What Is a Mandatory Sustainability Report?
Dcycle: Your Comprehensive Solution for Mandatory ESG Reporting
More and more companies are facing the mandatory sustainability report. It is not a fad or a passing trend.
It is a reality that directly affects how we operate and compete in the market.
Regulations have raised the bar. Reporting your environmental, social and governance impact is no longer optional. If you don’t, you simply fall behind.
And not for the sake of image, but because the rules of the game are changing: access to sustainable financing, tenders, clients and partners… it all begins to depend on your ESG data.
What does this mean for us? That we need to have everything clear, organized and ready to respond to any regulatory demand. This is how the journey begins.
In this article, we’ll see what’s going on with sustainability reports, what the regulations require and how you can prepare without going crazy.
A mandatory sustainability report is, basically, a document that shows how a company is managing its environmental, social and governance impact. And it does so with data.
No vague promises or pretty words.
It applies to all sectors. It doesn’t matter if you manufacture, sell or provide services. If you meet certain criteria (size, revenue, number of employees, presence in Europe…), you will have to do it.
Complying with mandatory ESG disclosures? Rely on governance risk and compliance software built for CSRD and beyond.
For years, many companies published reports on their own, with the approach they wanted and the data they chose to show.
That’s no longer enough. Now there are specific rules: what data to provide, how to provide it, how often and under what standards.
Because sustainability is no longer a checkbox. It’s a strategic lever. And like any other critical business area, it must be properly reported.
Also, investors, clients and banks want certainties, not good intentions.
The change is coming from the top. Regulations like CSRD or the European taxonomy are setting the standard for how companies must report in Europe.
But it’s not just Brussels. Globally, more transparency and comparability is being demanded.
Can we relax? Not really. These rules are here to stay and will become increasingly demanding.
It doesn’t only affect the one preparing the report. If you work with a large company that has to report, they will ask you for your data.
Suppliers, partners, subsidiaries… we are all in play. If we don’t measure or share our impact, we’re off the map.
So this isn’t a regulatory fad, it’s a wake-up call to catch up in a supply chain that increasingly values sustainability.
Learn more about our functionalities in detail, schedule a demo.
A mandatory sustainability report is not a corporate brochure. It’s a technical document that includes concrete and verifiable data about how we manage our ESG impact.
Let’s review the key elements it must include:
Here we talk about emissions, resource consumption, waste generation, energy use…
Everything related to the direct and indirect impact of our activity on the environment and our role in environmental sustainability.
If you don’t have this data properly collected, you’ll struggle to comply.
The social part focuses on how we manage people. It includes equality, occupational health and safety, working conditions, training and diversity.
And yes, this data also must be measured and reported. It's no longer enough to say that "we care about people".
This includes aspects like business ethics, transparency, anti-corruption efforts and governance structure.
Companies must show how decisions are made and what mechanisms are in place to ensure they are made correctly.
Beyond governance structure and ethical principles, companies must also ensure strict compliance with regulatory frameworks and internal codes of conduct to uphold trust and accountability.
Not just any data or format will do. You must indicate which rules and standards you follow: CSRD, GRI, ESRS, whichever applies.
This ensures the report has structure, comparability and validity before third parties.
It’s not only about what we’ve already done, we must also state where we’re going.
This means declaring objectives, recognizing ESG risks and explaining what we’ll do to improve over the coming years, such as concrete plans for decarbonization.
This report is not just for appearances. Complying with it brings clear business advantages.
This is especially relevant for publicly traded companies, which must rigorously report their ESG data to meet financial market expectations and preserve their stock value.
More and more investors require ESG data before investing. If you don’t have the report, they won’t even consider you.
Having it ready opens doors to loans, funds and opportunities that were previously out of reach.
A solid report proves that we take this seriously. That builds trust among clients, suppliers and employees.
It’s not about posturing, it’s about credibility.
Having all ESG data in order allows us to anticipate problems, avoid penalties and reduce uncertainty.
It’s not just about complying with the rules, it’s about being able to sleep soundly knowing we’re not leaving loose ends.
Unlike other formalities, a well-managed ESG report offers a clear return:
It’s not an expense. It’s an investment. And if integrated well, the result shows up in your profit margin and business outlook.
A very common mistake is to think that the ESG report can be handled solely by the sustainability department.
But the reality is that 90% of the data required by regulation is spread across the entire company: finance, procurement, logistics, legal, HR, IT…
If these teams are not aligned from the start, the result is predictable: incomplete information, delays, last-minute corrections and frustration for everyone.
To comply (and especially to lead), you need a cross-functional vision. This involves two key actions:
Teams that understand the impact of their data on the report, and on company decisions, collaborate more, better and faster.
We need to change the narrative. It’s not about “adding more work,” it’s about using sustainability as a business compass. If the report helps identify improvements, avoid risks or generate value, everyone wins.
This is where digital tools come in handy: they avoid duplication, automate workflows and make the contribution of each area visible. When the process is clear, collaborative and useful, it stops being a headache and starts being an opportunity.
Complying with ESG regulations shouldn’t be a last-minute race. Companies that prepare in advance not only report better, but they manage better.
They know what to measure, how to measure it, and how to turn that data into daily decisions.
This means having a clear strategy from now, not waiting for the next deadline to rush. The most advanced organizations are investing in systems, people and processes that allow them to integrate sustainability into daily operations.
They don’t see it as “extra,” they see it as part of the business.
They align sustainability with sustainable finance frameworks to ensure long-term resilience.
Before launching into report structures or buying tools, you need an honest diagnosis of your current situation. What data do you have? What’s missing? Who has it? Where is it stored? Is it validated?
Without those answers, you can’t make a good report. Many companies discover, once they start, that the data is incomplete, duplicated or poorly defined.
Or that it doesn’t even exist. That’s why the first step is not Excel: it’s the map.
Effective reporting only works if it reflects the internal culture. This means ESG data should not depend on one person or team. It must be embedded in how each area works.
An HR department that measures equality, an operations team that tracks consumption, a finance team that understands climate risks…
That is the difference between a company that survives the report and one that uses it to gain advantage.
Many small and medium-sized businesses also need to pay attention. Small and midsize enterprises are increasingly being drawn into the sustainability processes of their larger clients, especially when they are part of their value chains.
One of the big lessons from this new regulatory wave is this: ESG impact isn’t measured only within your company. It is measured throughout the entire value chain.
Large European corporations are already demanding that their suppliers deliver reliable data on emissions, social risks or sustainable governance.
If you can’t prove compliance, you lose contracts. It’s that simple.
Your company may not yet be required to submit a mandatory report. But if you sell to a multinational, they will ask for it anyway. Scope 3 emissions, labor risks, raw material traceability, ethical practices, Carbon Footprint…
This is not a passing trend. It’s a new way of doing business. Large companies are using ESG reporting to decide who they work with, who they invest in, and who they cut off.
Yes, it’s more work. But it’s also a real opportunity for improvement. Companies that begin measuring their impact before being required have more control, more flexibility and better reputation.
Plus, many are discovering unexpected benefits: lower operating costs, more efficient processes, and greater clarity in strategic decisions.
What began as a "customer obligation" ends up being an internal transformation lever.
It depends on size, revenue and number of employees. If we operate in the EU or are part of a large supply chain, we will most likely have to do it.
Each regulation establishes specific criteria, but the trend is clear: More and more companies are using process automation solutions that simplify ESG data collection and classification.
The CSRD is a mandatory regulation, while GRI and other frameworks like ESRS are standards that explain how to report.
In other words, CSRD tells you that you must do it, and the others tell you how to do it properly.
It can be done… but it’s a nightmare. If you do it manually, you’ll face errors, incomplete data and a lot of wasted time.
That’s why more and more companies are using digital solutions that automate the process and prevent loss of control.
You need to have traceability. Know where the data comes from, who validates it and whether it follows a recognized methodology.
If you can’t answer that, chances are the data is not reliable.
Sanctions, administrative blocks and lost opportunities. And that’s not even counting the reputational damage.
It’s not just a formality. It’s part of what keeps us in the market.
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The most recognized methodologies are:
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Investing in carbon reduction is not just an environmental action, it’s a smart business strategy.
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