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What is sustainability reporting and why is it important?

ESG / CSRESG Initiatives

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By Kara Anderson, UK Copywriter, on 09/29/2022

Updated by Agnès Potier-Murphy, on 08/04/2026

What is sustainability reporting?
How is sustainability reporting different from ESG, CSR, and non-financial reporting?
What are the benefits of sustainability reporting?
What is a sustainability reporting framework?
Is sustainability reporting mandatory?
The future of sustainability reporting
Sustainability reporting in the US
How to get started with sustainability reporting
Top 10 sustainability reporting software solutions for 2025
Frequently asked questions about sustainability reporting
How Greenly can support your sustainability ambitions

Sustainability reporting isn't just something companies do to tick a box anymore. At its core, it means disclosing how your company affects the environment, society, and the economy — sometimes called corporate sustainability reporting — typically against a recognized framework like GRI, SASB, or ESRS, so stakeholders get a clear view beyond the bottom line.

It's become a key part of how businesses build trust, manage risk, and show what they stand for. In fact, a recent KPMG study found that 96% of the world's largest 250 companies now publish sustainability reports – a sign of just how central this has become.

And it's not just about keeping regulators happy. Research from McKinsey suggests that companies that take environmental, social, and governance (ESG) issues seriously often end up in a stronger position – more resilient, trusted, and ultimately, more valuable.

Still, for many businesses, sustainability reporting can feel abstract. What does it really involve? What are the benefits beyond compliance? And how do you get started in a way that supports your wider sustainability strategy?

In this article, we’ll cover:

What sustainability reporting is (and how it differs from ESG, CSR, and non-financial reporting)
Why it matters – from managing risk to building trust
Whether it’s mandatory (and where regulations are heading)
How to choose the right reporting framework
What's shaping the US market today, from investor expectations to reporting software
How to get started – step by step

Whether you're new to reporting or looking to improve your approach, this guide will help you make sense of it all.

What is sustainability reporting?

Sustainability reporting is the practice of measuring and disclosing a company's environmental, social, and economic impact to stakeholders — distinct from a sustainability report, which is the document itself. It typically covers data like carbon emissions, energy and water use, waste, workforce diversity, and supply chain practices, most often structured around a recognized framework.

There's no one-size-fits-all format, but most reports follow recognized frameworks, like the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), or the European Sustainability Reporting Standards (ESRS). These frameworks help companies stay consistent and transparent in how they report their efforts.

Done well, sustainability reporting becomes a strategic tool – one that helps you understand where your biggest risks and opportunities lie, where you can improve, and how to track progress over time.

How is sustainability reporting different from ESG, CSR, and non-financial reporting?

With so many overlapping terms, it’s easy to get confused. Here's how sustainability reporting fits into the bigger picture, and while these terms overlap, their focus and audience differ:

Term	Focus	Audience	Key takeaway
Sustainability reporting	Broad, long-term view of environmental, social, and economic impact	Stakeholders (wide audience)	Strategic, values-driven umbrella for ESG and CSR
ESG reporting	Financial performance and risk management	Investors, analysts	Uses similar data but focused on materiality to investors
CSR reporting	Philanthropy, community engagement	Public, employees	Older, less data-driven, often highlights donations or volunteering
Non-financial reporting	Any non-financial information (e.g., ethics, diversity)	Regulators, stakeholders	Broadest term, includes sustainability but not always ESG-focused

Many companies combine elements from each, depending on who they’re reporting to and what they want to communicate.

woman looking at business reports and documents

What are the benefits of sustainability reporting?

Sustainability reporting has become a key part of business strategy – not just for meeting regulations, but because it enables companies to understand risks, improve performance, and build trust with stakeholders. It helps companies turn data into action, whether that’s cutting emissions, identifying inefficiencies, or showing stakeholders they’re serious about long-term impact.

Here are some of the key ways it creates value:

1️⃣ Enhances risk management 🌍

Sustainability is closely tied to long-term resilience. With climate change, resource scarcity, and social pressures creating real risks for business, sustainability reporting helps companies identify those risks early and prepare for them.

According to CDP's 2023 disclosure data, 52% of companies disclosed climate-related risks with potential for significant financial or strategic impact. At the same time, 63% identified opportunities linked to climate action, highlighting how sustainability reporting can surface both challenges and areas for growth.

2️⃣ Drives efficiency and cost savings 💰

By tracking resource use, emissions, and waste, businesses can pinpoint inefficiencies and fix them. Sustainability reporting often uncovers areas for improvement that lead to reduced operational costs, especially when integrated with energy-saving initiatives or smarter procurement practices.

McKinsey research on industrial companies found that combining emissions reduction with cost controls achieved up to a 40% emissions cut and a 15% boost in financial performance.

3️⃣ Supports better decision-making 📊

With growing pressure from regulators, customers, and investors, businesses are making more complex decisions under greater scrutiny. A robust sustainability report offers a clearer view of performance and future risk, providing the insights needed to guide your long-term management strategy, sustainability priorities, and broader business decisions.

It also helps companies prepare for tightening regulations. For example, climate-related disclosures are now mandatory in some regions, and those who already have structured reporting processes in place are better positioned to comply.

4️⃣ Builds stakeholder trust 🤝

Transparency is now expected, not optional. Customers, employees, investors, and business partners increasingly want to support companies that align with their values.

Sustainability reporting gives companies a way to show, not just say, what they stand for. Despite a more cautious political climate, US SIF's 2025/2026 Trends Report found nearly 70% of the sustainable investing community remains committed to its long-term future, with ESG integration still the dominant strategy for 77% of respondents.

What is a sustainability reporting framework?

A sustainability reporting framework is a structured set of guidelines that helps companies decide what to report, how to measure it, and how to clearly and consistently report sustainability related information to stakeholders.

Think of it as a blueprint; it doesn’t dictate your goals or strategies, but it gives you the tools to communicate them in a way that’s meaningful to your audience. Frameworks help ground your commitments in credible data and align your disclosures with global expectations.

Some frameworks are broad and stakeholder-focused, while others are designed specifically for investors or regulators. Depending on your objectives, you might use just one or combine several to meet different needs.

Here’s a look at the most widely used sustainability reporting frameworks and what they offer:

GRI (Global Reporting Initiative)

Focus: Broad ESG impact across environmental, social, and governance topics

Best for: Stakeholder communication, overall transparency

Key features: Covers a wide range of sustainability topics; widely adopted; aligns with SDGs

SASB (Sustainability Accounting Standards Board)

Focus: Financially material ESG issues by industry

Best for: Investor-focused reporting

Key features: Industry-specific metrics, focused on financially material sustainability performance and impact on the company

IFRS S1/S2 (incorporating TCFD)

Focus: Climate-related risks and opportunities, and broader sustainability disclosures

Best for: Climate disclosure and risk management, and global regulatory alignment

Key features: Issued by the International Sustainability Standards Board (ISSB); fully incorporates the TCFD's four pillars (governance, strategy, risk management, metrics) following the Financial Stability Board's disbandment of the TCFD in 2023

CDP (Carbon Disclosure Project)

Focus: Climate, water, and forest impact disclosures

Best for: Benchmarking environmental performance

Key features: Questionnaire-based; aligned with IFRS S2 (formerly TCFD); includes scoring system

IIRC (International Integrated Reporting Council)

Focus: Integrated Reporting Framework (formerly IIRC)

Best for: Communicating long-term value creation

Key features: Originally developed by the IIRC, now maintained by the IFRS Foundation following the 2022 consolidation of the Value Reporting Foundation; emphasizes connectivity between ESG and financial data

CSRD (Corporate Sustainability Reporting Directive)

Focus: Mandatory ESG disclosures in the EU

Best for: EU-based or EU-operating companies

Key features: Requires audited, standardised sustainability disclosures aligned with ESRS

ISO 26000

Focus: Social responsibility and ethical behaviour

Best for: Voluntary guidance for CSR integration

Key features: Covers topics like human rights, labour, and governance

UN Global Compact / SDG reporting

Focus: Alignment with the UN’s Sustainable Development Goals

Best for: Companies committed to global responsibility

Key features: Encourages transparency across 10 principles of the UNGC

How to choose the right sustainability reporting framework

You don’t need to follow every framework, just the ones that make sense for your business. The right fit depends on your goals, stakeholders, and reporting requirements, whether driven by regulation or internal strategy.

Here are a few things to consider:

👥

Your audience

For investors, use frameworks like SASB or IFRS S2 (formerly TCFD). For broader transparency, GRI is a strong choice.

📜

Regulatory requirements

If you're operating in the EU, the CSRD may apply. Elsewhere, climate-related disclosures are increasingly required under IFRS S2, while CDP remains a common voluntary choice for benchmarking.

🎯

Business priorities

Focus on frameworks that align with the topics most relevant to your impact, whether that’s climate, social issues, or governance.

🚀

Reporting maturity

New to reporting? Start with one flexible framework (like GRI) and build from there.

Choose the frameworks that help you stay compliant, communicate clearly, and keep your reporting focused on what matters most.

Is sustainability reporting mandatory?

Whether sustainability reporting is mandatory depends on where your business operates, your industry, and your size.

In some regions, particularly the EU, reporting is no longer optional. Under the Corporate Sustainability Reporting Directive (CSRD), thousands of companies are now required to disclose detailed sustainability information.

The picture is more mixed elsewhere. The UK has introduced mandatory climate-related financial disclosures for large companies. In the US, the federal picture has shifted: the SEC has proposed rescinding its 2024 climate disclosure rule entirely, meaning it will likely never take effect. California fills much of that gap at the state level, requiring large companies doing business there to disclose emissions and climate-related financial risk.

Even in places where it isn’t yet legally required, there’s growing pressure from investors, customers, and employees for businesses to be transparent about their environmental and social impact. In practice, many companies are choosing to report voluntarily, either to stay ahead of regulation or meet stakeholder expectations.

The future of sustainability reporting

While many companies are currently focused on meeting new regulatory requirements, sustainability reporting is moving far beyond basic compliance. Over the next few years, several trends are expected to reshape how businesses disclose and manage ESG data:

📑

Double materiality

CSRD will require reporting on both financial impacts and environmental and social effects.

Companies must assess how sustainability issues affect them and how they impact people and the planet.

🤖

Digital & AI-driven

AI is enabling real-time ESG dashboards and automated data collection.

Automation is replacing static reports with continuous monitoring and integrated ESG systems.

🌐

Global standards

IFRS S1 and S2 are creating a consistent global approach to sustainability reporting.

Multinational companies will benefit from simplified, harmonised sustainability disclosures.

🔗

Value chain focus

Scope 3 emissions and supplier sustainability practices are taking centre stage.

Companies must work with suppliers and partners to improve transparency and resilience.

✅

Independent assurance

Stakeholders expect reports to be verified, similar to financial audits.

Assurance requirements are becoming more standardized: current EU rules call for limited assurance rather than the full audit-level standard once envisioned.

These developments are shifting sustainability reporting from a tick-box exercise to an essential element of corporate strategy – one that shapes decision-making, strengthens stakeholder trust, and drives long-term business resilience.

Sustainability reporting in the US

Sustainability reporting has become a growing focus in US corporate governance, shaped by evolving regulation, investor activism, and market demand for transparency. Here’s what companies operating in the US need to know:

US sustainability reporting standards

The US currently has a mix of mandatory disclosure rules and voluntary frameworks, though the picture has shifted significantly at the federal level in 2026. Here's where things stand, per the SEC, the EPA, and the California Air Resources Board:

Regulation	Current status	Requirements
SEC climate disclosure rules	Proposed for rescission in May 2026; never took effect due to ongoing legal challenges	Would require climate-risk and Scope 1/2 — and in some cases Scope 3 — emissions disclosure for certain public companies
Dodd-Frank Act Section 1502	Stable, unchanged since 2010	Disclosure of conflict mineral — tin, tantalum, tungsten, gold — sourcing in supply chains
EPA GHG reporting program	Rollback proposed, not yet finalized	Requires large emitters to report annual GHG data; EPA has proposed removing most source categories and suspending oil & gas sector reporting until 2034
California Climate Accountability Package (SB 253 & SB 261)	Mixed: SB 253 active, SB 261 enjoined pending litigation	SB 253 requires Scope 1, 2, and 3 emissions disclosure, with first reports due August 10, 2026; SB 261 requires climate-related financial risk disclosure

With the federal regulatory picture in flux, California's mandate is currently the most concrete driver of ISSB-aligned reporting for US companies — though full national alignment with IFRS S1 and S2 remains uncertain given the broader deregulatory direction at the federal level.

Beyond these, US companies also widely adopt the voluntary frameworks covered earlier in this guide — GRI, SASB, IFRS S2, CDP, and the Integrated Reporting Framework — typically to meet investor expectations or prepare for evolving state and federal rules. IFRS S2 in particular, having absorbed the TCFD, has already shaped elements of both California's requirements and the SEC's now-stalled proposal.

Investor expectations

Investors continue to integrate ESG factors into decisions:

📜

Principles for Responsible Investment (PRI)

Many US asset managers remain signatories, though some now treat PRI participation as a lower-profile compliance safeguard rather than a public commitment.

🏛️

Investor Stewardship Group (ISG)

Its Framework for U.S. Stewardship and Governance sets engagement and proxy-voting expectations for major US and international investors.

🌍

Sustainable Finance Disclosure Regulation (SFDR)

Sustainable investing in the US remains substantial by scale, though growth has cooled amid a more cautious political climate.

Market trends

The US market is experiencing a growing demand for sustainability from both consumers and businesses. Key trends include:

Governance-focused shareholder activity – ESG-related shareholder proposals have actually declined sharply in the 2026 proxy season, down 47% year-over-year, as investors retreat toward core governance topics amid regulatory uncertainty. Anti-ESG proposals have grown more prominent, though they rarely win majority support.
Growth in climate litigation – More lawsuits are targeting organisations for inadequate or misleading sustainability disclosures, increasingly driven by state attorneys general and private plaintiffs as federal enforcement has pulled back.
Consumer and employee demand – Stakeholders are expecting authentic, verifiable sustainability commitments from businesses.
AI-powered ESG tools – Rapid adoption of automated platforms for data collection, analysis, and assurance in sustainability reporting.

US city skyline representing sustainability reporting regulation

How to get started with sustainability reporting

Getting started with sustainability reporting doesn’t have to be overwhelming. By breaking the process into a few clear steps – from identifying what matters most to choosing the right framework and collecting the right data – you can build a report that’s both practical and meaningful.

Here’s a simple step-by-step approach to get started:

The steps below outline how to create a sustainability report:

1. Identify what matters most 🔍

Start by figuring out which sustainability topics are most relevant to your business and stakeholders. This could include emissions, energy use, supply chain ethics, employee wellbeing, or waste. Tools like stakeholder surveys or materiality assessments can help you focus your efforts where they’ll have the most impact.
2. Choose your reporting framework 📑

Pick the framework (or combination) that best fits your goals, industry, and legal obligations. Whether it’s GRI for broad transparency, SASB for investor relevance, or CSRD for EU compliance, your framework will shape what and how you report.
3. Collect your data 📊

You’ll need both qualitative insights and hard numbers – from emissions data and diversity metrics to supply chain policies and social initiatives. Make sure your data sources are reliable, and consider third-party assurance where possible to strengthen the credibility of your figures.
4. Build your report 🏗️

Organise your content around the framework’s structure. Use plain language, include data visuals where helpful, and explain the story behind your numbers. Many companies also include case studies or goals to show progress and ambition.
5. Publish and engage 📢

Once the report is ready, share it on your website, with investors, internally, and across other relevant channels. The aim isn’t just to tick a box, but to open up a conversation with the people your business impacts.
6. Track progress and keep improving 🔄

Sustainability reporting isn’t a one-off task – it’s part of an ongoing process. Keep reviewing your data, tracking against your goals, and updating your stakeholders on progress year over year.

Rank	Tool / Platform	Best for	Key features	Pricing model
1	Greenly	SMEs and large enterprises looking for all-in-one carbon management and ESG reporting	- Automated carbon footprint tracking - LCA and Scope 1, 2, 3 analysis - Reporting for CSRD, IFRS S1/S2, GRI, SASB - Supplier engagement tools	Subscription-based; tailored to company size
2	Sphera	Large enterprises with complex reporting needs	- Advanced ESG data management - Risk and compliance dashboards - Supports multiple reporting frameworks	Enterprise licensing
3	Workiva	Companies focused on financial + sustainability reporting integration	- Unified platform for SEC filings and ESG data - Cloud collaboration - SASB, IFRS S2 (formerly TCFD) alignment	Subscription-based
4	Persefoni	Organisations needing carbon accounting expertise	- AI-driven carbon data insights - Financial-grade climate disclosures - Growing partnerships expanding its reach into governance-adjacent reporting	SaaS model
5	Envizi (by IBM)	Enterprises aiming for deep analytics	- ESG reporting automation - Data visualisations and KPI dashboards - Supports CDP submissions	Subscription-based
6	Cority	Industries with strict compliance requirements (e.g., manufacturing)	- EHS and ESG integration - Data audit trails - Assurance-ready reports	Tiered pricing
7	FigBytes	Mid-sized businesses looking for ESG strategy alignment	- Visual ESG roadmapping - SDG reporting modules - Multi-framework compatibility	SaaS model
8	Diligent ESG	Companies prioritizing board-level governance, with carbon accounting increasingly delivered through a partner platform	- Governance and risk management focus - Board-ready dashboards - Carbon accounting delivered via a strategic partner	Subscription-based
9	VelocityEHS	Businesses needing scalable sustainability management	- Environmental data management - KPI and target tracking - Cloud reporting tools	SaaS model
10	Measurabl	Real estate and property management firms	- Energy and sustainability metrics for buildings - GRESB and CDP reporting support - Automated data capture	Subscription-based

Frequently asked questions about sustainability reporting

What does sustainability reporting involve?
It means collecting and disclosing data on how a company affects the environment, society, and economy – from emissions and energy use to supply chain practices and diversity initiatives – and presenting it in a structured, framework-aligned report.
Is sustainability reporting mandatory for all companies?
Not everywhere. In the EU, the CSRD now makes reporting mandatory for thousands of companies. The UK has introduced climate-related financial disclosures, and California has introduced its own mandatory climate disclosure rules for large companies, while the SEC's federal climate rule has stalled and is now proposed for rescission. Elsewhere, many companies report voluntarily to meet investor and stakeholder expectations.
How is it different from ESG, CSR, and non-financial reporting?
Sustainability reporting is broad and stakeholder-focused, covering environmental, social, and economic impacts. ESG reporting is investor-focused, measuring how ESG factors affect financial performance and risk. CSR reporting is older and philanthropy-focused, less strategic or data-driven. Non-financial reporting is any non-financial disclosure, including sustainability, often for regulatory compliance.
Which frameworks should businesses consider?
Popular choices include GRI for overall transparency, SASB and IFRS S1/S2 for investor-focused reporting, CSRD and ESRS for EU requirements, CDP for environmental benchmarking, and ISO 26000 for CSR integration.
What is GRI sustainability reporting?
GRI (Global Reporting Initiative) is the most widely used sustainability reporting framework, giving companies structured guidance on disclosing their environmental, social, and governance impacts to a broad range of stakeholders. Unlike investor-focused frameworks like SASB, GRI sustainability reporting prioritizes transparency for all audiences, and aligns with the UN Sustainable Development Goals.
How often should sustainability reports be published?
Most companies issue annual reports alongside financial statements. Organizations with ambitious climate targets or regulatory obligations may release interim updates to track progress.

How Greenly can support your sustainability ambitions

Sustainability reporting is only one piece of the puzzle. To truly move from reporting to real climate impact, businesses need tools that can measure, manage, and reduce emissions across their entire value chain.

Greenly offers a comprehensive suite of sustainability solutions designed to streamline reporting and strengthen climate action:

Greenly Solutions	What It Provides
Carbon footprint assessments	Measure Scope 1, 2, and 3 emissions across operations, supply chains, and products with precision.
Compliance-ready reporting	Produce disclosures aligned with GRI, CDP, TCFD/IFRS S2, and CSRD, ensuring alignment with evolving regulations.
Life Cycle Assessments (LCA)	Gain a full understanding of product and service environmental impacts to guide sustainable decision-making.
Decarbonisation strategies	Set science-based targets and build actionable, high-impact emission reduction plans with expert support.
Sustainable procurement support	Identify greener suppliers and improve sustainability performance throughout your value chain.

Whether you're reporting to stakeholders, preparing for regulation, or looking to build a long-term climate strategy, Greenly’s platform and team are here to help. Get in touch to see how Greenly can support your goals.