ESG reporting refers to the disclosure of environmental, social, and governance (ESG) information by companies to stakeholders. This reporting enables investors, regulators, employees, and customers to understand how a company manages non-financial risks and opportunities. ESG reporting has grown from a niche activity to a mainstream expectation, particularly as sustainability, social impact, and ethical business practices have become essential aspects of corporate performance.

The need for ESG reporting emerged from growing concerns around climate change, corporate ethics, diversity, and long-term sustainability. Companies are now expected not just to generate profits but to operate responsibly. ESG disclosures help organizations communicate their efforts and commitments in these areas transparently.

ESG reports often cover topics such as carbon emissions, energy usage, labor practices, diversity metrics, board composition, and anti-corruption policies. The goal is to provide a well-rounded view of how a company operates beyond its financials.

Why ESG Reporting is Important Today

Today’s businesses face increasing pressure from multiple fronts—regulators, investors, employees, and customers—to be more transparent and accountable. ESG reporting has become a key tool for businesses to build trust and manage risk in a complex, evolving landscape.

Who Benefits from ESG Reporting:

  • Investors use ESG data to assess long-term value and risk.

  • Regulators seek disclosures to ensure compliance and transparency.

  • Employees want to work for organizations that align with their values.

  • Customers prefer brands that act ethically and sustainably.

Neglecting ESG reporting can lead to reputational harm, investor divestment, or regulatory penalties. On the other hand, strong ESG performance and transparent reporting can enhance a company’s credibility, attract investment, and improve stakeholder engagement.

Problems ESG Reporting Helps Solve:

  • Environmental degradation and resource mismanagement

  • Social inequality and poor labor practices

  • Governance failures like lack of board diversity or transparency

  • Lack of standardized data on sustainability performance

ESG reporting helps companies identify gaps, set measurable goals, and track progress. It also allows stakeholders to compare companies using consistent data.

Recent Updates in ESG Reporting (2024–2025)

The past year has seen major developments in the ESG landscape, particularly around standardization and mandatory disclosure.

Key Trends and News:

UpdateDescription
CSRD in the EUThe Corporate Sustainability Reporting Directive (CSRD) came into effect in January 2024, requiring more than 50,000 EU companies to comply with detailed ESG reporting requirements.
ISSB StandardsThe International Sustainability Standards Board (ISSB) launched its first global baseline ESG standards (IFRS S1 & S2) in mid-2023. Adoption is growing in 2024–2025.
SEC Proposal in the U.S.The U.S. Securities and Exchange Commission (SEC) is expected to finalize its climate-related disclosure rule, requiring public companies to disclose carbon emissions and climate risks.
India BRSRThe Business Responsibility and Sustainability Report (BRSR) became mandatory for the top 1,000 listed companies in India in 2023 and continues to evolve in 2025.
Increased Stakeholder DemandSurveys in 2024 show that over 80% of global investors now consider ESG performance critical to investment decisions.

There is a clear move toward harmonization and comparability, making it easier for companies to follow global standards and for stakeholders to make informed decisions.

ESG Reporting and Legal Requirements

ESG reporting is increasingly being shaped by legal frameworks. While some regulations are mandatory, others are voluntary guidelines. Here are key regulatory highlights from major regions:

European Union:

  • CSRD (Corporate Sustainability Reporting Directive): Replacing the previous NFRD, CSRD requires companies to disclose in accordance with the European Sustainability Reporting Standards (ESRS).

  • EU Taxonomy: Companies must classify their activities under the EU Taxonomy to determine sustainability alignment.

United States:

  • SEC Climate Rule (Pending): Expected to require Scope 1, 2, and possibly Scope 3 emissions reporting.

  • State-Level Laws: California’s SB 253 and SB 261 require large companies to disclose emissions and climate-related risks starting 2026.

India:

  • BRSR Format: Listed companies in India must file ESG disclosures in the BRSR format, focusing on areas such as energy, water, waste, and social responsibility.

United Kingdom:

  • TCFD-aligned Disclosures: Mandatory for premium-listed companies since 2022; now expanding to other sectors and smaller companies.

Global Frameworks (Voluntary but Influential):

  • GRI (Global Reporting Initiative)

  • SASB (Sustainability Accounting Standards Board)

  • TCFD (Task Force on Climate-related Financial Disclosures)

  • ISSB (International Sustainability Standards Board)

Helpful Tools and Resources for ESG Reporting

Numerous tools, templates, and platforms can help businesses—especially small and medium enterprises (SMEs)—start and improve ESG reporting.

Software Platforms and Tools:

  • ESGgo – A user-friendly platform for SMEs to collect, analyze, and report ESG data.

  • Diligent ESG – Offers automation and benchmarking tools.

  • Novisto – Helps align disclosures with GRI, SASB, and TCFD.

  • Workiva – Integrates financial and ESG reporting in one system.

Reporting Frameworks and Templates:

  • GRI Standards Template – Free guidelines from the Global Reporting Initiative.

  • SASB Materiality Finder – Helps businesses identify material ESG issues by industry.

  • TCFD Hub – A knowledge center with step-by-step implementation guidance.

  • CDP Questionnaire – Useful for companies responding to investor ESG surveys.

Other Resources:

  • UN Global Compact – Offers ESG principles and resources for businesses of all sizes.

  • ESG Disclosure Handbook (IFC) – A free resource with case studies and step-by-step guidance.

  • Climate Disclosure Standards Board (CDSB) – Now integrated into ISSB, offers climate-focused resources.

Frequently Asked Questions (FAQs)

What does ESG stand for and how is it different from sustainability?
ESG stands for Environmental, Social, and Governance. While sustainability focuses on long-term ecological and social balance, ESG provides measurable criteria to evaluate and report a company’s performance in these areas.

Is ESG reporting mandatory for all companies?
No, ESG reporting is only mandatory for certain companies depending on local laws. However, voluntary ESG disclosure is growing due to investor expectations and reputational benefits.

What is the difference between GRI, SASB, and TCFD?
GRI focuses on impact reporting for all stakeholders. SASB is more investor-focused and industry-specific. TCFD emphasizes climate-related financial risk disclosure. Companies often use a mix depending on their audience.

How can small businesses start ESG reporting?
SMEs can begin by identifying a few material ESG issues, setting basic metrics (e.g., energy usage, employee wellbeing), and using templates or lightweight tools like ESGgo or free GRI guides.

Are ESG scores important for a business?
Yes, ESG scores from rating agencies like MSCI, Sustainalytics, or Refinitiv influence investor decisions. A higher ESG score can enhance reputation and lower the cost of capital.

Conclusion

Understanding and implementing ESG reporting is no longer optional for many businesses. As regulations tighten and stakeholders demand more transparency, clear and consistent ESG disclosure has become a vital part of business operations. Whether a company is just starting or refining an existing ESG strategy, the right tools, frameworks, and commitment can make ESG reporting a valuable asset.

While the ESG reporting landscape continues to evolve, the foundational goal remains the same: to build a more responsible, transparent, and sustainable business environment. By staying informed and proactive, businesses can turn ESG reporting from a compliance task into a strategic advantage.