ESG Reporting Support for European SME in Machinery

The client, an SME in the machinery industry, is based in Sweden with operation sites in both Sweden and Asia and sales activities in more than 30 markets.

As stakeholders’ expectations of transparency in sustainability performance information have been growing, the client has faced more and more requests on ESG/sustainability disclosure.

The client wanted to publish its first ESG report. However, had limited experience in disclosing relevant information in a proper and globally accepted way. As such, they turned to ARC Consulting for support.

Industrial machinery

The company has spent extensive effort on improving labour conditions and ensuring legal compliance in EHS (Environment, Health & Safety). However, lacked any systematic reviews on its impacts on the economy, environment and people from its business operation. The client has also not incorporated any tangible and specific sustainability targets or metrics in their corporate strategy.

With ARC Consulting’s help to generate a sustainability report, the client was able to respond to stakeholders’ requests on ESG disclosure, as well as kick off its ESG strategy formulation based on the results from the report.

ARC Consulting reviewed the major international sustainability reporting standards together with the client. Both parties agreed that the best approach was for ARC Consulting to generate the report in accordance with GRI (Global Reporting Initiative) standards, as it is a widely recognized framework for sustainability reporting.

ARC Consulting followed GRI’s “in accordance requirements” to prepare the client’s sustainability report. Firstly, in the initial phase, the client and ARC Consulting team shared and aligned the system, key elements and reporting principles of GRI

In the second step, the team identified and assessed the company’s impact on the economy, society and people. After analyzing and mapping out the organization’s contexts, the consultants arranged multiple workshops with internal and external stakeholders. The workshops focused on identifying the actual as well as potential impact, access their significance, and deciding the material topics based on the prioritized impacts for reporting together with the client’s Sustainability Team. The prioritization of the most significant impacts has been tested with industry experts and information users such as customer representatives, noting that Sector Standards were not yet available for the client’s sector. In addition, the material topics have been reviewed and approved by the highest governance body of the organization- the board of directors.

Thirdly, the consultants have prepared the relevant disclosures for reporting based on the guidelines of GRI’s Universal Standards and Topic Standards. The consultants have also investigated the reasons of omissions of certain material topics required by GRI and made the reporting accordingly. The report was also reviewed and approved by the board.

Fourthly, the consultants have supported the preparation of GRI content index and statement of use, provided detailed guidance to the client’s Sustainability Team to publish relevant information.

Finally, GRI was notified about this report, as a fulfillment of the requirements by GRI.

The main deliverable was the client’s first sustainability report in accordance with GRI standards, published on its official website. The client has also actively shared the report to its major customers to increase the mutual trust and transparency in the corporation.

This report was a starting point for the client. It has then decided to incorporate ESG into its company strategy and set sustainability targets and metrics from top-down level. The company has also decided to continuously review of the material topics and track its progress of the targets on a semi-annual basis.

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