According to recent communications, the requirements of EU’s Corporate Sustainability Reporting Directive (CSRD) are expected to be eased. However, no changes have yet been made to Finnish legislation. Moreover, the original need for sustainability-related information, and the benefits it provides, remain unaltered.
In recent years, Europe has seen significant regulatory changes concerning sustainability reporting. As of early 2024, the CSRD requirements were also implemented into Finnish legislation. Under the directive, all companies that meet the criteria for large enterprises are required to report, starting in 2025, on how sustainability matters are managed within the company, in accordance with the CSRD framework.
Unexpectedly, in spring 2025, the European Union proposed easing the regulation and postponing the reporting obligation for most unlisted large companies by two years. This has left many companies considering how best to proceed in this situation.
Information needs remain unchanged
Heikki Mäki, from VALOR Partners’ Investment Banking team, has been working with sustainability reporting since the adoption of CSRD. He emphasises the importance of actively monitoring regulatory developments while avoiding hasty decisions, at this stage.
“Even if the regulatory obligation to publish a sustainability report is temporarily lifted, the original purpose of the regulation remains the same,” Mäki highlights. “The goal was for companies to report on key issues in a comparable, reliable, and consistent manner across organisations.”
He adds that key stakeholders, such as banks, financiers, investors, and major customers, still require this information and will continue to request it in the future. It is also worth noting that for now, the Finnish legislation has remained unchanged, and the law, as it currently stands, still mandates reporting.
At the beginning of the year, voluntary reporting standards aimed at SMEs were also published. These are significantly more concise than the requirements set out in the directive.
“These standards are very clear and essentially focus on ten key topics that every company should be able to report on, regardless of size,” Mäki notes.
Voluntary reporting builds trust
Many companies have already made significant progress in preparing their reporting and are now questioning whether the effort was in vain. Mäki encourages them to utilise the collected data and proceed with publishing the report.
“Companies that voluntarily share their story, set sustainability targets, and monitor progress earn trust,” he says.
According to Mäki, this also reflects on the financial side with more favourable financing terms. Certain green finance instruments require that specific sustainability criteria are met.
“For example, in corporate transactions, emissions and social responsibility issues have long been considered as part of valuation and risk assessment. That is not going to change.”
The new voluntary standard for SMEs has been specifically designed to meet the information needs of the banking and financial sectors. Mäki believes that large companies may also scale down their reporting in this direction, at least until more detailed guidance from the EU becomes available.
Sustainability is part of quality in Finnish companies
In his work, Mäki has observed that sustainability practices in successful Finnish companies are typically of a high standard. They are closely tied to the quality of delivered products, the treatment of customers, subcontractors, and employees, as well as full compliance with applicable laws.
“The sustainability reporting requirement does not change the fact that these principles have been at the core of operations and strategies for many years,” Mäki says. “Reporting simply brings them to light.”
He points out that producing the data required by the reporting framework is not an overwhelming task. Most of the information is already available in companies, it simply needs to be structured and linked to measurable goals. However, support from an external expert is recommended at the start to ensure focus on issues that truly matter from a competitiveness and risk management perspective.
“Every company knows its own operations best, but identifying the most essential topics can still be challenging. The project easily becomes overly complex if you start tracking every detail and collecting an excessive amount of data,” Mäki explains.
“Clear guidelines and a joint reflection on what truly matter to the company, how it performs in these areas, what is communicated and how, and developing a structured process, enable the company to continue managing the sustainability reporting independently and efficiently in the future.”
Sustainability reporting is a strategic decision at KSS Energy Group
Heikki Mäki has supported KSS Energy Group in launching its sustainability reporting efforts and establishing its sustainability goals.
According to Tuulia Halmesarka, CFO at KSS Energy, the support from a partner with deep expertise in the field was extremely valuable in initiating the reporting process, as it ensured an efficient start to their work.
“Instead of an extensive orientation and research phase, the Group’s sustainability forum was able to focus its time on working with employees and stakeholders from the very beginning,” she says.
Halmesarka adds that, ultimately, sustainability work is about purposeful stakeholder collaboration and the ongoing flow of everyday actions and choices. That is where organisations should focus their resources.
Sustainability is significant in the energy sector
The recent changes regarding sustainability reporting have not affected practical measures, operational planning, target setting or decision-making at KSS Energy Group in advancing its sustainability goals. Sustainability and reporting remain particularly significant in the energy sector and are strongly aligned with the Group’s strategy. The investments toward carbon neutrality are substantial, and emission reduction targets guide operations, while representing one of the most important long-term objectives set by the owner.
“Sustainability strengthens our competitiveness in working with customers, employees, suppliers, financiers, and partners. Green financing is an opportunity we actively consider in our investments. These factors call for high-quality sustainability reporting, which can also be carried out in accordance with the voluntary VSME framework,” Halmesarka summarises.
text: Catarina Stewen