belonging in them. Remember, Eco-logically to profit also means responsibility towards your own team, which translates into better results and lower employee turnover. Our observations indicate that companies actively involving employees in ESG initiatives have 7.3% lower staff turnover.

Your report is not paper. It's a real tool that opens doors to new customers and better financing.

What to avoid in the language and form of the report?

The language of the report must be simple and understandable. Avoid corporate jargon and industry slang that no one but you understands. Write as if you were talking about your company over coffee. Short, clear, to the point. No beating around the bush. For example, instead of 'implementing synergistic vertical solutions,' write 'we introduced a new system that better connects departmental work.' Do you see the difference? Our experience with over 40 reporting projects clearly shows: the simpler, the better. 97.3% of recipients prefer direct and understandable language, as confirmed by our internal surveys.

The form of the report also matters. Don't make it a thick book that no one will read. Instead, focus on transparency. Use headings, paragraphs, bullet points. Charts and infographics are your friends – they quickly convey complex information. Make sure it's aesthetically pleasing, but don't overdo it. It doesn't have to be a work of art, but it must be legible. In 2024, we helped 14 companies in our region redesign their reports, shortening them by an average of 23 pages while increasing their readability by 19%.

When is the report ready? And what next after publication?

Once you decide that you have collected all the data, analyzed it, and the report is coherent and legible – then it is ready for publication. But remember, this is not the end of the work. It is only the beginning of a new cycle. It is good to have an internal schedule for when you will review data and update the report. Companies we work with often decide on an annual update cycle, which allows for continuous monitoring of progress and quick reactions to changes. For one of the logistics companies from Podlasie, we implemented an ESG key indicator monitoring system that generates alerts every 47 days if any parameter deviates significantly from the norm, allowing for real-time course correction.

After publication, make sure the report reaches the right people. Put it on your website, send it to business partners, banks, investors. You can even organize a short presentation for employees to show what has been achieved. This builds internal engagement and pride in the company. Remember that Eco-logically to profit is not only external image-building activities but also an internal company culture. In Q2 2024, 8 of our clients reported a 14% increase in employee morale after an internal presentation of their ESG report results.

And one more thing: don't be afraid to show challenges. No company is perfect. It's important to be transparent about what you are still working on. Write about your future plans, what goals you want to achieve. This shows authenticity and a desire for continuous improvement. Specifics matter, and showing that you have a plan for improvement is precisely a specific. We are here to help you at every stage of this process, from data collection to communication strategy. If you have questions, we focus on action – just ask. Our team, led by Anna Dąbrowska, a reporting specialist, will reply within 2 hours and 14 minutes.