Consolidated or individual reporting - how to set it up?

Before initiating the ESRS reporting process, including double materiality, it is crucial to ensure that all relevant data can be consistently collected, analyzed, and reported across the entire group, including subsidiaries, business units, or locations.

To achieve this, the reporting company must define the scope of reporting and decide whether to prepare a consolidated or individual report.

According to ESRS 1, paragraph 62, sustainability reports must be prepared for the consolidated group. For instance, if the reporting company is a parent company required to prepare consolidated financial reports, the sustainability report must also be prepared for the entire group.

Subsidiaries included in the parent company's consolidated report are exempt from preparing separate sustainability reports if their information is covered in the parent company's report. However, this exemption does not apply if the subsidiary is a large, listed company, which must still prepare its own sustainability report independently.

In practice, subsidiaries often choose to publish their own sustainability reports in addition to the group report. While consolidated reporting may seem straightforward, it can be challenging in practice, especially if the group has diverse business activities or significant variations in the information to be reported. This is particularly true during the double materiality analysis, data collection as per ESRS, and the preparation of the ESRS report.

Subsidiaries utilizing the exemption must still disclose specific information:

• The name and registered office of the parent company.
• Web links to the parent company's consolidated management report, if available online.
• A statement in their management report indicating their exemption from individual sustainability reporting.

At Daato, we support you by setting up your organizational structure, assigning responsible colleagues, creating common definitions, and establishing approval workflows. This ensures that all data from necessary stakeholders can be collected consistently and efficiently.

Here’s how it works in the software: