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What is ESG reporting, and should you be doing it?
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Media > All articles > ESG Initiatives > What is ESG reporting, and should you be doing it?

What is ESG reporting, and should you be doing it?

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In this article, we’ll delve into what ESG reporting requires, why it’s important for businesses, and what benefits it can bring.
ESG / CSR
2025-03-26T00:00:00.000Z
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ESG reporting has become a key part of how businesses operate - it's not just a way to showcase values but also to measure and communicate them. As investors, regulators, and customers increasingly expect transparency around how companies manage environmental, social, and governance risks, ESG reporting provides the framework for meeting those expectations.

ESG stands for Environmental, Social, and Governance. But it’s the reporting part that turns these broad themes into actionable insights, helping companies track progress, identify risks, and build trust with stakeholders.

As climate concerns, social expectations, and demands for corporate accountability continue to grow, ESG reporting has taken on a more central role. It’s now seen as a key marker of credibility and commitment.

In this article, we’ll delve into what ESG reporting requires, why it’s important for businesses, and what benefits it can bring.

What is ESG reporting?

ESG reporting is the process through which companies disclose data on their environmental, social, and governance performance. This can include everything from carbon emissions and energy use to diversity metrics, supply chain practices, and board structure.

The goal is to give stakeholders, including investors, regulators, customers, and employees, a transparent view of how the company is managing risks and opportunities linked to sustainability and ethical business conduct.

There’s no single universal standard for ESG reporting, but many companies use recognised frameworks like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), or the Task Force on Climate-related Financial Disclosures (TCFD) to structure their reports.

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What are ESG reporting criteria?

ESG reporting is built around three core pillars: environmental, social, and governance performance. Each one covers a range of topics that companies may choose to report on, depending on their sector, size, and applicable regulations.
  • Environmental: This pillar looks at how a company’s activities affect the natural world. It can include metrics like greenhouse gas emissions, energy and water use, waste management, and investment in clean technologies, as well as how the company identifies and manages climate-related risks.
  • Social: The social aspect focuses on how a company treats people, from employees and suppliers to customers and communities. It covers areas such as labour practices, human rights, workplace diversity, and community engagement.
  • Governance: Governance relates to how a company is run. It includes policies and practices around transparency, ethics, and accountability, with common metrics including board composition, executive pay, and anti-corruption efforts.

The following table showcases some examples of ESG factors that fall under each category:

Metric Description
Environmental Metrics
Carbon emissions The total greenhouse gases produced directly and indirectly by a company.
Product carbon footprint The total emissions produced over the lifecycle of a product.
Climate change vulnerability The extent to which a company is exposed to the risks posed by climate change.
Use of natural resources The consumption of natural resources such as water, minerals, and fossil fuels.
Waste management How a company handles waste production, reduction, recycling, and disposal.
Opportunities in clean tech and renewable energy Investment and utilization of technology and energy sources that reduce environmental impact.
Social Metrics
Labor management Practices related to hiring, training, employee relations, and labor rights.
Health and safety Measures to ensure the safety and well-being of employees in the workplace.
Product safety and quality Standards and practices to ensure products are safe for consumers and meet quality criteria.
Privacy and data security Measures to protect customer and employee data from unauthorised access and breaches.
Access to healthcare and finance Availability of health benefits and financial services to employees and communities.
Governance Metrics
Corporate governance The system of rules, practices, and processes by which a company is directed and controlled.
Board diversity The inclusion of diverse members in terms of gender, ethnicity, and experience on the board.
Executive pay Compensation practices for top executives, including transparency and fairness.
Business ethics Adherence to ethical guidelines and standards in business operations and decision-making.
Tax transparency The clarity and openness in disclosing a company's tax practices and payments.

What's the difference between ESG and CSR?

ESG (Environmental, Social, and Governance) and CSR (Corporate Social Responsibility) often get mentioned in the same breath, and while they’re closely related, they serve different purposes.

CSR is about companies taking responsibility for their social and environmental impact. This often plays out through initiatives like ethical sourcing, community programmes, and charitable donations. The idea has been around for over a century, with early examples found in the philanthropic efforts of business leaders like Andrew Carnegie and John D. Rockefeller.
ESG, on the other hand, is a more structured evolution of CSR. While CSR is typically values-driven and focused on doing the right thing, ESG adds a measurable, reportable framework. It turns those good intentions into data, allowing companies to track progress and stakeholders to see the full picture.

For example, a tech company might commit (through CSR) to lowering its carbon footprint and supporting local communities. ESG reporting would then quantify that impact.

Think of it this way: CSR sets the intention, ESG reporting shows the results.

ESG reporting standards

With hundreds of ESG frameworks in use around the world, it’s no surprise that many companies struggle to figure out which ones to follow. The landscape is fragmented, and different stakeholders often expect different things, making it hard to report in a consistent, meaningful way.

This lack of standardisation has led to some well-known cases of companies appearing to perform well on paper, only to face major controversies later. Both Volkswagen and Boohoo, for example, received strong ESG ratings before facing backlash over emissions cheating and labour abuses.

In response, some industries have started building more unified reporting frameworks. One example is the ESG Data Convergence Initiative, launched by the private equity sector to create a common set of ESG metrics and improve comparability across firms. But like many initiatives in this space, it’s voluntary, and private equity firms still have to navigate a patchwork of ESG expectations from investors, regulators, and other stakeholders.

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ESG reporting frameworks

Given the fragmented landscape of ESG standards, many companies choose to adopt established frameworks to bring structure and credibility to their reporting. These frameworks provide guidance on what to disclose, how to present it, and who the intended audience is, whether investors, regulators, or the general public.

Using a recognised framework not only helps improve the quality and consistency of ESG reports but also makes it easier for stakeholders to compare companies on a like-for-like basis.

Here’s an overview of some of the most widely used ESG reporting frameworks and what they focus on:

Framework Focus Key Features
Global Reporting Initiative (GRI) Broad sustainability impacts Covers economic, environmental, and social topics; modular and sector-specific; widely adopted globally
Sustainability Accounting Standards Board (SASB) Financially material ESG data for investors Industry-specific standards; focuses on ESG factors that impact financial performance
Task Force on Climate-related Financial Disclosures (TCFD) Climate-related financial risks Recommends disclosures on governance, strategy, risk management, and metrics related to climate
Carbon Disclosure Project (CDP) Environmental impact reporting Companies disclose data on climate change, water security, and deforestation; data used by investors
International Integrated Reporting Council (IIRC) Integrated reporting Integrates financial information with sustainability performance to offer a holistic view of the organisation’s value creation over time
UN Global Compact (UNGC) Corporate sustainability principles Encourages adoption of ten principles on human rights, labour, environment, and anti-corruption; requires annual progress reporting
EU NFRD / CSRD EU sustainability reporting regulations NFRD mandates non-financial disclosures for large public-interest entities; CSRD expands scope and depth of reporting
Streamlined Energy and Carbon Reporting (SECR) UK energy and emissions disclosure Requires large UK companies to report on energy use, GHG emissions, and energy efficiency actions

By aligning with one or more of these frameworks, companies can improve the clarity, reliability, and impact of their ESG reports while also staying ahead of evolving regulatory requirements. Choosing the right framework often depends on your industry, location, and the expectations of your stakeholders.

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Is ESG reporting mandatory?

The short answer: it depends on where your company operates and what kind of organisation you are.

Over the past few years, ESG reporting has shifted from being largely voluntary to a more regulated space, especially in the EU and UK. While there’s still no global standard, the direction of travel is clear: companies are increasingly being required to report on their environmental, social, and governance performance.

Let’s break it down by region.

European Union (EU)

The EU has introduced a comprehensive suite of regulations that make ESG reporting mandatory for a wide range of companies, both inside and outside the bloc. The Corporate Sustainability Reporting Directive (CSRD) is the cornerstone of this, replacing the older NFRD and significantly expanding the scope and depth of reporting obligations.

But CSRD is just one piece of a broader regulatory puzzle. Financial institutions must also comply with the Sustainable Finance Disclosure Regulation (SFDR), and new legislation like the Corporate Sustainability Due Diligence Directive (CSDDD) is pushing ESG responsibilities further into the supply chain. The EU Taxonomy, CBAM, and the Fit for 55 package round out the framework, all aimed at driving transparency and accelerating the green transition.

Here’s a summary of the major EU ESG-related regulations:

Regulation/Directive Scope Key Requirements
Corporate Sustainability Reporting Directive (CSRD) Large EU companies, listed SMEs, and non-EU companies with significant EU activity Detailed ESG disclosures using ESRS, to be included within management reports alongside financial statements; phased implementation through 2028.
Sustainable Finance Disclosure Regulation (SFDR) Financial market participants and financial advisors Disclose how sustainability risks are integrated into investment decisions
Corporate Sustainability Due Diligence Directive (CSDDD) Large EU and non-EU companies with EU operations Identify, prevent, and mitigate adverse environmental and human rights impacts
EU Taxonomy Regulation All companies under CSRD and SFDR reporting Define and disclose environmentally sustainable activities
Carbon Border Adjustment Mechanism (CBAM) Importers of certain carbon-intensive goods Report emissions from imported goods; comply with carbon pricing
Fit for 55 Package EU-wide climate policy package Includes updates to ETS, CBAM, and other climate legislation to cut emissions 55% by 2030

United Kingdom (UK)

The UK has taken a slightly more fragmented approach, with ESG requirements spread across several frameworks and departments. While there’s no single regulation equivalent to the EU’s CSRD, many companies - especially large ones - are subject to multiple overlapping obligations.

These include mandatory energy and emissions disclosures, climate-related financial reporting, and upcoming sustainability labelling rules to tackle greenwashing. NHS suppliers, too, are increasingly being asked to demonstrate sustainability performance as part of procurement requirements.

Here’s a summary of the UK’s current ESG reporting frameworks:

Regulation/Framework Applies To Key Requirements
Streamlined Energy and Carbon Reporting (SECR) Large quoted and unquoted companies and LLPs Disclose energy use, GHG emissions, and efficiency actions in annual reports
FCA TCFD-Aligned Climate Reporting UK-listed companies and FCA-regulated asset managers/owners Annual climate disclosures aligned with TCFD
Climate-Related Financial Disclosure (CRFD) UK-registered companies with 500+ employees or £500M+ turnover Disclose climate risks and transition strategies, based on TCFD approach; included in the Non-Financial and Sustainability Information (NFSI) section of the strategic report
UK Sustainability Disclosure Standards (SDS) All UK entities using sustainability-related terms in finance/marketing (expected by in 2025) Sustainability Disclosure Standards (SDS) will align with the International Sustainability Standards Board (ISSB) – bringing the UK’s ESG reporting into line with global expectations while reducing greenwashing and improving consistency
Energy Savings Opportunity Scheme (ESOS) Large organisations meeting the qualification criteria Conduct energy audits every 4 years across buildings, transport, and operations
NHS Evergreen Sustainable Supplier Assessment NHS suppliers (phased rollout) Submit sustainability assessments tied to NHS contract eligibility

United States (US)

In contrast to the EU and UK, ESG reporting in the US remains largely voluntary at the federal level, but that doesn’t mean companies can ignore it. Investor pressure, consumer expectations, and state-level legislation are all pushing businesses toward greater ESG transparency.

In 2024, the Securities and Exchange Commission (SEC) finalised a climate disclosure rule that would have required public companies to report detailed climate-related information in their filings. However, the rule was met with legal challenges, and by early 2025, the SEC signalled that it would no longer defend it in court, effectively stalling the effort.

That said, companies are still required to disclose material ESG risks in their SEC filings if those risks could impact financial performance. For many large businesses, this includes climate change, diversity and inclusion, or governance-related issues.

Meanwhile, several US states have taken matters into their own hands:

  • California introduced landmark climate disclosure laws in 2023: SB 253 (Climate Corporate Data Accountability Act) and SB 261 (Climate-Related Financial Risk Act). These laws apply to both public and private companies operating in California, with thresholds starting at $1 billion and $500 million in annual revenue, respectively.
  • The laws require companies to report on greenhouse gas emissions (including Scope 3) and disclose climate-related financial risks, starting from 2026 for the emissions data and 2026 for risk reporting.

Large US companies are also often expected to report voluntarily using frameworks like TCFD, SASB, or GRI, especially if they have global operations or investor demand for ESG transparency.

What are the benefits of ESG reporting?

Even when it’s not legally required, ESG reporting offers clear strategic value. It helps companies build resilience, stay ahead of regulation, and strengthen relationships with key stakeholders, from customers and investors to employees.

Here are some of the key benefits:

  • Preparing for future regulation: Reporting ESG metrics voluntarily is a smart form of risk management. It gives your company time to develop effective strategies, build internal systems, and integrate ESG into day-to-day operations, before disclosure becomes mandatory.
  • Meeting customer expectations: Consumers are paying closer attention to the values behind the brands they support. A recent survey found that 78% of people prefer to buy from companies that are environmentally responsible. ESG reporting helps build credibility and trust, boosting both brand reputation and sales.
  • Attracting investors: Investor interest in ESG is rising fast, with ESG-aligned investments projected to make up 50% of US-managed assets by the end of 2025. Transparent reporting can improve access to capital by appealing to investors looking for responsible, lower-risk companies. A lack of ESG data, on the other hand, can raise red flags.
  • Engaging and retaining employees: Strong ESG performance can also be a powerful tool for talent attraction and retention. One study found that 64% of millennials wouldn’t take a job at a company without a clear CSR policy, and 84% said they’d be more loyal to employers that take social and environmental issues seriously. ESG reporting helps signal those values and shows that your company is taking action, not just talking about it.
  • Improving financial performance: Companies with strong ESG credentials tend to outperform their peers. Why? Because ESG strategies can help reduce operational costs, increase productivity, and identify new market opportunities. They also make companies more resilient in times of crisis, whether environmental, economic, or reputational.
  • Identifying risks and improving operations: The reporting process itself often reveals valuable insights. ESG audits can uncover inefficiencies, compliance risks, or supply chain issues that might otherwise go unnoticed, helping businesses strengthen operations and plan more effectively for the future.
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How to implement effective ESG reporting

Deciding to report on ESG is a meaningful step, but turning that decision into action takes planning, structure, and commitment. Here’s a step-by-step approach to building a reporting process that’s credible, useful, and aligned with your broader business goals:

1. Build the right team

Start by assembling a cross-functional ESG team with representatives from key departments, such as finance, HR, operations, legal, and sustainability. This group will be responsible for overseeing your reporting process, coordinating data collection, and ensuring your ESG efforts reflect your company’s values and strategic priorities.

2. Identify what matters most

Conduct a materiality assessment to determine which ESG topics are most relevant to your business and stakeholders. This involves speaking with employees, investors, customers, and suppliers, reviewing industry benchmarks, and analysing current and upcoming regulations. The goal is to focus your reporting on the issues that matter, not just everything that could be reported.

3. Set clear, measurable goals

Once you’ve identified your material ESG issues, define specific goals to address them. Use the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) to ensure your targets are realistic and trackable. These might include cutting emissions, improving supply chain transparency, or increasing board diversity.

4. Build an ESG strategy and roadmap

Develop a practical roadmap that outlines how you’ll reach your goals. Include clear actions, responsibilities, timelines, and KPIs to track progress along the way. Your strategy should be ambitious but adaptable and able to evolve as your business grows or as regulations shift.

5. Set up robust data systems

Accurate reporting depends on strong data. Implement tools and systems that make it easy to track ESG metrics across your operations. Ensure your data is consistent, verifiable, and regularly reviewed, especially if you’re reporting against frameworks like GRI, SASB, or TCFD.

6. Report transparently

Use recognised ESG reporting frameworks to structure your disclosures and ensure comparability. Communicate your progress and your challenges clearly. Whether you're publishing a formal ESG report or embedding disclosures in your annual report, transparency helps build trust with investors, customers, and employees.

7. Embed ESG into your culture

For ESG to be effective, it can’t sit in a silo. Engage your broader team by weaving ESG values into everyday operations and decision-making. Offer training, set internal expectations, and recognise teams or individuals who contribute to your sustainability efforts.

8. Monitor and refine

Review your progress. Use data, feedback, and industry developments to assess what’s working and where adjustments are needed. ESG is not a one-off exercise but an evolving process of learning, adapting, and improving.

9. Commit to long-term improvement

Perfection isn’t the goal - progress is. Start where you are, build strong foundations, and make steady improvements over time. The companies that get ESG right aren’t necessarily the ones with the flashiest reports, but those that stick with it and make it part of how they do business.

ESG infographicESG infographic

ESG reporting challenges

While ESG reporting offers significant benefits, implementing it effectively can be a real challenge, especially for companies just getting started. The process often involves new systems, cross-departmental coordination, and evolving regulatory expectations.

Below are some of the most common ESG reporting challenges and practical ways to address them:

Challenge Description Suggested Solutions
Data collection and quality Difficulty in gathering accurate and complete ESG data due to fragmented sources and inconsistent standards Invest in integrated data systems and conduct regular audits to ensure data reliability
Lack of standardisation No universal ESG reporting standard leads to confusion and inconsistency across frameworks Use widely recognised frameworks (GRI, SASB, TCFD) to bring structure and comparability
Resource constraints High time, resource, and expertise demands can overwhelm smaller teams or companies Prioritise key issues, automate processes, and seek external support where needed
Stakeholder alignment Conflicting expectations from investors, customers, and regulators can be difficult to manage Engage stakeholders early and often to align ESG priorities and expectations
Integration into corporate strategy Resistance to embedding ESG within operations Ensure leadership buy-in and provide ongoing education and internal communication
Regulatory compliance Keeping up with shifting regulations across jurisdictions adds complexity Stay informed on regulatory updates; consult legal and ESG professionals regularly
Ensuring data transparency Reports must be credible and trustworthy; a lack of transparency undermines stakeholder trust Adopt strong governance practices and consider third-party verification of reports
By anticipating these challenges and putting the right systems and processes in place, companies can build a more credible, consistent, and resilient ESG reporting structure. Over time, this not only improves reporting quality but also strengthens internal decision-making and stakeholder trust.
man in a suit looking at a report

How Greenly can help with ESG reporting

Greenly offers a comprehensive suite of carbon management services designed to assist companies at every stage of their ESG reporting and sustainability journey. Here's how Greenly can support your efforts:

Start your climate journey by measuring your GHG emissions

  • Carbon assessment - Calculate your Scope 1, 2, and 3 emissions. With the support of our climate expert team, build custom action plans aimed at reducing these emissions.

Decarbonise your supply chain

  • Supplier engagement - Engage your suppliers in your journey to Net Zero, helping them reduce their carbon emissions and monitor their progress.
  • Supply chain optimisation - Identify the most wasteful suppliers and replace them with less carbon-intensive alternatives. Analyse your Scope 3 emissions to improve transparency in your ESG communications.

Determine your product's full impact with Life Cycle Assessment

  • Life Cycle Assessment (LCA) - Conduct a comprehensive LCA to provide transparency to your customers and gain a competitive edge. Understand the full environmental impact of your products and identify areas for improvement.

Build your carbon action blueprint

  • Decarbonisation roadmap - Establish a detailed roadmap for decarbonisation, complete with science-based reduction goals and actionable steps toward achieving Net Zero.
  • Customised actions - Choose industry-specific actions and follow step-by-step implementation guidelines. Leverage Greenly's proven tools and expertise to assess reduction potential and associated costs.

CSRD with Greenly

  • CSRD guidance - Navigate the complexities of the Corporate Sustainability Reporting Directive (CSRD) with Greenly's specific tools and dedicated platform.

Align with SBTi

  • SBTi alignment - Start your journey with the Science Based Targets initiative (SBTi) and rely on Greenly to guide you through the validation process. Our team will expertly collect and analyse global sustainability and emissions data to support your efforts.

Greenly's comprehensive services and expert support can help your company effectively measure, manage, and report its ESG performance, driving towards a more sustainable future. For more information and to get started on your ESG journey, visit our website.

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