Are you working in a small or medium-sized business? And do you find it difficult to understand how your business will be impacted by EU requirements on sustainability reporting? Then read on.

With the adoption of the EU legislation on ESG reporting (CSRD), it will soon be a legal requirement for the largest and publicly listed companies across Europe to report on their ESG data – meaning data related to the three categories: “Environment,” “Social,” and “Governance.”

As a smaller business, you are not directly obligated to report, but you should expect that larger companies within your customer base will require you to provide data on a range of sustainability parameters that they will need for their reporting.

This might seem a bit abstract, so let's take a look at a concrete example for a Herning-based SME in the near future.

When an Ambitious Player Like Topsoe Moves In

Topsoe announced in May 2022 that they have chosen Herning as the location for their electrolysis production facility – a key player in the green transition, which has landed in Herning.

Topsoe has long focused on developing solutions that contribute to the green transition and aims to become net-zero (CO2-neutral) by 2040. They have submitted their targets for validation by the Science Based Targets initiative (SBTi).

Already today, suppliers to Topsoe must adhere to the company’s Supplier Code of Conduct, and regardless of whether you are delivering craftsmanship services, cleaning services, materials, or something entirely different, you should expect to meet world-class standards.

At the end of 2022, Topsoe also received a platinum rating through EcoVadis, which evaluates more than 100,000 companies globally and compares them based on their sustainability efforts. A platinum rating is, of course, the highest rating a company can receive via this internationally recognized evaluation tool.

EcoVadis is a framework that measures, tracks, and compares companies on a range of sustainability parameters in four categories: Environment, Labor & Human Rights, Ethics, and Sustainable Procurement. With a platinum rating, Topsoe ranks in the top 1% of all evaluated companies globally.

What Will This Mean for Businesses and Citizens – or Potential Suppliers and Employees in Herning – When a Large and Ambitious Company Like Topsoe Arrives? And What Does the Excellent Score Mean?

Suppliers to Topsoe Will Be Required to Provide Sustainability Data

Topsoe's arrival in Herning will actually mean quite a lot for suppliers and partners to the company’s upcoming facility. They can expect to be asked to meet and document a range of parameters such as CO2 emissions, working conditions, and more. With Topsoe’s long history and new evaluation, their ambition and execution skills for sustainability are top-notch.

“We work with the Greenhouse Gas Protocol, CDP, and the Science Based Targets initiative as frameworks for our work to set reduction goals for the environmental impact of our solutions, and at the same time, to document both the effort and the result of our initiatives,” says Stinne Hjulmann, Sustainability Specialist at Topsoe.

“This means that we are already reporting on our greenhouse gas emissions in scope 1, 2, and 3, and we expect our suppliers to contribute with data about their production for our reporting, for example through CDP,” she continues.

In Topsoe’s Sustainability Report, you can read about how the company’s greenhouse gas emissions are distributed between internal operations and their upstream and downstream activities. Suppliers will need to provide this kind of data to Topsoe so they can contribute to Topsoe's future ESG reporting.

This will create a ripple effect, where smaller businesses will need to supply data to their customers on a range of environmental, social, and operational issues.

“Reporting requirements from the EU mean that we need to think across our value chain when it comes to data. Not least, the EU Taxonomy is a game changer, as life cycle analyses are an important component of this reporting,” says Stinne Hjulmann.

The Three Scopes for GHG Emissions

• Scope 1 – Refers to greenhouse gas (GHG) emissions that arise from a source owned or controlled by an organization. In Topsoe’s case, this includes all fossil fuels used, such as those involved in their catalyst production.

• Scope 2 – Refers to emissions that are indirectly associated with an organization, such as the purchase of electricity, heating, or cooling for their offices.

• Scope 3 – Refers to emissions that result from activities not owned or controlled by Topsoe but indirectly affect their value chain. In Topsoe’s case, scope 3 emissions mainly come from purchased goods and services.

About Topsoe

Topsoe was founded in 1940 and is one of the global leaders in developing solutions that reduce CO2 emissions and create more sustainable systems. Topsoe provides technology, catalysts, and services to transform the global energy system. Topsoe's mission is to combat climate change by helping its partners and customers achieve their reduction goals, particularly in challenging sectors such as aviation, shipping, and the production of essential raw materials. Headquartered in Kgs. Lyngby, Topsoe employs approximately 2,400 people globally.