What Is a Mandatory Sustainability Report?
What Should a Mandatory Sustainability Report Include?
3 Risks of Non-Compliance: What Can Happen If You Ignore It
How to Go From Data Chaos to Full Control Without Losing Your Mind
Why the ROI of the ESG Report Is Real (If You Do It Right)
Dcycle: Your Comprehensive Solution for Mandatory ESG Reporting
Frequently Asked Questions (FAQs)
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.
Not complying with the mandatory sustainability report is not just a paperwork issue. It has real consequences for the business.
The regulations are not optional. If we fail to deliver the report, we risk fines, exclusions from tenders or administrative blocks.
Complying is cheaper than facing a penalty or missing out on key opportunities.
Today’s market makes comparisons. If others report and we don’t, we lose credibility, access to demanding clients and differentiation capacity.
It’s not about seeming responsible. It’s about being responsible and proving it with data.
In a context where transparency outweighs marketing, not reporting creates distrust.
And once you lose the market’s trust, it’s very hard to recover.
Knowing what to include in the report is only part of the problem. The real challenge is having all the data ready and organized.
ESG data is scattered across the company: operations, HR, procurement, finance… And no single team sees the whole picture.
Additionally, much of this data is not digitalized or isn’t even collected systematically.
This is where technology comes in.
More and more companies are using process automation solutions that simplify ESG data collection and classification.
In our case, we’re not auditors or consultants. We’re a solution that centralizes all ESG information and connects it to different uses: CSRD, taxonomy, ISOs, EINF, or whatever is required.
Because if your data isn’t well-structured, you can’t even get started.
We guide you step by step: schedule a demo.
The main obstacle is not the regulation, it’s the internal disorder.
Many companies don’t fail out of lack of intent, but because they have their ESG data scattered across emails, spreadsheets, folders and disconnected teams. Internal chaos becomes the real barrier to compliance.
You must lay the foundation: know where the data is, who generates it, how it is validated and in what format. And all this before even thinking about reports or audits.
Having numbers is not enough. Regulations demand to prove the source and reliability of each data point. That’s why digitalization and automation are not a luxury: they’re survival.
Meeting the minimum is falling short.
Some companies produce the report just to avoid penalties. Others use it as a real management tool, with direct impact on strategic decisions.
When you manage your sustainability well, you improve processes, reduce costs, attract talent and position yourself better with investors. This is not theory, it’s daily practice.
The report stops being a document and becomes a compass.
It’s not just about “submitting it on time.” It’s about knowing where you stand, where you're going, and how to transform data into decisions that generate economic and environmental impact.
ESG compliance is not a Q4 game.
Waiting until year-end to gather data is a recipe for stress. Companies that do it well measure all year, correct in time and arrive well-prepared for the final report.
If you detect a rise in emissions in March, you can act in April. Not wait until December to realize you overshot all your goals.
Those who manage their sustainability as a continuous process have better metrics, fewer errors, more credibility… and fewer surprises during audits.
Many companies face the sustainability report as a regulatory burden. But the most advanced ones are using it for something more powerful: aligning sustainability with actual business. This means turning data into decisions, reports into strategy, and compliance into profitability.
When the finance team sees the report as a tool to detect risks, or the procurement department uses it to choose more efficient suppliers, the report stops being an obligation and becomes a lever of competitiveness.
The big leap happens when ESG data is integrated into daily business operations. For example:
If you know your emissions rise whenever you import a certain material, you can redesign logistics.
If you see your best social metrics are tied to an internal training policy, you can expand it.
If you discover certain clients prefer suppliers with reports aligned to ESRS, you know where to focus your commercial efforts.
This only happens if the report doesn’t stay on the sustainability manager’s desktop. It has to reach finance, strategy, operations and sales. It must speak their language and address their challenges.
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.
Solid ESG governance isn’t just about having a sustainability team. It’s about getting the right people across the organization involved, especially leadership, legal, finance, and your board.
The companies doing this right follow three core practices:
Clearly defined roles and responsibilities: Everyone needs to know what data they’re responsible for, when to report it, and how. Leading companies appoint ESG leads in every key department, procurement handles Scope 3 emissions, HR reports diversity, and operations manage energy use. The ESG report becomes a shared responsibility.
Formal policies and approval workflows: Good intentions aren’t enough. You need documented ESG policies and structured approval processes. This means internal audit protocols, tracking ESG incidents, and annual reviews. When you publish your report, you can stand by it, knowing it reflects a well-governed, verifiable process.
Annual governance reviews: ESG governance isn’t “set and forget.” Top companies review governance systems at least once a year. What’s improved? What hasn’t? What needs adjusting based on new regulations or industry benchmarks? This review feeds directly into your improvement plans and next reporting cycle.
Why it matters
In short, strong governance tells the world your ESG strategy isn’t just words. It’s something you run and manage with intention, from the top down.
A great ESG strategy isn’t about adding one more task. It’s about embedding sustainability into how your company runs and grows. The most effective businesses make ESG part of their business mode, not a separate track.
Here’s how they do it:
Strategic planning linked to ESG goals: The best companies set sustainability goals like emissions cuts, workforce diversity, or energy efficiency right alongside financial KPIs. They treat them with the same level of importance, because they are just as impactful.
Budgeting tied to ESG impact: ESG isn’t a cost center, it’s an investment. Smart companies earmark budget for sustainability projects: smarter logistics, better working conditions, employee training, or cleaner energy use. That spending shows up in long-term ROI.
Business decisions informed by ESG data: When ESG data is linked to operational decisions, it creates real impact. For example:
Why it pays off
This isn’t just about having a report. It’s about having a system that turns data into strategy, and strategy into a long-term advantage. When ESG is part of the business, it starts generating real value, far beyond just ticking boxes.
Institutional investors, sustainable funds, and impact-driven venture capital firms increasingly demand solid ESG data, not mere stories. A mandatory ESG report that goes beyond compliance, highlighting robust metrics, validated methodologies, and forward-looking goals, can build trust on day one.
By demonstrating double materiality assessments, science-aligned targets, and risk mitigation plans, you position your company as less risky, more transparent, and more attractive to capital.
You can lean on these data-backed narratives during pitch decks, due diligence cycles, and credit reviews, turning the ESG report from a checkbox into a strategic entry point for funding opportunities.
Modern clients expect more than sustainability claims, they ask for evidence. A report that clearly shows your supplier governance, carbon footprint reductions, or diversity initiatives can become a competitive advantage in bids, tenders, and proposals.
Highlighting alignment with frameworks like ESRS or GRI, quantifying Scope 1, 2 and 3 emissions, or showcasing results from social metrics such as employee retention or pay gaps helps differentiate your value proposition.
Positioning sustainability through a report lens enhances credibility and opens doors to customers who will only engage with suppliers meeting high ESG standards.
Once your ESG reporting is positioned as a corporate asset, it triggers internal alignment. For example:
This alignment turns ESG data into strategic decisions, not just compliance artifacts.
The ESG report becomes a tool for continuous improvement: you iterate goals, track them in dashboards, and adapt processes based on real performance indicators.
Use your ESG report to build credible, measurable stories in marketing materials, investor packs, and sales collateral.
You can highlight:
This transforms sustainability from a “nice-to-have” into tangible metrics that enhance brand reputation and resonate with ESG-conscious stakeholders.
Lead with facts, chart improvements, show trends year-over-year, and contextualise numbers compared to industry benchmarks. This builds narrative credibility and attracts clients, partners, investors and talent who expect measurable ESG performance.
Many companies discover, after reporting, operational inefficiencies they hadn’t noticed: excessive energy use in certain facilities, high waste volumes, or suppliers with poor ESG practices.
By linking these insights to business decisions, you can:
The ESG report becomes not just a statement of facts, but a roadmap for sustainable efficiency gains.
Employees increasingly look for purpose-driven organizations. An ESG report that transparently shares governance structures, diversity stats, career development programmes, and employee initiatives communicates sincerity.
This is not about window dressing, it’s about demonstrating actionable progress.
Potential recruits and existing employees see that sustainability is integrated in corporate strategy, not siloed in CSR brochures, which boosts engagement, retention, and inbound talent flow.
Instead of treating the ESG report as a one-off compliance activity, integrate it into your quarterly or biannual business rhythm.
This creates a virtuous, continuous process where ESG isn’t locked in a yearly PDF, it becomes part of daily strategy and corporate rhythm.
At Dcycle, we are not auditors or consultants. We are a solution for companies that want to have their ESG data under control and use it strategically.
All the ESG information you have scattered in countless places, we centralize it in a single system. Emissions, social data, corporate governance… everything connected.
Forget chasing each team for an Excel file. We automate data collection and leave it ready to use.
We gather your data and turn it into whatever you need to deliver. One single data point, multiple uses: EINF, CSRD, taxonomy, SBTi goals, ISOs… whatever you have (or want) to do.
We work with that logic: one source, multiple destinations.
It’s not just about complying with the rules. It’s about using the data to improve how your company operates.
The platform allows you to track, detect opportunities and set action plans. All in one place, no hassle, no endless processes.
Bring your digital strategy to life, schedule a demo.
We’ve spent years watching how companies face this compliance challenge. Those that succeed aren’t the ones publishing the most reports, but the ones that have their data well-structured from the start.
Without clear data, there’s no strategy. Without strategy, there’s no competitive edge.
They start with the basics: knowing what they have, what they don’t, and where the gaps are. Then they choose a solution that lets them organize and connect everything.
They don’t seek complexity. They look for efficiency, clarity and control.
Start with the data. If you don’t know what you’re measuring, you won’t be able to report anything.
From Dcycle, we help you gather it all, connect it to what you need to report, and get it up and running faster than you think.
Because if you don’t do it now, you will be left behind. And that is definitely not an option.
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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Carbon footprint calculation analyzes all emissions generated throughout a product’s life cycle, including raw material extraction, production, transportation, usage, and disposal.
The most recognized methodologies are:
Digital tools like Dcycle simplify the process, providing accurate and actionable insights.
Some strategies require initial investment, but long-term benefits outweigh costs.
Investing in carbon reduction is not just an environmental action, it’s a smart business strategy.
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