Green Payroll – How Insights from the Payroll Process Can Contribute to Sustainability

Lön & HR | 04.06.2024

by Beatrice Lien

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The payroll system contains a wealth of useful data to promote strategic and systematic sustainability efforts within a company. This can be summarized as the concept of "green payroll," which involves extracting measurable sustainability data from the payroll process. Companies and payroll managers can thus use this information to create a more sustainable workplace and environment. In this article, we will explore how you can think about key metrics from the payroll system and sustainability reporting.


Key Metrics from the Payroll System 

Key metrics can be highly beneficial in a company's efforts to create a sustainable and responsible business model based on data, as they can provide insights into a company's current challenges and strengths. Based on these metrics, goals can be set, and sustainability efforts can be measured. 

The payroll system includes information on staff turnover, sick leave, hours worked including overtime, utilized wellness benefits, vacation leave taken, etc. This data can indicate how sustainably employees are working, as well as how well the employer is adhering to, for example, the Vacation Act regarding employees' use of vacation leave. If employees work extensive overtime combined with low vacation leave, it suggests that the staff is not getting sufficient rest and recovery, making it unlikely that they can maintain such a workload in the long run. 

Insights from the payroll survey can also be reused in sustainability efforts related to maintaining or achieving gender equality. 

It is beneficial if the payroll manager collaborates with those responsible for the company's sustainability efforts to get the most value out of the existing data. Consider contacting your payroll partner if you have outsourced payroll to review what information the payroll system can provide.


Sustainability Reporting 

The internal sustainability work that companies undertake is crucial for societal development in sustainability at large and significant for a company's ability to continue operating and developing its business. This affects its opportunities to secure desired investments, customers, and to hire sought-after talent. To make information about companies' sustainability efforts accessible, certain companies are required to report on sustainability. 

Companies that meet more than one of the conditions below for the past two financial years are required by the Annual Accounts Act to report on sustainability: 

  • The average number of employees in the company during each of the past two financial years has been more than 250. 
  • The company's reported balance sheet total for each of the past two financial years has been more than SEK 175 million. 
  • The company's reported net sales for each of the past two financial years have been more than SEK 350 million. 

Large public-interest companies with more than 500 employees are also subject to additional reporting requirements.


Sustainability Reporting - New Regulations

To direct capital towards more sustainable investment choices, reliable and comparable information from companies regarding environmental and social impacts, as well as corporate governance, is necessary. This is one of the goals of the EU Corporate Sustainability Directive (CSRD). The new directive imposes higher demands on the information that must be provided in a sustainability report and will cover more companies compared to current requirements.

The Swedish Parliament has approved the government's proposal to implement the directive, which will come into force on July 1, 2024. The new regulations will apply to companies whose financial year starts after June 30, 2024.

Initially, the regulations will apply to larger companies (more than 500 employees) and will gradually be extended to include more companies.


Even Without Legal Requirements 

Working on a company's sustainability is not only about complying with legal requirements but also about ensuring that the company and its employees are sustainable in the long term and that we care for the environment and the society we all live in. 


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About Beatrice Lien

Auktoriserad lönekonsult och kvalitetsansvarig för affärsområdet Pay.