The opportunities of sustainability reporting for the circular transition

How does your company map its social and ecological impact? And do you know what opportunities exist to improve your company's circularity? To operate sustainably, we need to make the social and ecological impact of companies on people and the environment visible.

This adopted European directive will, after implementation, require more than 50,000 companies to report uniformly on their social and ecological impact from 2025. The report will contain transparent, reliable, and comparable information. Over the years, an increasing number of companies will need to comply with this upcoming legislation. How can these insights lead to more circular practices by companies?

To answer this question, the Circular Accounting Coalition (CCA) has started working on their 6th case study. The CCA* was founded by Circle Economy, the Royal Netherlands Institute of Chartered Accountants, and Invest-NL to address the challenges related to reporting and accounting in the transition to a circular economy. This time, the company Hempel was examined to explore the opportunities and challenges that the CSRD presents.

* The CCA consists of NBA, Invest-NL, Circle Economy, ABN AMRO, Alfa Accountants & Advisers, Sustainable Finance Lab, Impact Economy Foundation, Avans University of Applied Sciences, Nyenrode Business University, Copper8, and Deloitte

Coating company Hempel turns a necessity into a virtue

The global supplier of coatings for the maritime, industrial, and decorative markets sees many opportunities in a seemingly dull CSRD report (about the sociological and ecological impact of the company). For example, in this report, Hempel looked into their raw material consumption and how they handle waste streams. These insights have led Hempel to interesting conclusions, which will contribute to the company's sustainability. Hempel turns a necessity into a virtue by developing potential new products and business models.

The key takeaways from Hempel summarized

Hempel looked at the entire supply chain, closely collaborated with all stakeholders, and scrutinized their material use and resulting waste streams more thoroughly
Hempel started a take-back plan as a new service to reclaim unused products
The analysis of the waste stream or residual materials provided insight into operational processes. This enabled Hempel to streamline their production processes
The ESRS E4 ‘Renewable Input’ and ESRS E6 ‘Financial Effects’ provided Hempel with valuable insights and even new potential business models
After evaluating their recycling or use of renewable raw materials, Hempel sees opportunities to expand their bio-based products
The analysis of Hempel’s CO₂ emissions revealed that there are ample opportunities to reduce CO₂ emissions and material usage
Hempel also aims to become less dependent on a single product, market, or even essential raw materials. Better product differentiation helps limit the risks and impacts of potential market fluctuations on both demand and supply sides
Moreover, new business models (such as Painting-as-a-Service) could be established to decouple economic growth from resource use, truly contributing to the essence of the circular economy

Conclusion: CSRD reporting uncovers opportunities

The CSRD will bring about significant changes in reporting on companies’ social and ecological impacts. The Hempel case illustrates how an organisation can leverage the CSRD obligation to make better decisions that are beneficial not only for people and the environment but also for the business.

Therefore, use the CSRD reporting process to gain better insight into your company's position in the supply chain and the larger ecosystem. And above all, engage with all stakeholders and give them a central role in this circular transition that we and the world need!