ESG reporting is the process by which organisations disclose data on their environmental, social and governance performance, enabling investors, regulators and stakeholders to assess non-financial risks and long-term sustainability. As climate risk, supply chain transparency and corporate accountability move up the global agenda, ESG reporting has become a central requirement for modern business.
Once considered voluntary or reputational, ESG reporting is now increasingly mandated through regulation, driven by investor scrutiny and linked directly to financial performance, risk management and access to capital.
What Is ESG Reporting?
ESG reporting refers to the structured disclosure of information across three core areas:
- Environmental: greenhouse gas emissions, energy use, water consumption, waste, biodiversity impact and climate risk
- Social: labour practices, health and safety, human rights, supply chain standards and community impact
- Governance: board structure, executive pay, ethics, compliance, shareholder rights and transparency
These disclosures are typically published in annual sustainability reports, integrated reports or regulatory filings, using recognised reporting frameworks.
Why ESG Reporting Matters
The importance of ESG reporting has grown rapidly as climate change, social responsibility and corporate governance failures increasingly translate into financial risk.
For investors, ESG data provides insight into long-term resilience, operational risk and exposure to environmental and regulatory change. For companies, ESG reporting supports strategic decision-making, strengthens stakeholder trust and improves comparability in global markets.
Regulators now view ESG reporting as essential to protecting financial stability and ensuring transparency in capital markets.
Key ESG Reporting Frameworks
Several global frameworks guide how ESG reporting is structured and disclosed:
- Global Reporting Initiative (GRI) – widely used for comprehensive sustainability reporting
- International Sustainability Standards Board (ISSB) – focused on investor-relevant sustainability disclosures
- EU Corporate Sustainability Reporting Directive (CSRD) – mandatory ESG reporting framework for companies operating in the EU
Many organisations now align with multiple frameworks to meet regulatory, investor and stakeholder expectations.
ESG Reporting and Regulation
Regulatory pressure has transformed ESG reporting from a voluntary exercise into a legal obligation for many businesses.
In Europe, the CSRD significantly expands the number of companies required to report ESG data, introducing stricter audit requirements and standardised metrics. Similar developments are underway globally, including climate disclosure rules linked to financial reporting.
As regulation increases, inaccurate or incomplete ESG reporting now carries legal, financial and reputational risk.
Challenges in ESG Reporting
Despite its growing importance, ESG reporting presents several challenges:
- Data availability and quality across global operations
- Inconsistent methodologies between reporting frameworks
- Supply chain transparency and verification
- Risk of greenwashing without robust governance
Addressing these challenges requires stronger data systems, cross-departmental coordination and independent assurance.
The Future of ESG Reporting
ESG reporting is moving towards greater standardisation, digitalisation and regulatory alignment. Investors and regulators increasingly expect ESG data to be as reliable and decision-useful as financial information.
As climate risk and sustainability performance become integral to business strategy, ESG reporting will continue to shape how companies measure success, manage risk and demonstrate accountability.
Related coverage on corporate sustainability and climate policy can be found in our Technology & Innovation section.
