Ultimate Guide to ESG Reporting

Environmental, social, and governance (ESG) reporting is no longer just a rising trend—it’s a fundamental part of how companies demonstrate accountability, resilience, and long-term value. Investors, stakeholders, and regulators have made it clear: ESG performance is now inseparable from financial performance.

As global regulatory frameworks mature and the climate crisis intensifies, companies face growing pressure to transparently disclose how their operations impact both people and the planet. According to a recent report by insightsoftware, with regulations like the Corporate Sustainability Reporting Directive (CSRD) coming into effect this year, the urgency to report on ESG initiatives has reached new heights. This shift is also driven by stakeholder expectations—from employees to customers—who are demanding more responsible and inclusive business practices.

In this context, ESG reporting has rapidly evolved from a “nice-to-have” to a business-critical function. To keep pace, organizations must understand what ESG reporting entails, what standards they need to meet, and how to build a meaningful strategy that aligns with their goals.

In this guide, we’ll break down what ESG reporting is, why it matters more than ever, and the steps organizations should take to embed it into their operations and disclosures.

What is ESG Reporting?

ESG reporting is the structured process of disclosing a company’s performance, risks, and impacts in three key areas: environmental, social, and governance. These disclosures are meant to provide clarity and transparency to stakeholders—investors, regulators, employees, customers, and communities—on how a company manages its responsibilities and future-proofing strategies.

Like financial reporting, ESG reporting blends both quantitative data (e.g., emissions metrics, workforce demographics, board diversity) and qualitative insights (e.g., sustainability strategies, social impact narratives). It helps stakeholders assess how an organization’s values and risk management approaches align with global sustainability goals.

• Environmental metrics now extend beyond carbon emissions to include climate resilience, circular economy efforts, biodiversity impact, and water stewardship.
• Social performance is under closer scrutiny, especially with rising expectations around human rights due diligence, employee well-being, equitable pay, inclusive workplace policies, and ethical supply chains.
• Governance reflects how organizations are led and held accountable—covering board oversight, ESG integration in executive compensation, anti-corruption measures, and compliance with emerging regulations such as the EU CSRD (Corporate Sustainability Reporting Directive), SEC climate disclosure rules, and ISSB standards.

Together, these three pillars allow companies to showcase their commitment to ethical, transparent, and future-ready practices—earning stakeholder trust and improving access to capital in a rapidly shifting global economy.

Why is ESG Reporting Important?

ESG reporting is critical for fostering transparency and accountability—qualities that are now non-negotiable for investors, regulators, and consumers alike. ESG disclosures are no longer optional in many jurisdictions, with mandatory frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the U.S. SEC’s climate-related disclosure rules setting new standards for corporate transparency. One of the primary objectives of ESG reporting is to help organizations effectively communicate their performance and progress in environmental, social, and governance areas. This transparency enables investors to assess a company’s sustainability and ethical practices, allowing them to make better-informed, risk-adjusted decisions about where to allocate capital.

Moreover, ESG reporting helps organizations identify material risks and opportunities linked to climate change, social equity, and governance practices. It encourages alignment with international standards such as the Task Force on Climate-related Financial Disclosures (TCFD), the International Sustainability Standards Board (ISSB), and the United Nations Sustainable Development Goals (SDGs). Demonstrating credible ESG performance not only mitigates risk exposure but also enhances brand reputation, improves stakeholder engagement, and increases access to green financing, sustainability-linked loans, and ESG indices—all of which are increasingly influential in global capital markets.

Beyond the external advantages, ESG reporting also delivers internal value. By tracking performance metrics and analyzing ESG-related data, organizations can uncover inefficiencies, reduce waste, and strengthen operational resilience. It also promotes a values-driven culture—one that prioritizes employee well-being, ethical leadership, and long-term thinking. As expectations for corporate responsibility continue to rise, ESG reporting empowers your business to adapt to changing market dynamics while contributing to a more equitable and sustainable future.

The Growing Importance of ESG Reporting

ESG reporting is no longer just a voluntary exercise in many parts of the world. While it remains non-mandatory in some jurisdictions, there has been a significant global shift toward mandatory sustainability disclosures. Regulatory frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD), the U.S. SEC’s climate-related disclosure requirements, and the IFRS Foundation’s global sustainability standards are transforming ESG from optional to expected. Despite voluntary origins, companies continue to adopt ESG reporting to stay ahead of regulatory change and meet stakeholder expectations. Companies are increasingly publishing ESP reports. The question remains: why this continued momentum?

One reason is clear—companies that prioritize environmental and social impact are proving to be more resilient and adaptable in the face of disruption. ESG-conscious organizations tend to manage risks more effectively, particularly during economic, environmental, or geopolitical crises. These companies also gain an opportunity to articulate their values, business strategy, and long-term purpose more clearly. Evidence continues to show that organizations with strong ESG performance achieve better investment outcomes, benefit from greater operational efficiency, and build more enduring stakeholder trust—contributing to stronger financial returns.

This trend is strongly reinforced by investor priorities. According to a 2024 report from PwC, over 80% of institutional investors now factor ESG considerations into their investment decisions to mitigate long-term risks. Companies with transparent ESG strategies are better positioned to attract capital, manage reputational risk, and align with growing environmental and social mandates.

Finally, regulatory requirements around ESG reporting are accelerating. The CSRD, which replaces and expands upon the Non-Financial Reporting Directive (NFRD), is now in effect and will gradually cover nearly 50,000 EU companies by 2026. It requires more detailed, audited ESG disclosures in alignment with European Sustainability Reporting Standards (ESRS). The Sustainable Finance Disclosure Regulation (SFDR) is also being enforced more stringently, requiring financial market participants to disclose ESG risks at both entity and product levels. The EU Taxonomy Regulation remains a central framework for classifying environmentally sustainable activities, offering clear criteria to help investors identify projects aligned with the EU’s climate and environmental goals. Together, these measures are reshaping corporate disclosure. The shift toward mandatory ESG reporting is well underway, and organizations that embed ESG into their strategy will be better equipped to build resilient operations, secure stakeholder trust, and thrive in the evolving global economy.

What’s the Difference Between ESG and Sustainability?

While ESG (Environmental, Social, and Governance) and sustainability are often used interchangeably, they serve different—but complementary—purposes within responsible business practices. ESG is a structured, measurable framework that provides investors, regulators, and stakeholders with standardized data to evaluate a company’s performance in managing environmental, social, and governance risks and opportunities. With the rise of global disclosure standards such as those developed by the International Sustainability Standards Board (ISSB) and the EU’s Corporate Sustainability Reporting Directive (CSRD), ESG reporting has become increasingly formalized and metric-driven in 2025.

Sustainability, by contrast, refers to a company’s overarching philosophy and long-term commitment to balancing environmental, social, and economic objectives. It includes strategic initiatives aimed at reducing carbon footprints, fostering equity, ensuring ethical labor practices, and promoting resilience across operations and supply chains. Unlike ESG, which centers on what is reported and how it’s measured, sustainability is more about why a company chooses to prioritize responsible practices in the first place. It reflects the values, vision, and goals that drive corporate responsibility beyond compliance.

• Focus Areas: ESG emphasizes specific, auditable performance indicators tied to risk and accountability, while sustainability considers a wider context of corporate purpose, environmental stewardship, and social impact over time.
• Audience: ESG primarily serves the needs of investors, analysts, and regulatory bodies, whereas sustainability resonates more broadly with employees, consumers, advocacy groups, and local communities.

By understanding and leveraging the distinction, companies are better positioned to meet both compliance obligations and stakeholder expectations—aligning ESG reporting with their wider sustainability strategy to build long-term value, transparency, and trust.

What’s the Difference Between ESG and CSR?

ESG (Environmental, Social, and Governance) and CSR (Corporate Social Responsibility) are complementary but fundamentally distinct concepts in corporate responsibility. ESG is a data-driven, performance-based framework used to assess how a company manages environmental risks, social impacts, and governance structures. As of 2025, ESG reporting is increasingly standardized and regulated—especially in jurisdictions following the Corporate Sustainability Reporting Directive (CSRD), the SEC’s climate disclosure rule, and frameworks developed by the International Sustainability Standards Board (ISSB). ESG disclosures are now essential for investors, regulators, and financial institutions evaluating long-term risks and value creation.

CSR, in contrast, remains a voluntary and narrative-driven approach. It reflects a company’s self-directed efforts to contribute positively to society through charitable giving, ethical labor practices, community engagement, and environmental stewardship. CSR is often centered on brand reputation, corporate values, and public relations, and may not always be tied directly to financial or risk-based performance metrics. While impactful, CSR initiatives are generally broader and less formalized than ESG disclosures.

Key Differences:

• Scope: ESG is embedded in business operations and risk management strategies, directly influencing financial performance and investor relations. CSR tends to be project-based, often external to core business functions.
• Measurement: ESG uses standardized metrics and assurance-ready reporting aligned with global frameworks (e.g., ISSB, CSRD, SASB), whereas CSR reporting is typically informal, qualitative, and non-regulatory.
• Audience: ESG is aimed at investors, analysts, and regulators looking for transparency and accountability. CSR is more targeted toward customers, employees, and the broader public to build trust and goodwill.

Many companies are integrating CSR into their broader ESG strategies, aligning purpose-driven initiatives with measurable outcomes. This convergence helps organizations fulfill both compliance requirements and societal expectations—strengthening stakeholder relationships and enhancing long-term sustainability.

What Do ESG Reports Include?

ESG reports provide a comprehensive overview of a company’s performance in environmental, social, and governance areas. These reports have become increasingly standardized and are often aligned with globally recognized frameworks such as the International Sustainability Standards Board (ISSB), the EU’s Corporate Sustainability Reporting Directive (CSRD), and the Task Force on Climate-related Financial Disclosures (TCFD). Designed to ensure transparency and accountability, ESG reports help investors, regulators, and stakeholders evaluate how companies manage risk, drive value, and contribute to a more sustainable and equitable economy. While the exact content varies by industry and jurisdiction, most ESG reports include the following key components:

Environmental Metrics:

• Greenhouse gas emissions (Scopes 1, 2, and 3), with third-party verification where applicable
• Energy consumption, renewable energy adoption, and energy efficiency improvements
• Water usage, conservation, and water stress assessments
• Waste generation, diversion rates, and circular economy strategies
• Biodiversity impacts, land use, and nature-related risk disclosures (e.g., aligned with TNFD)

Social Metrics:

• Workforce diversity, equity, inclusion, and accessibility (DEIA) disclosures
• Employee health, safety, mental well-being, and labor conditions
• Community engagement, volunteering programs, and social investment
• Human rights due diligence in supply chains, aligned with UNGPs or OECD guidelines
• Customer satisfaction, product safety, and ethical marketing practices

Governance Metrics:

• Board composition, tenure, diversity, and skills matrices
• Executive pay structures and alignment with ESG performance
• Anti-bribery, anti-corruption, and ethical conduct policies
• Cybersecurity, data protection practices, and AI governance (where relevant)
• Stakeholder engagement processes and mechanisms for shareholder input

Performance Highlights and Targets:

• Summary of key ESG milestones and outcomes achieved during the reporting period
• Time-bound sustainability targets (e.g., net-zero emissions, gender parity goals)
• Roadmaps and KPIs for climate transition plans, social progress, and governance reforms
• Benchmarking progress against peers or industry averages

Frameworks and Standards:

• Explicit alignment with current reporting standards (e.g., ISSB, CSRD, TCFD, GRI, SASB)
• Disclosure of double materiality assessments (financial and impact perspectives)
• Explanation of methodologies, scope boundaries, and data quality assurance
• Independent assurance statements (where applicable)

ESG reports are more than compliance tools—they are strategic narratives that demonstrate how companies are creating long-term value while managing environmental and social risks. By including these core elements, companies not only meet regulatory and investor expectations but also build trust and accountability across all stakeholders.

What Is an ESG Score or Rating?

An ESG score or rating is a standardized assessment used to evaluate a company’s performance across three key dimensions: Environmental, Social, and Governance. As regulatory frameworks and investor expectations evolve, these scores have become increasingly important for measuring how effectively a company manages sustainability-related risks and opportunities.

ESG scores are compiled by independent research firms and rating agencies—such as MSCI, Sustainalytics, S&P Global, ISS ESG, and Moody’s ESG Solutions—using proprietary methodologies. These methodologies analyze both publicly disclosed and alternative data sources, benchmark performance against peers, and apply industry-specific weightings.

Key Components of an ESG Score:

• Environmental Factors: Evaluates a company’s impact on the planet, including carbon emissions (Scopes 1, 2, and 3), climate targets, energy consumption, resource management, biodiversity, and exposure to environmental regulations.
• Social Factors: Assesses how a company manages its relationships with employees, customers, suppliers, and communities. Metrics often include workforce diversity and inclusion, labor practices, employee well-being, data privacy, and supply chain human rights.
• Governance Factors: Reviews the structure and accountability of the company’s leadership. This includes board diversity and independence, executive compensation alignment, anti-corruption practices, shareholder rights, and ethical conduct.

Why ESG Scores Matter in 2025:

• Investor Decision-Making: ESG ratings are widely used by institutional investors to screen, compare, and assess companies for sustainable investing strategies, including ESG integration, impact investing, and exclusionary screening.
• Regulatory and Disclosure Alignment: As ESG disclosures become mandatory in many jurisdictions (e.g., EU CSRD, SEC climate rules), ESG scores offer a consolidated view of how well companies meet evolving regulatory expectations.
• Reputation and Stakeholder Trust: A strong ESG score signals responsible business conduct, which builds trust with consumers, employees, and partners.
• Risk and Opportunity Assessment: ESG ratings highlight potential exposures to environmental liabilities, social controversies, or governance lapses—and can identify strategic opportunities such as energy efficiency or ethical innovation.
• Competitive Differentiation: Companies with higher ESG ratings are increasingly seen as more resilient, future-ready, and aligned with the values of both capital markets and consumers.

An ESG score offers a data-driven snapshot of a company’s sustainability and ethical performance. While methodologies may vary across rating agencies, the growing convergence around global reporting standards—such as those set by the ISSB and EU—means these scores are becoming more transparent, comparable, and influential in shaping a company’s long-term viability and market reputation.

Who Assigns ESG Scores?

ESG scores are assigned by specialized organizations and rating agencies that evaluate companies based on their Environmental, Social, and Governance practices. These agencies use proprietary methodologies to analyze publicly available data, company disclosures, and sometimes direct engagement with businesses to assign scores or ratings.

Major ESG Rating Agencies:

1. MSCI ESG Ratings
   • Provides ratings from AAA (leader) to CCC (laggard) based on how well a company manages ESG risks relative to its industry peers.
   • Evaluates over 8,500 companies globally.
2. Sustainalytics
   • Focuses on ESG risk management by assessing a company’s exposure to material ESG risks and how well they manage these risks.
   • Assigns risk ratings ranging from Negligible to Severe.
3. S&P Global ESG Scores
   • Uses the Corporate Sustainability Assessment (CSA) to assign scores based on a company’s ESG performance.
   • Covers a wide range of industries and regions.
4. FTSE Russell ESG Ratings
   • Provides a comprehensive evaluation of ESG risks and opportunities for thousands of companies, focusing on industry-specific metrics.
5. ISS ESG (Institutional Shareholder Services)
   • Focuses on governance, environmental, and social factors, providing detailed ratings that investors use for proxy voting and engagement strategies.
6. CDP (Carbon Disclosure Project)
   • Specializes in environmental ratings, particularly on climate change, water security, and forest impact, with scores ranging from A to D-.

How ESG Scores Are Determined:

• Data Collection: Agencies analyze company reports, sustainability disclosures, regulatory filings, and media coverage.
• Industry Comparison: Scores are often benchmarked against industry peers to provide context.
• Methodology: Agencies use proprietary scoring frameworks that weigh various ESG factors differently depending on their relevance to the industry or region.

Why ESG Ratings Vary Across Agencies:

Each agency uses different methodologies, data sources, and weighting systems, leading to variations in ESG scores for the same company. This diversity highlights the need for companies to ensure consistent and transparent ESG reporting to improve their ratings across multiple platforms.

By understanding the agencies and their methods, companies can better align their ESG efforts to meet stakeholder expectations.

Environmental

The environmental element involves looking at how a company or organization uses natural resources across its operations. In other words, this element considers how these companies or organizations use energy and manage the environmental impact that their operations have.

Some factors considered here include:

• Climate change.
• Carbon emissions.
• Opportunities in renewable energy and clean technology.
• The use of natural resources.
• Biodiversity and land use.
• Waste management.

Social

The social element focuses on companies, people, culture, and their effect on the broader community. This element focuses on a company’s business relationships, the suppliers it uses, its contributions to the community, and the working conditions of its employees.

Some factors considered here include:

• Product liability
• Social opportunity
• Product safety and quality
• Human capital management and development
• Supply chain labor standards
•  Privacy and data security

Governance

Finally, the governance element involves looking at a company or organization’s internal controls, practices, and processes it has in place to comply with legislation and regulations. This, for instance, include that a company uses accurate and transparent accounting methods, implements proper shareholder voting processes, and doesn’t engage in any illegal practices.

Some factors considered here include:

• Corporate governance
• Business ethics
• Board diversity
• Text transparency

Getting Started With ESG Reporting

Now that we’ve seen what ESG reporting is and why it’s important, let’s consider the steps a company will need to follow to get started with ESG reporting.

Develop an ESG Strategy

The first step is for companies to create an ESG strategy that can help them be sustainability-driven. During this process, they’ll need to consider issues and factors that impact the company’s ESG impacts and gauge their relative importance relating to sustainability. This is known as the materiality matrix or assessment.

During the development of the ESG strategy, it’s also important to involve and consider the decisions of all relevant stakeholders. It’s also important to keep in mind that sustainability practices and a company’s needs and goals change over time.

This makes it vital to constantly review the ESG strategy and processes and adjust them according to the evolving needs and requirements. When this happens, it’s also important to notify all stakeholders of the changes and progress relating to the strategy.

Decide On the Right Reporting Framework

The next step is to decide on the right ESG reporting framework. Here, there are a variety of ESG reporting standards and companies should consider each carefully to find the right one based on the specific requirements.

Some of these ESG reporting standards include:

ISSB (IFRS S1 & S2). The International Sustainability Standards Board (ISSB), created by the IFRS Foundation, has introduced the first global baseline for sustainability-related disclosures. These include IFRS S1, which outlines general requirements for sustainability-related financial information, and IFRS S2, which focuses specifically on climate-related disclosures. These standards consolidate elements from SASB and TCFD, and are increasingly being adopted by jurisdictions and investors worldwide as the primary global ESG framework.

• GRI (Global Reporting Initiative). The GRI Standards remain the most widely used framework for sustainability reporting. They help organizations disclose their most significant economic, environmental, and social impacts in a way that is accessible to a wide range of stakeholders—not just investors. GRI’s modular system includes universal, topic, and sector standards, enabling organizations to report with clarity on sector-specific ESG risks and opportunities. GRI also aligns with the ESRS for dual reporters in the EU.
• ESRS (European Sustainability Reporting Standards). Mandatory for companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD), the ESRS were developed by EFRAG to ensure consistency, comparability, and transparency across sustainability disclosures in the EU. These standards adopt a double materiality lens, addressing both the financial impact of ESG issues on the company and the company’s impacts on people and the planet. The first set of sector-agnostic ESRS became applicable in 2024, with sector-specific standards rolling out in 2025 and beyond.
• CDP (Carbon Disclosure Project). CDP operates a global environmental disclosure system that helps companies, cities, states, and regions manage their environmental impacts. CDP’s climate change, water, and forest questionnaires are closely aligned with ISSB’s IFRS S2 and are widely used by companies seeking to disclose their environmental performance to investors and stakeholders. In 2024, CDP updated its platform to align more directly with the ISSB’s climate framework.
• TNFD (Taskforce on Nature-related Financial Disclosures). Launched in 2023, TNFD helps organizations report on nature-related risks and dependencies, including biodiversity loss and ecosystem degradation. It mirrors the structure of TCFD and complements ISSB standards by encouraging disclosures around governance, strategy, risk management, and metrics and targets related to nature. Adoption is growing among companies in agriculture, extractives, and finance.
• SASB. Now maintained by the ISSB, SASB Standards provide detailed guidance on financially material ESG issues across 77 industries. While no longer evolving independently, SASB metrics are still widely used and have been incorporated into IFRS S1. Many companies continue to reference SASB as a practical guide for industry-specific disclosures.
• TCFD. Although officially superseded by IFRS S2, the Task Force on Climate-Related Disclosures  has had a lasting impact on ESG reporting. Many jurisdictions (including the UK and Canada) still refer to its four-pillar structure—governance, strategy, risk management, and metrics—as part of transitional guidance. Companies transitioning to ISSB often start by aligning with TCFD.
• UNPRI (Principles for Responsible Investment). The UN-supported Principles for Responsible Investment provide a voluntary framework for investors to incorporate ESG factors into decision-making and ownership practices. While not a reporting framework in the strict sense, UNPRI membership often indicates a company or investor’s broader ESG commitment, particularly in the finance sector.
• SDG Impact Standards. Developed by the UN Development Programme, these standards help companies and investors align their activities with the UN Sustainable Development Goals (SDGs). They focus on integrating sustainable development into core business strategy, decision-making, and performance measurement—particularly for those seeking to measure non-financial impact.

It’s important to note that there isn’t a one-size-fits-all approach to ESG reporting standards and the right standard will depend on a specific company’s industry, its reporting requirements, who it wants to report to, and what information it wants to report.

Gather Data

The next step is to gather the data to compile the report. Fortunately, a lot of this data can be gathered internally and companies will find relevant ESG-related information in the processes it uses in its different departments or as part of its operations.

One of the most important aspects when it comes to collecting data is that the data should be accurate and reliable. Simply put, based on inaccurate data, the report will be inaccurate and unreliable.

Ensure Reporting Reliability and Transparency

Tying in, to a certain extent, with ensuring that gathered data is reliable and accurate is transparency. In other words, it’s vital that the ESG report be transparent. The foundation of this is developing the right processes in order to achieve this. In turn, this involves finding the right metrics that will allow companies to properly identify and capture ESG activities and their impacts.

Now, these metrics will differ from company to company but the key is that they’re adaptable. In other words, they should be specific, measurable, achievable, realistic, and time-sensitive. The reason for this is simply that the right metrics allow companies to track their progress over time and see the impacts that their improvements have.

Communicate the ESG Report Effectively

The final step in the process is to communicate the results of the report effectively. This requires a reflection on the company’s ESG impacts during the reporting period and communication of its performance in the context of sustainability.

Another important aspect when communicating the report to investors, stakeholders, and the public is to demonstrate how the company’s performance in respect of ESG-related aspects aligns with its overall business strategy.

Use Technology

Although not strictly a step in the reporting process, it might be valuable for companies to consider using an appropriate  ESG reporting  solution. With 58% of organizations already exploring new technology to enhance their ESG reporting capabilities, the need for action is undeniable.

Identifying the right tools remains a challenge as businesses seek solutions that meet both operational needs and evolving regulations. This pressure is driving investment in modern technologies that streamline compliance, enhance data accuracy, and reduce risk. When successful, they will:

• Speed up the ESG reporting process. With the right ESG solution, companies will be able to manage their ESG reporting quickly, securely, and efficiently. As such, they’ll be able to identify the stakeholders that will be involved in each part of the report easier, and they’ll be able to define the data flow of the information the report is based on.
• Connect their reports directly to source data. With an ESG solution, companies will be able to connect their data directly to their ESG reporting efforts. This allows them to adapt to new reporting requirements with less effort, and they’ll be able to capture changes in real-time. As a result, their reports will always be up to date with the latest, relevant figures.
• Reduce errors in their ESG reporting processes. Because ESG solutions help companies automate the process of report creation and revision, they’ll eliminate manual processes. As a result, their reporting will be more consistent, and they’ll reduce errors and their risks.

The Bottom Line

It’s no secret that ESG reporting is becoming more prevalent. This is for a variety of reasons including legislation and regulations that require it or companies voluntarily providing the information on their ESG impacts as part of their annual reports.

With ESG reporting, you gain a clearer view of your company’s risks and opportunities—and can show how financial and non-financial performance are connected. More importantly, you’ll streamline processes, cut costs, boost efficiency, and lower risk.

This can enhance your company’s reputation, build loyalty, and increase brand visibility—ultimately attracting more investment and growth opportunities. To learn more about ESG reporting and the steps your company can take, explore insightsoftware’s ESG research report.