HR-Glossar

Nachhaltigkeitsberichterstattung (sustainability reporting)

Which HR data sustainability reporting requires, where they come from and why payroll becomes the source for an audited report.

1. What is Nachhaltigkeitsberichterstattung (sustainability reporting)?

Sustainability reporting obliges businesses to disclose information on environmental, social and governance matters alongside financial data. The basis is the European Corporate Sustainability Reporting Directive (CSRD); the substantive requirements are in the European Sustainability Reporting Standards (ESRS).

For HR, ESRS S1 – "own workforce" – is the relevant one. What is required includes information on headcount and workforce structure, forms of employment, pay and pay differences, occupational safety and health, training, and social dialogue.

On the legal position: the scope and the dates of the reporting duty have been adjusted several times at European level and remain in motion. This entry therefore deliberately states no thresholds and no years – who has to report and from when belongs checked against the current position. What can be described is the subject of the reporting and the question of where the data come from.

2. Origin and development

Sustainability reports existed on a voluntary basis for a long time, with the familiar problem: what looked good got reported, and there was no comparability.

The CSRD changes that in three respects. It makes reporting mandatory for a wider circle, it prescribes uniform content through the ESRS, and it subjects the information to external audit. A communication task thereby becomes a reporting duty with the requirements familiar from financial reporting.

For HR that has a consequence which looks unremarkable and is not: personnel data become audit-relevant. A figure that was previously reported internally and was roughly right must now be derivable, consistent and evidenced.

Most of these data sit where the calculating already happens – in payroll and the personnel master data. Payroll thereby becomes the data source for a reporting regime it was never built for. That is exactly where the practical difficulties arise: definitions, reference dates and delimitations that never had to be settled internally, because nobody audited them.

3. Core principles and how it works

ESRS S1 concerns the own workforce

Workforce structure, forms of employment, pay and pay differences, occupational safety, training, social dialogue.

The information is externally audited

Personnel data are therefore subject to requirements familiar from financial reporting: derivability, consistency, evidence.

Definitions must be settled and documented

What counts as an employee, at which reference date, with what delimitation? Without a settled definition a figure is neither auditable nor usable over time.

Payroll is the main source

It supplies headcount, pay data and forms of employment – and was not built for it. The derivation belongs described, not improvised.

Data protection limits the collection

For individual items, characteristics may not be collected or only with consent. What is then reported are outcomes, not characteristics.

Businesses with no duty are affected too

Information is requested through supply chains and financing partners. The effect reaches well beyond the immediate scope.

The legal position is in motion

Scope and dates have been adjusted several times. Who must report and from when belongs checked against the current position.

4. Who is Nachhaltigkeitsberichterstattung (sustainability reporting) relevant for?

  • Businesses subject to the duty – for them it is an obligation with an audit consequence.
  • Suppliers and service providers – they receive data requests even with no duty of their own.
  • HR – they supply the largest part of the social information.
  • Payroll – the raw data sit with them, and they have to be able to explain the derivation.
  • Finance and auditors – they integrate the information into the reporting process.

5. How it differs from related terms

- CSRD and ESRS – the directive creates the duty, the standards set the content. - The sustainability report and the management report – the information is part of corporate reporting, not a separate document. - ESRS S1 and S2 – S1 concerns the own workforce, S2 workers in the value chain. - CSRD and supply chain due diligence – two different regimes with overlapping data requirements but duties of their own. - Sustainability reporting and HR controlling – the same data, a different purpose. Controlling steers, the report discloses – and is audited.

6. Variants and adaptations

Situations in practice:

- Directly subject to the duty – full application of the ESRS with external audit. - Indirectly affected – data requests from customers, clients or banks, with no duty of one's own. The most common case in practice. - Group reporting – subsidiaries supply data without reporting themselves; the definitions then come from the parent. - Voluntary reporting – with no duty, but with the same questions of definition. - Preparing without a current duty – given the moving legal position, sensible for many.

7. Advantages and challenges

Advantages

  • Makes social measures comparable that were previously reported at will
  • Forces clean definitions, from which internal steering also benefits
  • Pay differences and occupational safety become visible rather than asserted
  • The data work improves the quality of personnel master data overall
  • Those who are prepared can answer supply chain requests quickly

Challenges

  • Considerable effort, particularly in first building the data basis
  • Payroll becomes the data source for a reporting regime it was not built for
  • Definitions and delimitations have to be settled for the first time
  • Data protection limits the collection of individual characteristics
  • The legal position is in motion, which makes planning harder
  • Businesses with no duty carry effort too, through supply chain requests

8. Best practices for implementation

Start with data availability, not with the report

Which of the required items exist today, which do not? That stocktake is useful independently of the moving legal position – and it is the larger part of the work.

Settle definitions in writing

The definition of an employee, reference dates, the delimitation of forms of employment. Without settling them no item is auditable and no time series sound.

Document the derivation from payroll

Which report, which filter, which reference date. The audit asks about the derivation, not about the figure.

Settle data protection in advance

For individual items, characteristics may not simply be collected. Where that is so, outcomes are reported rather than characteristics.

Plan for supply chain requests

Requests arrive even with no duty of your own. Holding the data ready means answering them in hours rather than weeks.

9. Tips for employers and employees

For employers

  • **Data availability first** – it is the larger part of the work and useful whatever the legal position
  • **Settle and document the definitions** – the audit asks about the derivation
  • **Payroll becomes a reporting source** – it was not built for that
  • **Check the scope against the current position** – the legal position is in motion

For employees

  • **The report makes comparable things visible** – pay differences and occupational safety, for instance
  • **Your data are reported in aggregate** – not personally
  • **Social dialogue is a reporting subject** – including collective agreement coverage and co-determination
  • **Ask about the report** – it is public and says something about the employer

10. Conclusion

For HR, sustainability reporting is less a communication task than a data task. ESRS S1 requires information on workforce structure, pay, occupational safety, training and social dialogue – and that information is externally audited. Personnel data are therefore subject to requirements previously known only from financial reporting: they must be derivable, consistent and evidenced.

The practical core therefore sits in an unspectacular place: most of these data come from payroll and the personnel master data – from systems never built for reporting. The difficulties arise not in producing the report but before it: in definitions, reference dates and delimitations that never had to be settled internally, because nobody audited them.

For a subsidiary the most common situation is a particular one: it supplies data without reporting itself, and the definitions come from the parent. That is where the delimitation problems appear, because German forms of employment – marginal employment, partial retirement, time-value accounts – rarely fit a group scheme cleanly. And where characteristics may not be collected, what gets reported are outcomes, not characteristics.

An express reservation on the legal position: the scope and the dates of the reporting duty have been adjusted several times at European level and remain in motion. This entry therefore deliberately states no thresholds and no years. Who has to report and from when belongs checked against the current position – the work on data availability is worth doing regardless, if only because supply chain requests reach businesses with no duty of their own.

Sources

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