THE SUSTAINABILITY BALANCE SHEET FOR PUBLIC INVESTEE COMPANIES

The sustainability report has become one of the most up-to-date documents within the corporate world today and will become increasingly so from January 2024 when it will be made mandatory for many more large companies. 

This is bound to have a cascading effect on SMEs as well, which, although not obligated, can reap clear benefits in practical and economic terms from the preparation of this document. 

The positivity of this compliance can be reflected a fortiori on public investee companies that intend to adopt it, but let’s go step by step.

What is the sustainability report?

The sustainability report is a document addressed to all stakeholders or otherwise bearers of interest to the company (employees, suppliers, customers investors, lenders, etc.) that communicates the commitments – and results – made in the area of corporate responsibility. 

This document must, therefore, provide a representation of an organization’s sustainability performance by reporting on the positive and negative impacts generated by its activities in the five areas referred to by Directive 2014/95/EU, namely: active and passive anti-corruption, environment, personnel, social, human rights. 

It can be understood, therefore, how much it is a document that photographs and crystallizes the company’s commitment to increasingly topical and relevant issues implying the assumption of responsibility (accountability) and its related communication, in relation to the relationship between the organization’s performance and sustainable development objectives. 

What are the benefits of sustainability reporting?

The practical reflection that is generated for companies is less capital constraint and obvious cost savings.

In relation to the latter, this means, specifically, an increase in the likelihood of achieving the set goals by engaging the company in periodic data collection and reporting on management and performance, an improvement in operational effectiveness and efficiency as well as the retention of employees who find themselves highly motivated by a better working environment.  

These features of the sustainability report and its positive consequences for companies that adopt it can only be, for a public company, one more reason to adopt it. 

In fact, while it is true that the existence of the social balance sheet is in some respects close to the same conception, we can consider that the sustainability balance sheet is a form of evolution of the social one, which, being totally marked by transparency, immediately identifies with publicist principles. 

Thus, it can be understood how, in pursuing its main targets in accordance with the Sustainable Development Goals (SDGs), a public company inevitably contributes to the improvement of the lives of the people belonging to the relevant social group, thus realizing, a public interest.

If we add to this the fact that in the case of adoption there are potential economic-financial benefits (with consequent positive repercussions in terms of investments to improve/increase the services provided to the community concerned), the profile of public interest that it can assume is even more enhanced. 

Conclusions

In conclusion, this is the reason why most of the investee companies, although not obliged by the regulatory framework, are adopting this type of document that elevates public interests according to criteria of sustainability, legality and transparency and that makes public entities in perfect synchrony with the socio-cultural evolution that Europe is going through.