Sustainability Report: What It Is, What It Includes, and How to Prepare It 

MARTA GÁNDARA MILLÁN

Technical staff of the Department of Development

Technical Lead for Climate Change and Environmental Verification

Asustainabilityreportis adocument that provides information on an organization’s environmental, social, and governance (ESG) performance.Its content and whether it is required depend on the applicable regulatory framework and the standard used, such asESRS, GRI, or VSME. 

The need to increase thetransparency and sustainability of organizations, as well as to strengthen the trust of investors, consumers, and society at large, has driven the evolution of European regulations on sustainability reporting. 

In this context, thesustainability reporthas become an essential tool for communicating an organization’s environmental, social, and governance (ESG) performance in a structured manner and, where applicable, for complying with the disclosure requirements established by European regulations. 

The Corporate Sustainability Reporting Directive (CSRD) introduced a new framework to standardize the sustainability reporting generated by certain companies and gradually replaced the previous non-financial reporting framework derived from the NFRD and its transposition into Spanishlaw throughLaw 11/2018. 

For organizations subject to the CSRD, sustainability information is structured in accordance with theEuropean Sustainability Reporting Standards (ESRS), developed by EFRAG. These standards aim to improve thequality, comparability, and traceabilityof information on environmental, social, and governance issues. 

However,not all companies are required to prepare and publish a sustainability report in accordance with the ESRS. For organizations that fall outside the mandatory scope, there are also voluntary frameworks, such as theVSME, designed to facilitate sustainability reporting tailored to unlisted small and medium-sized enterprises. 

Below, we explainwhat a sustainability report is, who is required to prepare one, what content it must include, and what the differences are between GRI, ESRS, and VSME. 

What is a sustainability report? 

Asustainability reportis adocumentthat compiles and communicates relevant information about an organization'senvironmental, social, and governance (ESG) performance. 

Its goal is to provide various stakeholders—such as investors, customers, employees, financial institutions, government agencies, and other business partners—with structured information onhow the organization manages its sustainability-related impacts, risks, and opportunities. 

Depending on the framework used and the applicable requirements, a sustainability report may include information on: 

• Theorganization's strategy and business model. 
• Integrating sustainability into decision-making.  
• The mainimpacts, risks, and opportunitiesrelated to ESG issues. 
• Policies, objectives, and action plans.  
• Environmental indicators and metrics .  
• Information related to workers and other social issues.  
• Governance, business ethics, and the fight against corruption.  
• Information related to thevalue chain, when relevant.  
• Data on greenhouse gas emissions and other environmental indicators.  

Therefore, a sustainability reportis not merely a compilation of environmental or social initiatives. Its purpose is to provide structured, relevant, and traceable information on the organization’s sustainability performance and management. 

 What is dual materiality? 

Dual materialitytakes two complementary perspectives into account. 

On the one hand,materiality of impactanalyzes how an organization’s activities can have positive or negative impacts on people and the environment. 

On the other hand,financial materialityanalyzes how sustainability-related issues can give rise to risks and opportunities that affect the organization’s financial position, performance, or value. 

Therefore, an issue may be material because the organization has a significant impact on its environment, because it may have significant financial consequences for the company, or because of both of these factors.

This approach is particularly relevant in reporting underESRS. In contrast,VSME does not require a formal double materiality analysis, one of the features that allows the reporting to be adapted to the realities of small and medium-sized enterprises.  

Who is required to publish a sustainability report? 

The obligation to prepare and disclose sustainability information depends onthe size, characteristics, and circumstances of each companyand, in particular, on whether it falls within the scope of the European sustainability reporting regulations. 

Therefore, the obligation to prepare a sustainability report should not be confused with the option to submit avoluntary sustainability report. 

In addition to companies directly subject to regulatory obligations, there are organizations that, although not required to report under the CSRD, may need or choose to prepare a sustainability report for other reasons: 

• Inquiries from major clients.  
• Requirements for banks and investors.  
• Requirements related to the value chain.  
• Procurement or bidding processes.  
• ESG and Corporate Sustainability Strategies.  
• Transparency Requirements for Stakeholders.  
• Preparing for future regulatory requirements.  

For these organizations, theVSMEis a particularly important benchmark. The standard is intended forunlisted companies—especially SMEs and microenterprises—and allows them to structure their sustainability information in a proportionate manner.  

Important:The requirements and thresholds for compliance with European sustainability disclosure regulations are subject to regulatory changes. Therefore, before determining whether a company is required to report, it is necessary to review the current regulatory framework and the organization’s specific circumstances.

Which companies are required to report on sustainability?

Under the new European framework, the obligation to disclose sustainability information in accordance with the CSRD is limited to companies and groups that meet both of the following criteria:

• An average of more than 1,000 employees during the fiscal year.
• More than 450 million euros in net revenue.

These same thresholds apply to groups of companies on a consolidated basis and to certain issuers. The new scope of application applies to fiscal years beginning on or after January 1, 2027.

Therefore, not all large companies are currently required to prepare a sustainability report in accordance with the ESRS. Companies, groups, and issuers that do not exceed these thresholds are exempt from the sustainability reporting requirement established by this framework, although they may prepare sustainability information on a voluntary basis.

SMEs fall outside the mandatory scope of the CSRD under the new thresholds, although they may voluntarily prepare sustainability disclosures using standards such as the VSME.

What about companies that are not required to do so?

Just because a company is not subject to the CSRD’s mandatory requirements does not mean it does not need to have sustainability information available.

SMEs and other organizations may receive requests for ESG information from:

• Major clients and companies in their value chain.
• Financial institutions and banks.
• Investors.
• Business partners.
• Contracting and Bidding Processes.

In these cases, a company may voluntarily prepare a sustainability report to organize and communicate its environmental, social, and governance information.

For unlisted companies, particularly SMEs and microenterprises, the VSME serves as a specific framework for carrying out this voluntary reporting in a proportionate manner. The standard is designed to facilitate the collection and disclosure of ESG information and to address the information needs of customers, financial institutions, and investors, without the complexity of the ESRS.

What content should a sustainability report include? 

The content of asustainability reportdepends on the standard used and the characteristics of the organization. 

Generally speaking, a sustainability report can be organized around the following sections: 

Strategy and Business Model 

The organization should explain, where applicable, itsbusiness model, strategy, and how it integrates sustainability issues into its operations. 

Impacts, Risks, and Opportunities 

The report should provide an understanding of the mainsustainability-related impacts, risks, and opportunities. 

For reports prepared in accordance with ESRS, this information is closely linked to thedouble materiality analysis. 

Environmental Information 

It may include information regarding: 

• Climate change.  
• Greenhouse gas emissions.  
• Energy.  
• Pollution.  
• Water and marine resources.  
• Biodiversity and ecosystems.  
• Circular economy and resource use.  

The specific content will depend on the material issues and the applicable reporting framework. 

Social Information 

The report may include information on: 

• Working people.  
• Working conditions.  
• Equality and diversity.  
• Human rights.  
• Affected communities.  
• Consumers and users.  
• Issues related to the value chain.  

Governance 

In this context, issues such as the following can be addressed: 

• Corporate governance.  
• Business Ethics.  
• Fighting corruption and bribery.  
• Control systems.  
• Risk management.  
• Internal policies and procedures.  

Ultimately, the content of a sustainability report must betailored to the applicable standard and the organization’s specific circumstances, avoiding turning the report into a mere compilation of initiatives. 

GRI Standards vs. ESRS: Which One to Apply 

One of the most common questions when preparing asustainability reportis deciding which standard to use. 

The two frameworks that appear most frequently areGRI and ESRS, although they serve different purposes. In addition, there is theVSME, which is particularly relevant for privately held companies that engage in voluntary reporting. 

What are the GRI Standards? 

The GRI (Global Reporting Initiative) are international benchmark standards for reporting on the economic, environmental, and social impacts of organizations. 

They are primarily used in the context ofvoluntary reportingand enable the structuring of sustainability reports tailored to different stakeholder groups. 

TheGRI sustainability indicatorsaddress issues such as emissions, energy, employment, human rights, water, waste, and anti-corruption, among many others. 

Therefore,GRI sustainability reportsremain an important tool for organizations that wish to improve transparency and communicate their ESG performance, although using GRIdoes not automatically mean compliance with ESRS requirements. 

 What are ESRS? 

The European Sustainability Reporting Standards (ESRS) are the European standards used to structure sustainability information for companies that fall within the scope of the CSRD. 

Its approach is linked toEuropean regulatory reportingand establishes disclosure requirements and structured metrics. 

A key difference is the approach to materiality.GRI focuses primarily on an organization’s impacts, while ESRS incorporates thedual materiality perspective, which combines impact materiality and financial materiality. 

What is VSME? 

The VSME (Voluntary Sustainability Reporting Standard for Non-Listed SMEs) is a voluntary standard developed to provide unlisted companies withsimplified and proportionate sustainability reporting. 

The standard features a modular structure and enables a more structured response to ESG information requests fromcustomers, banks, investors, and other business partners.  

Furthermore, the VSMEdoes not replace the ESRS or the CSRDand is specifically designed for organizations that are not required to report under these frameworks.  

GRI, ESRS, or VSME: Which standard should a company use? 

The choice depends primarily onthe company's obligations and the purpose of the report: 

Therefore: 

• If the company is required to report in accordance with CSRD → ESRS.  
• If you engage in voluntary sustainability reporting → GRI may be an appropriate framework.  

• If it is a privately held company and you need a pro rata report → VSME.  

The VSME is specifically designed with a modular structure tailored to the needs of businesses and helps prevent an excessive information burden.  

Difference between the sustainability report and the EINF 

Another concept that often causes confusion is the difference between asustainability reportand theStatement of Non-Financial Information (EINF). 

Traditionally, the Non-Financial Information Statement (EINF) has been the instrument used in Spain to comply with the non-financial disclosure requirements established by Law 11/2018, which transposed the previous European regulations on this matter into Spanish law.

The EINF and the sustainability report share a similar purpose and content, as both are used to communicate information on environmental, social, and governance (ESG) issues. However, the scope, content, and reported indicators may vary depending on the regulatory framework and applicable reporting standards, such as GRI or ESRS.

In this regard, the new European framework introduced by the CSRD represents an evolution from the previous non-financial reporting regime, expanding and standardizing sustainability disclosure requirements through the application of the European Sustainability Reporting Standards (ESRS).

Therefore,a sustainability report and an EINF are not necessarily synonymous. 

The difference also lies in their purpose and framework. An EINF meets specific legal requirements, while a sustainability report may use different standards—such asGRI, ESRS, or VSME—depending on the report's objective. 

Furthermore, as European regulations have evolved, sustainability reporting has gradually replaced the traditional approach to non-financial reporting with a more standardized and structured model. 

What role does VSME play in sustainability reports? 

For companies thatare not subject to CSRD reporting requirements but needto structure their sustainability information, theVSMEserves as a particularly relevant reference. 

The standard is designed as a voluntary framework forunlisted SMEsand provides a more accessible and proportionate structure compared to the ESRS. Its objective is to facilitate the collection and disclosure of sustainability information and to address, among other needs, ESG information requests fromcustomers, financial institutions, and investors. 

One of its key features is thatit does not require a formal dual materiality analysisand allows companies to disclose only the information relevant to them under the“if applicable” principle. 

The VSME is structured into abasic module and a comprehensive module, tailoring the level of information to the organization’s needs. To learn more about its requirements, structure, and practical application, you can consult our guide on VSME: What Is the Voluntary Sustainability Standard for SMEs and How to Implement It.  

How do you prepare a sustainability report? 

Although the process depends on the standard used, the preparation of asustainability reportcan be organized into several phases. 

1. Determine the obligations and the applicable framework: Beforecollecting information, the company must determinewhether it is subject to regulatory obligations and which standard applies. 

2. Define the scope of the report: It isnecessary to determine which companies, centers, activities, and time periods are included. 

3. Identify relevant sustainability aspects: Whenrequired by the framework,impacts, risks, and opportunitiesmust be analyzed, and the corresponding materiality analysis must be conducted. 

4. Collect data: Theorganization must identify internal sources of information and establish consistent criteria for obtainingenvironmental, social, and governance indicators. 

5. Verify the traceability of the information: Thedata included in the report must be linkable toevidence, records, and internal systemsthat support the reported information. 

6. Prepare and review the report: Finally, the report is structured in accordance with the relevant standard, and itscoherence, consistency, and qualityare reviewed before publication or presentation. 

For companies that report under the ESRS, the process includes additional requirements related to thedual materiality analysis, disclosure requirements, and assurance of information. 

Is it mandatory to verify a sustainability report? 

The need for verification depends on theregulatory framework and the organization's specific circumstances. 

In the case of companies subject to the CSRD’s sustainability disclosure requirements, reporting is subject toassurance requirementsin accordance with the applicable regulatory framework. 

In contrast, a company that voluntarily prepares a sustainability report in accordance with theVSMEis not required by the standard itself to have it externally verified. 

Verification can, however, provide an additional assurance regarding thereliability and traceability of the information, especially when the data is to be used by customers, financial institutions, or other stakeholders. 

Benefits of Preparing a Sustainability Report 

Although preparing a sustainability report may be a regulatory requirement, it can also providestrategic benefitsfor the organization. 

Notable among them are: 

• Improve transparencywith respect to stakeholders.  
• Internal structuring of ESG information.  
• Facilitate responses to customer inquiries.  
• Improve communication with financial institutions and investors.  
• Identify sustainability-related impacts, risks, and opportunities.  
• Prepare the organization for future reporting needs.  
• Improve thetraceability and quality of ESG data.  
• To facilitate the integration of sustainability into business strategy.  

For small and medium-sized enterprises (SMEs), using a framework such as VSME can be particularly helpful instandardizing information and reducing the need to respond to multiple requests for ESG information in an uncoordinated manner.  

In short: What is a sustainability report? 

A sustainability report is a document that details an organization’s environmental, social, and governance performance.Its content depends on the standard used and the applicable requirements. Companies within the scope of the CSRD must comply with theESRS, while organizations not subject to the CSRD may use voluntary frameworks such asGRI or VSME. 

Therefore, properly preparing a sustainability report is not merely a matter of compiling data. It requiresdefining an appropriate reporting framework, establishing consistent criteria, ensuring the quality of the information, and making sure that the reported data can be supported by evidence. 

ACERTA's Experience in Sustainability and ESG 

ACERTAhasmore than 20 years of experiencein certification, verification, and technical assessment, and specializes in the field ofsustainability and ESG. The organization employs more than120 professionals and works withmore than 1,600 external experts, and has an international presence in more than 10 countries.  

Through itsESG Division, ACERTA provides services related to sustainability and technical assessment, offering expertise and technical proficiency in a field that demands ever-greater transparency and trust.  

This experience allows us to approach sustainability from a technical perspective, focused onindependent assessment, information traceability, and building trust.