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What is ESG reporting, and should you be doing it?
Level
By Kara Anderson, UK Copywriter, on 11/07/2023
Updated by Kara Anderson, on 21/04/2026
“ESG reporting has become a mandatory part of how businesses operate - it's not just a way to showcase values but a standardised system to measure and communicate them. ”
As investors, regulators, and customers now require transparency around how companies manage environmental, social, and governance risks, ESG reporting provides the legal and operational framework for meeting those requirements. It’s now seen as a key marker of regulatory compliance and global market access.
In this article, we will cover:
What modern ESG reporting involves
ESG versus CSR: key differences
Core environmental, social, governance criteria
Current mandatory global reporting regulations
Steps to implement effective reporting
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.
Note: While ESG reporting standards have historically been fragmented, the International Sustainability Standards Board (ISSB) now provides a global baseline for disclosure. Most companies align their reports with the ISSB standards (which now incorporate SASB and TCFD), the European Sustainability Reporting Standards (ESRS), or the Global Reporting Initiative (GRI) to ensure their data is comparable and compliant.
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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.
Understanding the difference between CSR and ESG
CSR
Corporate Social Responsibility focuses on ethical impact
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 seen in the philanthropic efforts of business leaders.
The idea has been around for over a century, with early examples seen in the philanthropic efforts of business leaders.
ESG
ESG turns sustainability into measurable performance
ESG is a more structured evolution of CSR. While CSR is values-driven, ESG introduces measurable and reportable criteria.
It transforms intentions into data, allowing companies to track progress and giving stakeholders clear visibility.
It transforms intentions into data, allowing companies to track progress and giving stakeholders clear visibility.
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 using standardised metrics to prove compliance.
“Think of it this way: CSR sets the intention, ESG reporting verifies the results.”
What are ESG reporting criteria?
ESG reporting is built around three core pillars: environmental, social, and governance performance. Each one covers a range of ESG criteria that companies must report on, depending on their sector, size, and the results of their double materiality assessment.
The three pillars of ESG
🌿
Environmental
This pillar looks at how a company’s activities affect the natural world, as well as how climate-related risks can impact its financial value.
🤝
Social
The social pillar focuses on how a company treats people across its entire value chain, from employees and suppliers to customers and communities.
🏛️
Governance
Governance relates to how a company is run, including its ethical conduct, transparency, and decision-making structures.
ESG reporting
Examples of ESG metrics companies track
ESG metrics help organisations measure environmental impact, social responsibility, and governance practices in a more structured, comparable way.
Environmental
Biodiversity & ecosystems
Impact on natural habitats and dependencies on ecosystem services.
Environmental
Product carbon footprint
Emissions produced over the lifecycle of a product.
Environmental
Climate change vulnerability
Exposure to risks posed by climate change (physical and transition risks).
Environmental
Use of natural resources
Water, minerals, and fossil fuels consumption.
Social
Value chain workers
Working conditions and human rights of people in the supply chain.
Social
Health and safety
Ensuring safety and well-being of employees.
Social
Product safety & quality
Standards ensuring safe and high-quality products.
Social
Privacy & data security
Protection of personal and sensitive information.
Governance
Corporate governance
Rules and processes for directing and controlling the company.
Governance
Board diversity
Inclusion of diverse members in leadership positions.
Governance
Executive pay
Fair and transparent compensation tied to sustainability performance.
Governance
Business ethics
Adherence to ethical standards, anti-bribery, and lobbying transparency.
Governance
Tax transparency
Clarity in disclosing tax practices and payments.
What are the main ESG reporting standards and frameworks?
While historically companies struggled with a fragmented landscape of hundreds of ESG frameworks, 2026 marks a new era of global consolidation. The industry has moved toward a global baseline that simplifies how companies report, making data more consistent and meaningful.
“This increased standardisation has been a direct response to cases where companies appeared 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 labor abuses. Today, mandatory audit requirements (assurance) make discrepancies like this much harder to hide.”
Given this consolidated landscape, most companies now adopt established global or regional standards to bring structure and legal credibility to their reporting.
“Using a recognised framework is now often a regulatory requirement, helping stakeholders compare companies on a like-for-like basis across international borders.”
ESG reporting
Common ESG reporting frameworks and standards
Different reporting frameworks serve different needs — from mandatory regional compliance to investor-facing disclosures and broader impact reporting.
| Framework / Standard | Focus | Who it’s best for | Key features |
|---|---|---|---|
|
ISSB (IFRS S1 & S2)
|
Global baseline |
Multinationals and listed companies seeking global capital or operating in ISSB-adopting countries (e.g. Australia, Brazil, Singapore).
|
The primary global standard
Now fully incorporates SASB and TCFD
Designed to provide investor-grade data
|
|
ESRS (under CSRD)
|
EU mandatory |
Companies with significant EU operations (€450M+ turnover) or those supplying large EU firms that require data.
|
Detailed, mandatory disclosures
Uses double materiality
Covers both financial and social impacts
|
|
GRI
|
Impact & stakeholders |
Consumer brands, NGOs, and private firms wanting to show their impact on people and the planet to a broad audience.
|
Focuses on a company’s outward impact
Well suited to broader stakeholder communication
Highly interoperable with ESRS for global compliance
|
|
UK SDS
|
UK mandatory |
Large UK-registered companies and LLPs (starting 2026/27) to meet domestic regulatory requirements.
|
The UK’s endorsement of ISSB
Designed to reduce greenwashing
Aims to ensure more consistent UK disclosures
|
|
TNFD
|
Nature & biodiversity |
Agriculture, mining, and energy firms, or any business with a high dependency on natural resources.
|
The emerging standard for nature-related risks
Often described as the TCFD for biodiversity and ecosystems
|
|
UN Global Compact
|
Ethical principles |
Small-to-medium businesses looking for a simple, values-based entry point into sustainability.
|
Built around ten principles
Covers human rights, labor, environment, and anti-corruption
Requires a simple annual Communication on Progress
|
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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 strictly regulated space, especially in the EU and UK. While there’s now a recognised global baseline through the ISSB, the direction of travel is clear: companies are increasingly being required to report on their environmental, social, and governance performance with the same rigour as financial data.”
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. Following the "Omnibus I" Directive in March 2026, the CSRD scope was refined to focus on larger entities, raising the reporting thresholds for many businesses. But CSRD is just one piece of a broader regulatory puzzle.
Financial institutions must also comply with the Sustainable Finance Disclosure Regulation (SFDR), and legislation like the Corporate Sustainability Due Diligence Directive (CSDDD) is pushing ESG responsibilities further into the supply chain, with full implementation for the largest firms set for 2029. 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:
ESG regulation
Key ESG regulations and directives
ESG regulation is becoming more detailed, more auditable, and more closely tied to company size, jurisdiction, and market activity. These are some of the main frameworks businesses may need to track.
| Regulation / Directive | Scope | Key requirements |
|---|---|---|
|
CSRD (Updated 2026)
EU reporting
|
Companies with more than 1,000 employees and €450M+ turnover; listed SMEs; certain non-EU parents.
|
Mandatory ESG disclosures using ESRS
Included within management reports
Requires external audit and assurance
|
|
CSDDD (Updated 2026)
Due diligence
|
Very large firms with more than 5,000 employees or €1.5B turnover.
|
Identify and mitigate environmental impacts
Identify and mitigate human rights impacts
Reporting starts in 2029
|
|
SFDR
Financial sector
|
Financial market participants and advisors.
|
Disclose how sustainability risks are integrated into investment decisions
|
|
EU Taxonomy
Classification system
|
All companies under CSRD and SFDR.
|
Define which activities are environmentally sustainable
Disclose alignment with taxonomy criteria
|
|
CBAM
Carbon pricing
|
Importers of carbon-intensive goods.
|
Report embedded carbon emissions
Transition to mandatory payments begins now
|
United Kingdom (UK)
The UK has transitioned toward a more structured approach, shifting from a patchwork of overlapping obligations to a formalised system centered on the UK Sustainability Reporting Standards (UK SRS). While there’s no single regulation equivalent to the EU’s CSRD, many companies - especially large ones - are subject to mandatory disclosures that now align with global benchmarks.
These include mandatory energy and emissions disclosures, climate-related financial reporting, and strict FCA anti-greenwashing rules that are now fully in force. NHS suppliers, too, are now legally required to meet specific sustainability maturity levels as part of procurement requirements.
Here’s a summary of the UK’s current ESG reporting frameworks:
UK ESG regulation
Key UK ESG regulations and frameworks
The UK ESG landscape combines reporting standards, anti-greenwashing rules, climate disclosures, and sector-specific requirements. These are some of the main frameworks businesses may need to track.
| Regulation / Framework | Applies to | Key requirements |
|---|---|---|
|
UK Sustainability Reporting Standards (UK SRS)
UK reporting standard
|
Large UK-listed and registered companies (>250 employees / £54M+ turnover).
|
Formalised in early 2026
Aligns with ISSB
First mandatory wave for listed firms starts January 2027, with reporting beginning in 2028
Voluntary adoption is currently encouraged
|
|
FCA Anti-Greenwashing Rule
Marketing and claims
|
All FCA-regulated firms.
|
Fully in force since 2024
Requires all sustainability claims to be fair, clear, and not misleading
Includes strict enforcement on marketing and fund labels
|
|
Streamlined Energy and Carbon Reporting (SECR)
Energy and emissions
|
Large quoted and unquoted companies and LLPs.
|
Disclose energy use, GHG emissions, and efficiency actions in annual reports
|
|
Climate-Related Financial Disclosure (CRFD)
Climate disclosure
|
UK-registered companies with 500+ employees or £500M+ turnover.
|
Now transitioning into the UK SRS framework
Requires disclosure of climate risks and transition strategies
|
|
NHS Evergreen Assessment
Public procurement
|
All NHS suppliers.
|
As of 6 April 2026, all suppliers must achieve at least Evergreen Level 1
Baseline carbon reporting is required to remain eligible for tenders
|
|
Energy Savings Opportunity Scheme (ESOS)
Energy audits
|
Large organisations meeting qualification criteria.
|
Conduct energy audits every 4 years
Phase 4 planning is currently underway
|
United States (US)
In contrast to the EU and UK, ESG reporting in the US remains complex. While federal reporting is not yet broadly mandatory, investor pressure and state-level legislation have made transparency a business necessity for many.
In 2024, the Securities and Exchange Commission (SEC) finalised a climate disclosure rule. However, after significant legal challenges, the rule entered a period of regulatory suspension in late 2025. The SEC has launched a formal review of the framework, leaving federal mandatory climate reporting in a state of limbo while the courts and the agency reconsider its scope.
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 already includes climate change, diversity and inclusion, and governance issues.
Meanwhile, California has taken the lead with landmark laws that are now active:
US climate disclosure update
SB 253 (Climate Corporate Data Accountability Act): Applies to companies doing business in California with >$1 billion in revenue. The first-ever mandatory reporting deadline for Scope 1 and 2 emissions is set for August 10, 2026.
SB 261 (Climate-Related Financial Risk Act): Applies to companies with >$500 million in revenue. While the initial January 2026 deadline faced a temporary legal injunction, companies are currently being encouraged to submit reports voluntarily to a public docket while the courts finalise the enforcement timeline.
Large US companies also continue to report voluntarily using the ISSB (which now incorporates SASB and TCFD) or GRI, especially if they have global operations or seek to meet the transparency expectations of institutional investors.
Why should your company do ESG reporting?
“Even when it’s not legally required, ESG reporting offers significant competitive advantages. It helps companies build resilience, secure cheaper capital, and strengthen relationships with key stakeholders - from customers and investors to employees.”
Here are the key reasons to report in 2026:
Why it matters
Why companies are reporting on ESG now
ESG reporting is no longer just a communications exercise. It is becoming a commercial, regulatory, financial, and talent priority.
Supply chain
Securing your place in the supply chain
Hover or tap to read more
Major global firms, especially those under EU CSRD, now require suppliers to provide ESG data. If you cannot report your carbon footprint or labour practices, you risk being excluded from major supply chains.
Compliance
Preparing for mandatory compliance
Hover or tap to read more
Reporting voluntarily today is one of the strongest forms of risk management. It gives your company time to build audit-ready systems before disclosure becomes mandatory, avoiding the cost and disruption of emergency compliance.
Finance
Accessing cheaper capital
Hover or tap to read more
Investor interest is increasingly data-driven, with over $40 trillion in ESG-aligned assets projected globally. Transparent reporting can reduce your cost of capital, while missing data is often treated as a red flag.
Claims
Meeting the Green Claims standard
Hover or tap to read more
With the EU Greenwashing Directive and UK SDR now in force, vague environmental marketing is a legal risk. ESG reporting provides the evidence needed to support claims and reduce exposure to fines or reputational damage.
Talent
Attracting and retaining Gen Z talent
Hover or tap to read more
Employees, especially younger workers, increasingly want employers whose values match their own. Reporting shows your company is taking measurable action, not just making promises.
Efficiency
Identifying operational efficiencies
Hover or tap to read more
The reporting process often reveals hidden costs and improvement opportunities. Companies tracking ESG metrics frequently identify savings in energy use, waste management, and supply chain logistics.
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How can your company implement effective ESG reporting?
Implementing ESG reporting is no longer just a meaningful step - it is a critical operational upgrade. To be effective in today's business environment, your process must move beyond spreadsheets and toward audit-ready, automated systems.
Here is your 10-step roadmap to successful implementation:
Implementation guide
A step-by-step guide to ESG reporting
ESG reporting works best when it is approached as a structured implementation programme — starting with governance, then narrowing focus, building reliable systems, and ending with disclosure and assurance.
Phase 1
The Governance Foundation
Before you collect a single data point, you must define the rules of the game for your organisation.
1
Board-level accountability & mandate
Regulators look for evidence of sustainability competence at the board level. Formally update your Board Charter to include explicit oversight of ESG risks, and assign a committee to oversee data integrity.
2
Define your reporting boundary
Your ESG boundary should align with financial consolidation. If you control a subsidiary, its emissions fall within your reporting perimeter. You also need to map your value chain to identify Scope 3 data sources.
3
Gap analysis & technical selection
Run a pre-audit comparison between your current data and your main reporting framework, such as ESRS, to identify what information is still missing.
Phase 2
Strategy & Assessment
This phase acts as a filter, ensuring you report on what is genuinely material to the business.
4
Conduct a double materiality assessment
Document both impact materiality and financial materiality. This is now a core gateway step and determines what belongs in your reporting scope.
Critical detail: You must document your methodology and long list of topics,
because auditors may verify how and why specific topics were excluded.
5
Scenario analysis & resilience testing
Test how the business performs under different climate futures, such as 1.5°C versus 3°C. This now requires financial modelling, not just narrative disclosure.
Phase 3
Data Systems & Controls
This is the technical core of the implementation, where data quality and audit-readiness are built.
6
Implement an ESG system of record
Spreadsheets are a weak control environment. Use dedicated ESG software as a single source of truth, connected to operational systems like utility meters, HR platforms, and ERPs.
7
Establish internal controls & data lineage
Every figure should have assurance-grade traceability. Define data owners across the business and maintain a clear digital trail from source evidence to final disclosure.
8
Value chain data collection (Scope 3)
Engage suppliers proportionately. Use estimates for smaller vendors where needed, and prioritise primary data from your most strategic suppliers.
Phase 4
Disclosure & Assurance
The final phase turns internal work into an externally credible, legally compliant disclosure.
9
Pre-assurance dry run
Before the official auditor arrives, run an internal or third-party assurance simulation to identify missing evidence, calculation issues, or process gaps.
10
Final disclosure & mandatory audit
Publish your Sustainability Statement within the Management Report and complete the required external assurance process to give the report formal market credibility.
Common ESG reporting challenges (and how to solve them)
While ESG reporting offers significant benefits, implementing it effectively remains a challenge. In 2026, the focus has shifted from high-level strategy to the technical rigor required for mandatory audits and value-chain transparency.
Data auditability & assurance
Reports must pass external assurance. Manual spreadsheets often lack the traceable data lineage required by auditors.
Solution:
Implement ESG software with full audit trails and move from manual inputs to automated data flows from systems like utilities and HR.
Scope 3 & value chain complexity
Collecting reliable data from global suppliers remains difficult, especially when working with smaller partners.
Solution:
Use spend-based estimates for smaller vendors and direct engagement or primary data collection for high-impact suppliers.
Interoperability burden
Companies often need to report across multiple frameworks, leading to duplication of effort.
Solution:
Adopt cross-framework mapping tools to collect data once and reuse it across multiple reporting standards.
AI integrity & errors
Over-reliance on AI can introduce inaccuracies or misclassification, creating compliance risks.
Solution:
Maintain human oversight. Use AI for support tasks, but ensure final disclosures are manually verified.
Regulatory change management
ESG regulations evolve rapidly, making it difficult to maintain compliance across jurisdictions.
Solution:
Assign a dedicated ESG controller or owner responsible for tracking regulatory updates and adjusting reporting scope.
Greenwashing & litigation risk
Misalignment between marketing claims and verified ESG data increases legal and reputational exposure.
Solution:
Align all public claims with verified data and recognised frameworks such as Science-Based Targets (SBTi).
“By anticipating these technical challenges and putting the right digital systems in place, companies can move beyond mere compliance to build a resilient, audit-ready reporting structure. Transparency is no longer a choice - it is a strategic lever for market access and financial credibility.”
ESG reporting FAQs:
What is a 'Climate Transition Plan' and do we need one?
A transition plan is the action part of your ESG report. While the US SEC rules are in flux, the UK government and the EU (under CSDDD) now require large firms to disclose a formal plan on how they will reach Net Zero. For SEO purposes, it’s important to know that Transition Planning is now a separate, high-stakes reporting requirement focused on capex and business model changes, not just carbon footprints.
What is the difference between 'Limited' and 'Reasonable' assurance?
This is a top-trending search for companies facing their first 2026 audit.
- Limited Assurance (Current Standard): A lighter audit where the auditor says they found nothing obviously wrong. Most CSRD and UK SRS reports currently require this.
- Reasonable Assurance (Future Standard): A deep dive similar to a financial audit. Regulators plan to move to this by 2028, but many leaders are opting for it early in 2026 to attract high-conviction institutional investors.How does the California August 2026 deadline affect non-US companies?
If you are a UK or EU company doing business in California (usually defined as having sales or employees there) and your global revenue exceeds $1 billion, you must comply with SB 253. This means you must report your Scope 1 and 2 emissions by August 10, 2026, regardless of where your headquarters are located.
What is the 'Value Chain Cap' and does it apply to US/UK firms?
This is an EU-born rule (from the March 2026 Omnibus Directive) that has become a global best practice. It prevents large companies from demanding impossibly complex ESG data from small suppliers (under 1,000 employees). Even if you are a US or UK firm, if you sell to a large EU company, you can use this cap to provide a Simplified Disclosure instead of a full, expensive ESG audit.
We use TCFD and SASB. Are we "safe" for 2026?
You are on the right track, but you need to migrate. By April 2026, TCFD has been disbanded and its responsibilities handed to the ISSB (International Sustainability Standards Board).
- UK Companies: You must now transition your TCFD-aligned reporting to the UK SRS (S1 and S2).
- US Companies: While you can still use SASB voluntarily, you should align your data with the IFRS S2 standard, which is what major institutional investors (and California regulators) now use as the global benchmark.Do we need to report on nature yet?
It’s moving from maybe to yes. While not yet a federal law in the US or UK, many investors in 2026 are asking for TNFD (Taskforce on Nature-related Financial Disclosures) data. If your business relies heavily on natural resources (water, timber, agriculture), failing to report on nature-related risks is now seen as a major "G" (Governance) failure.
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How Greenly can help with ESG reporting
Streamlined ESG Data Management & Compliance
Greenly streamlines the complex process of ESG data collection, consolidation, and management all in 1 platform.
📥 Import qualitative & quantitative data — platform processes & flags errors
🤖 AI-powered data processing & auto-filling of answers
🔗 Integrated connectivity: map & connect data points across indicators, eliminate redundancy
📂 Centralised platform for all ESG data & supporting docs
⏱️ Track collaborator progress, set reminders & deadlines for compliance
🛡️ Audit-ready traceability: instantly track every change
📊 ESG dashboards to track all key KPIs
🏢 Multi-entity task management & data ingestion at all levels
🧠 AI-powered pre-filling from documentation saves weeks of manual work
🧮 Automatic calculations handle dependencies & speed up consolidation
📈 Multi-entity data collection simplified by mirroring company structure
Strategic ESG Impact & Risk Mitigation
Greenly empowers companies to move beyond reporting to develop strategy, identify risks, and unlock opportunities.
📋 Automated Double Materiality Assessment (DMA) built with CSRD experts
🤖 AI-powered climate risk forecasting integrated into DMA with site-level detail
💰 Translate climate risk into quantified financial opportunities
📍 Location-specific financial risk breakdowns with IPCC-backed data
🔎 Data gap analysis from DMA to improve future reporting
📈 Automated Climate KPI integration
📊 Advanced Materiality Module: benchmarks & specialised add-ons (e.g., CSA)
Tailored & Future-Ready Reporting
Flexible reporting with interoperability across 15+ frameworks.
📝 Custom framework creation with tailored reports
🔀 Interoperability across 10+ frameworks with harmonised database
⚡ Accelerated report creation with AI-powered generation and pre-filling
📄 Auto-generation of complete ESG reports (qualitative & quantitative data)
🛡️ Audit-ready guaranteed reports
💻 Automated ESG report gen incl. XHTML & XBRL for CSRD
📂 Centralised audit trails & attachments per indicator
🤝 Collaborative workflows managing full indicator lifecycle
Expert Guidance & Continuous Support
Comprehensive support & training to empower ESG teams and ensure successful, autonomous reporting.
🧑💼 Dedicated Project Managers & ESG Experts for each framework
📚 Extensive training & resources available on the platform
🤖 AI-powered in-app chatbot (24/7) for instant answers
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