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What is a mandatory sustainability report and how to prepare

Updated on
April 3, 2025

More and more companies are facing the mandatory sustainability report.

This is not a trend or a passing phase.

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 do it, you’re simply falling behind.

And not just for image reasons, but because the rules of the game have changed: access to funding, bids, clients, and partnerships all now depend on your ESG data.

What does this mean for us?

That we need everything clear, organized, and ready to respond to any regulatory demand.

That’s where the journey begins.

In this article, we’ll look at what’s happening with sustainability reporting, what the regulations require, and how you can prepare without losing your mind.

What Is a Mandatory Sustainability Report?

A mandatory sustainability report is, essentially, a document that shows how a company manages its environmental, social, and governance impact, with verifiable data.

No vague promises or pretty words.

It applies across sectors.

It doesn’t matter whether you manufacture, sell, or provide services. If you meet certain criteria (size, revenue, number of employees, presence in Europe), you’ll be required to report.

How Is It Different From Voluntary ESG Reports?

For years, many companies published ESG reports however they wanted, highlighting whatever data they chose.

That is no longer enough.

Now there are specific rules: what data to provide, how to provide it, how often, and under which standards.

Why Has It Become Mandatory for So Many Companies?

Because sustainability is no longer just a checkbox. It is now a strategic driver.

And like any other critical area of business, it needs to be reported properly.

Also, investors, clients, and banks want certainty, not just good intentions.

The Role of New European and Global Regulations

The change is coming from the top.

Regulations like the CSRD and the EU taxonomy are setting new expectations for how companies in Europe must report.

But this isn’t just about Brussels. Globally, there is increasing pressure for transparency and comparability.

This includes alignment with emerging sustainable finance frameworks that are shaping investment and compliance landscapes.

The Impact Across the Value Chain: Suppliers, Partners, and Clients

This doesn’t just affect the reporting company.

If you work with a large company that needs to report, it’s going to ask you for your data.

Suppliers, subsidiaries, partners, we are all part of the equation.

If we don’t measure and share our impact, we’re out of the picture.

So this is not a regulatory trend. It’s a wake-up call to get up to speed.

What Should a Mandatory Sustainability Report Include?

A mandatory sustainability report is not a corporate brochure.

It is a technical document that includes concrete, verifiable data on how you manage your ESG impact.

Let’s go over the key elements it must include:

1. Environmental Data

This includes emissions, resource use, waste generation, energy consumption...

Everything related to the direct or indirect impact of your operations on the environment.

If this data isn’t well recorded, or based on accurate, customized emission factors, compliance will be difficult.

2. Social Indicators

The social section focuses on how people are managed: equality, health and safety, working conditions, training, and diversity.

And yes, this data must also be measured and reported.

Saying you care about people is no longer enough.

3. Corporate Governance

This covers business ethics, transparency, anti-corruption measures, and governance structure.

Companies must show how decisions are made and what controls ensure they’re made properly.

4. Methodology and Regulatory Framework Followed

Not just any data or format is acceptable.

You must specify which standards you follow: CSRD, GRI, ESRS, or others.

This guarantees the report’s structure, comparability, and credibility.

5. Objectives, Risks, and Improvement Plans

It’s not just about what has been done. You must also define where you’re headed

That means declaring goals, acknowledging ESG risks, and laying out plans for improvement over the next few years.

3 Strategic Benefits of Complying With the Sustainability Report

1. Access to Financing and Investors

More and more investors require ESG data before investing.

If you don’t have the report ready, they won’t even consider you.

Having it complete opens doors to loans, investment funds, and opportunities that were previously out of reach.

2. Market Trust and Reputation

A solid report proves that you’re taking this seriously.

That builds trust among clients, suppliers, and employees.

It’s not about posturing, it’s about credibility.

3. Reduced Operational and Regulatory Risk

Having your ESG data in order lets you anticipate problems, avoid penalties, and reduce uncertainty.

This is not just about compliance.

It’s about being able to sleep soundly, knowing there are no loose ends.

3 Risks of Non-Compliance: What Could Happen if You Ignore It

1. Legal Sanctions and Administrative Barriers

Regulations are not optional.

If you don’t submit the report, you risk fines, disqualification, or being excluded from public tenders.

Compliance costs less than facing a penalty or missing out on key opportunities.

2. Loss of Competitiveness Compared to Reporting Companies

Today the market compares.

If your competitors report and you don’t, you lose credibility, access to demanding clients, and your ability to differentiate.

This is not about looking responsible. It’s about being responsible and showing it with data.

3. Reputational Risk With Clients and Consumers

In a world where transparency matters more than marketing, not reporting leads to mistrust.

And once you lose the trust of the market, it’s very hard to win it back.

The Big Challenge: Collecting and Structuring ESG Data

The Complexity of ESG Data Within the Organization

ESG data is scattered throughout the company: operations, HR, procurement, finance...

And no single team has the full picture.

Many of these data points aren’t digitized, and some aren’t even being collected systematically.

What Tools Are Companies Using to Simplify This Process

This is where technology makes the difference.

More and more companies are turning to platforms that automate ESG data collection and classification.

In our case, we’re not auditors or consultants.

We’re a solution that centralizes all your ESG data and connects it to the different reporting needs: CSRD, taxonomy, ISOs, EINF, or whatever applies to your sector.

Because if your data isn’t well-structured, you can’t even get started.

Dcycle: Your All-in-One Solution for Mandatory ESG Reporting

At Dcycle, we’re not auditors or consultants.

We are a tech solution for companies that want full control over their ESG data and to use it strategically.

We Gather All Your ESG Information

All the ESG data scattered across your company, we centralize it into a single system.

Emissions, social data, corporate governance, everything connected.

Forget chasing down Excel files from every department.

We automate data collection and leave it ready to use.

We Convert It Into Ready-to-Submit Deliverables for EINF, CSRD, SBTi, ISO, Taxonomy...

We take your data and transform it into what you need to submit. One data set, many uses:

EINF, CSRD, EU Taxonomy, SBTi goals, ISO certifications, whatever you need to do (or are required to do).

We work with this logic: one single source, multiple outputs.

Automation, Monitoring, and Continuous Improvement, All in One Platform

This isn’t just about checking a box.

It’s about using your data to improve how your company operates.

Our platform allows you to track performance, identify opportunities, and set action plans.

Everything in one place, with no chaos and no endless processes.

Our Perspective as Experts in ESG Sustainability and Compliance

We’ve spent years watching companies face this challenge.

And we’ve learned something important:

The companies that succeed aren’t the ones with the most reports, they’re the ones with well-structured data from the start.

Because without clear data, there is no strategy.

And without strategy, there is no competitive advantage.

What Do Leading Companies Do Well?

They start with the basics: knowing what data they have, what they don’t, and where the gaps are.

Then they choose a solution that lets them organize and connect everything. No unnecessary complexity. Just efficiency, clarity, and control.

Our Recommendation to Get Started Right Now

Start with the data. If you don’t know what you’re measuring, you won’t be able to report anything.

At Dcycle, we help you gather it all, connect it to your reporting needs, and get it up and running faster than you think.

Because if you don’t start now, you will fall behind. And that is not an option anymore.

Frequently Asked Questions (FAQs)

What Types of Companies Are Required to Submit a Sustainability Report?

It depends on size, revenue, and number of employees.

If you operate in the EU or are part of a large supply chain, you will likely be included.

Each regulation has specific criteria, but the trend is clear: more and more companies are being included.

What’s the Difference Between CSRD and Standards Like GRI or ESRS?

CSRD is mandatory regulation, while GRI, ESRS, and others are standards that explain how to report properly.

In other words: CSRD tells you that you must report, and the others tell you how to do it right.

Can the Report Be Done Without a Digital Tool?

Technically yes...
but it’s a nightmare.

If you do it manually, you’ll face errors, incomplete data, and wasted time.

That’s why more and more companies use digital solutions that automate the process and give you control.

How Can I Know If My ESG Data Is Correct?

You need traceability.

You must know where the data comes from, who validates it, and whether it follows a recognized methodology.

If you can’t answer those questions, your data probably isn’t reliable.

What Happens If I Don’t Submit the Report on Time?

Fines, administrative blocks, and lost business opportunities. And that’s not even counting the reputational hit.

This isn’t just a formality.It’s part of what keeps your company in the market.

Take control of your ESG data today.
Take control of your ESG data today.
Start nowRequest a demo

Frequently Asked Questions (FAQs)

How Can You Calculate a Product’s Carbon Footprint?

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:

  • Life Cycle Assessment (LCA)
  • ISO 14067
  • PAS 2050

Digital tools like Dcycle simplify the process, providing accurate and actionable insights.

What Are the Most Recognized Certifications?
  • ISO 14067 – Defines carbon footprint measurement for products.
  • EPD (Environmental Product Declaration) – Environmental impact based on LCA.
  • Cradle to Cradle (C2C) – Evaluates sustainability and circularity.
  • LEED & BREEAM – Certifications for sustainable buildings.
Which Industries Have the Highest Carbon Footprint?
  • Construction – High emissions from cement and steel.
  • Textile – Intense water usage and fiber production emissions.
  • Food Industry – Large-scale agriculture and transportation impact.
  • Transportation – Fossil fuel dependency in vehicles and aviation.
How Can Companies Reduce Product Carbon Footprints?
  • Use recycled or low-emission materials.
  • Optimize production processes to cut energy use.
  • Shift to renewable energy sources.
  • Improve transportation and logistics to reduce emissions.
Is Carbon Reduction Expensive?

Some strategies require initial investment, but long-term benefits outweigh costs.

  • Energy efficiency lowers operational expenses.
  • Material reuse and recycling reduces procurement costs.
  • Sustainability certifications open new business opportunities.

Investing in carbon reduction is not just an environmental action, it’s a smart business strategy.