In recent years, the importance of environmental impact has shifted from being a customer-driven marketing focus to a critical operational consideration for businesses. Previously, many companies would track and report on sustainability if it resonated with their customer base. However, sustainability reporting is becoming a requirement with regulatory shifts like Australia’s Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill and the European Union’s Corporate Sustainability Reporting Directive (CSRD) that both come into effect in January 2025.
- The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act is a legislative development in Australia to enhance the resilience and transparency of the nation's financial market infrastructure. This Act introduces mandatory climate-related financial disclosure requirements that aligns with global standards to provide stakeholders with consistent information on climate-related risks and opportunities. The Act also strengthens regulatory framework by granting the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) broader authority to supervise and manage financial market infrastructures.
- The European Union's Corporate Sustainability Reporting Directive (CSRD) mandates comprehensive sustainability reporting for large entities and small & medium-sized entities (SMEs). The CSRD requires these companies to disclose detailed information on environmental, social, and governance (ESG) factors.
These regulatory changes signal increased reporting requirements for Australian businesses, especially those engaging with international markets or working within regulated industries.
As part of its comprehensive business functionality, Dynamics 365 Business Central offers a sustainability management feature that helps you monitor and manage your organisation’s effect on the environment. Released at the start of 2024, this feature is currently designed to oversee and regulate an organisation’s environmental footprint by tracking various greenhouse gas emissions. In the future, the sustainability feature will also monitor water and waste management. This fulfils Microsoft’s vision to turn organisational data into insights and action.
Key Features of Sustainability Management in Business Central
- Centralised tracking of greenhouse gas emissions via journal or purchase order
- Role-based access to sustainability data
- Emission scorecards and goals
- Vendor and item sustainability certificate tracking
- Modern reporting and analytics
- New sustainability accounts and ledger integration
Current Capabilities and Future Plans for Sustainability in Business Central
The current version of the Sustainability feature tracks greenhouse gas emissions with a focus on carbon footprint (CO2) across all three emission scopes as defined by the CSRD. Tracking of Methane (CH4) and Nitrous Oxide (N2O) can also be tracked. Future iterations will include the ability to track water and waste management, and the feature can be extended to track other emissions.
Understanding the Three Emission Scopes of the CSRD
The CSRD has three scopes for reporting greenhouse gas emissions, that cover all aspect of the value chain. The scope of an emission is set in Business Central against a Sustainability Account and is then grouped for insight and reporting once registered.
- Scope 1: Direct Emissions includes emissions directly controlled by your organisation, such as fuel combustion in vehicles or oil burned in factories.
- Scope 2: Indirect Emissions from Purchased Energy includes emissions linked to purchased electricity, heating or cooling, such as gas and electricity used to heat an office.
- Scope 3: Other Indirect Emissions Across the Value Chain includes up- and downstream activities in the value chain, including emissions from products purchased and sold, and end-of-life disposal.
Getting Started
Resources & References
Microsoft’s documentation on Microsoft Learn is an excellent starting point, check it out at https://aka.ms/bcesg. You can also watch the Microsoft launch event that introduced the sustainability feature in Introducing: Sustainability in Business Central video below.
Testing in Sandbox Environment
In the sandbox environment, you can take advantage of the Contoso Demo Tool to explore the features of the sustainability module. This enables you to generate the setup and transactional data to simulate real-world scenarios. You can easily experiment and test the sustainability functionality, including tracking emissions, creating sustainability accounts, and generating reports. The sandbox provides you with a hands-on experience without affecting live data.
Is your organisation interested in the sustainability feature in Microsoft Dynamics 365 Business Central? Get in touch with FUJIFILM MicroChannel to organise a demonstration of the module to better understand how it can help you on your sustainability journey. Alternatively schedule a call back today from our experienced team.
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