From our practice: How is an ESG report created for a property developer?

What does it take to prepare an ESG report, where to start, what problems are encountered during implementation and what benefits can reporting bring to a company? We summarize our experience with preparing an ESG report for a Czech property developer.

Reporting sustainability data to EU standards will be an obligation for all companies affected by the CSRD. ESG disclosure is also essential for relationships with banks, investors and other business partners. Moreover, in real estate, sustainability is increasingly required by customers themselves. These were the main reasons why a real estate developer focusing on sustainable solutions decided to publish an ESG strategy and ESG report. Read step by step how we helped the company to become a pioneer in ESG reporting in the property development sector.

ESG reporting is one of the main topics we focus on. We were directly involved in the development of the EU standards for sustainability reporting - our team leader is a member of the EFRAG Sustainability Reporting Board, which is responsible for the development of the EU standards. Thanks to our expertise, we also collaborated on the development of a unique ESG reporting guide for the Prague Stock Exchange and the European Bank for Reconstruction and Development.

1. Identification of material topics

Before a company begins to develop an ESG strategy or report, it needs to assess what ESG topics and areas are material to its business in terms of negative impacts, risks or opportunities

Therefore, as a first step, we prepared what we call a materiality analysis for the client, where we identified which topics to focus on in the strategy and report based on the company's business model. A description of how the company has assessed its material topics is also a mandatory part of the reporting according to EU standards. "The analysis is based on objective criteria relating to ESG impacts and financial risk reversals, not on a survey of what stakeholders think or how the company perceives things," adds Filip Gregor, head of Frank Bold Advisory and member of the EFRAG Sustainability Reporting Board.

2. Help with data collection and process set-up

We then explained to the client which data we would need from them for the ESG report and prepared materials for them to complete. In general, the better the quality of the materials the client provides us with, as per our instructions, the easier and faster we can produce the report.

Similarly, we helped the client identify the data it needs to collect from its suppliers for ESG reporting. "Our goal is not just to provide the client with one-off deliverables, but also to help them navigate the EU ESG framework and set up processes for data collection. This will make the client's job easier in subsequent reporting periods," explains Gregor's approach.

3. Policy review and preparation of ESG strategy

Based on an analysis of material issues, we reviewed the client's existing ESG policies and proposed adjustments to align with the EU ESG framework and best practice. EU legislation defines the minimum set of policies expected of a company. However, it is important that the policies are specific and assist the company in business decision making.

As a next step, we developed a comprehensive ESG strategy in which we set strategic goals and commitments for important topics in collaboration with the client. "While the CSRD does not require company to adopt specific objectives or measures, for material topics, firms should address specific objectives and commitments, as they will be asked about them by investors and banks and as material impacts may pose a risk to the firm going forward," says reporting consultant David Janků. For example, a company in the construction and property development sector typically adopts climate, circular economy and biodiversity targets, he says.

4. Creating an ESG report

After the client provided us with the necessary information, we started working on the ESG report. "A common mistake companies make in their reports is to focus on CSR activities, philanthropic projects, sponsorship or volunteering and neglect the impacts that the company's activities cause, contribute to or are linked to by business relationships. A focus on CSR is of course welcome, it is just not covered by EU ESG standards. They require companies to focus on their real impacts," says Gregor, describing one of the main principles of reporting under the EU standards. 

The resulting ESG report for the developer follows the structure of the EU standards, making it easier for the company to communicate with banks and other business partners. It looks at identified major themes such as climate change, circular economy, water efficiency, biodiversity, own employees and so on, with specific KPIs and plans for each.

What benefits has the company gained?

By having the final ESG report written with the EU ESG framework in mind, the company can more easily meet the information requirements of its banks, investors and business partners. Moreover, thanks to our work, the company understood what data is appropriate to collect and how to make the process as easy as possible (for example, through a questionnaire for suppliers). Finally, the client gained valuable insights into its negative impacts, including a coherent ESG strategy to help address these impacts.

Get a head start with ESG reporting

We help companies to prepare ESG reporting according to the new European legislation, and thus obtain key data for their clients, business partners and financial institutions.