What is ESG Reporting? A Complete Guide for 2025

ESG reporting discloses a company’s performance in Environmental, Social, and Governance areas, providing transparency on sustainability and ethical practices. This guide explains the importance of ESG reporting, its role in attracting sustainable investment, managing risks, and ensuring compliance. It also covers key frameworks like GRI, SASB, and TCFD, and trends shaping ESG reporting in 2025 and beyond.

Ever wondered why major companies now publish detailed reports about their environmental practices, employee treatment, and board decisions alongside their financial results? Understanding and defining what ESG reporting is has become crucial as the business world shifts toward transparency that goes far beyond profit margins.

This transformation reshapes business success. Tesla maintained investor confidence during production challenges by demonstrating transparent governance. These companies show how effective ESG reporting attracts sustainable investors, reduces operational risks, and strengthens brand reputation.

Today,  89% of investors consider ESG data when making investment decisions.

The stakes continue escalating. The European Union now requires 50,000 companies to share detailed sustainability information. The SEC mandates climate risk disclosure for public companies.

Mastering ESG reporting fundamentals becomes essential for capturing these opportunities, avoiding regulatory penalties, and building stakeholder trust that drives long-term growth in tomorrow's transparency-driven economy.

What is ESG reporting?

ESG reporting involves disclosing a company’s performance in three key areas: Environmental sustainability, Social responsibility, and Governance. It provides stakeholders with insights into how a company manages risks and opportunities that can impact its long-term success. Unlike financial reports that focus on profits, ESG reporting highlights non-financial factors, such as environmental impact, social practices, and governance structures.

For example, Microsoft publishes annual ESG reports, detailing metrics like carbon emissions, energy use, waste management, and water consumption. These reports help stakeholders understand the company’s commitment to sustainability.

By embracing ESG reporting, companies align operations with ethical practices, ensuring long-term growth and transparency with stakeholders.

Key aspects of ESG reporting

ESG reporting covers three key areas that reflect a company’s sustainability and responsibility: Environmental, Social, and Governance. These elements help businesses show how they manage their impact on society and the planet, as well as how they govern their operations. 

Here’s a breakdown of each aspect:

1. Environmental

Environmental criteria in ESG reporting measure a company’s impact on the natural world. Key factors include:

• Carbon emissions: The Amount of greenhouse gases a company emits.

• Energy consumption: The use of renewable vs. non-renewable energy sources.

• Waste management: How efficiently a company manages waste.

• Water usage: Conservation and water usage efficiency.

For example, Microsoft regularly reports its carbon footprint and renewable energy usage as part of its commitment to carbon neutrality.

2. Social

Social factors focus on a company’s relationships with its employees, suppliers, customers, and the communities it serves. Important elements include:

• Employee health and safety: How a company ensures a safe and healthy workplace.

• Diversity and inclusion: Efforts to create an inclusive environment for all employees.

• Community engagement: How companies give back to and support local communities.

• Human rights: Protecting the rights of workers and suppliers across the supply chain.

Google has been a leader in social responsibility, with transparent reporting on diversity and inclusion initiatives.

3. Governance

Governance focuses on how a company is managed and how it ensures ethical conduct in its operations. Key factors include:

• Board diversity and structure: Ensuring a diverse and effective leadership team.

• Executive compensation: Whether compensation is tied to long-term company performance.

• Compliance and transparency: Following laws and regulations, and maintaining open communication with shareholders.

• Shareholder rights: Protecting shareholder interests through governance structures.

For example, Apple maintains strong governance practices, emphasizing ethical decision-making and accountability at the executive level.

ESG reporting frameworks

ESG reporting frameworks provide structured guidelines for companies to disclose their environmental, social, and governance performance. These frameworks help businesses align with global standards, improve transparency, and meet stakeholder expectations. Below are some of the most widely adopted ESG reporting frameworks:

1. Global Reporting Initiative (GRI): What It Is and How It Works

The Global Reporting Initiative (GRI) is one of the most commonly used ESG reporting frameworks. It offers comprehensive guidelines for companies to report on environmental, social, and governance activities. 

GRI’s focus on sustainability metrics ensures that companies can report their impacts on global issues like climate change and inequality. This framework is adaptable across industries and regions, allowing businesses to disclose their efforts toward sustainability and responsible governance.

• Focus: Broad, global sustainability metrics

• Application: Used across industries and regions

• Strength: Supports global challenges, such as climate change and inequality

By adopting the GRI framework, companies can gain a comprehensive understanding of their sustainability impact and contribute to global solutions on climate change and inequality.

2. Sustainability Accounting Standards Board (SASB) Explained

The Sustainability Accounting Standards Board (SASB) provides industry-specific ESG reporting guidelines that are investor-centric. The SASB framework focuses on financially material topics, where ESG performance can significantly impact a company's financial results. By adopting SASB’s standards, companies can better demonstrate how ESG factors affect risk and return from an investor’s perspective.

• Focus: Industry-specific, financially material topics

• Application: Primarily for investors

• Strength: Enables evaluation of ESG performance in terms of financial risk and return

SASB helps companies focus on financially material ESG topics, enabling stakeholders to make more informed decisions based on risk and return.

3. International Sustainability Standards Board (ISSB): A Global Perspective

The International Sustainability Standards Board (ISSB) was created to establish a universal set of ESG reporting standards globally. Its aim is to standardize sustainability disclosures, making it easier for businesses worldwide to report their sustainability performance in a consistent and comparable manner. By focusing on integrating ESG into mainstream financial reporting, the ISSB enhances the transparency and credibility of corporate sustainability efforts.

• Focus: Standardizes ESG disclosures globally

• Application: Aims for comparability and consistency

• Strength: Integrates ESG into mainstream financial reporting

The ISSB framework is crucial for companies seeking global standardization in ESG reporting, ensuring their sustainability efforts are communicated consistently worldwide.

4. Task Force on Climate-related Financial Disclosures (TCFD) and ESG

The Task Force on Climate-related Financial Disclosures (TCFD) framework provides guidance for companies to disclose their climate-related risks and opportunities. TCFD reports typically include insights on governance, strategy, risk management, and metrics related to climate risks, such as carbon emissions and other environmental impacts. 

This framework helps companies align their operations with climate goals and showcase their commitment to mitigating environmental risks.

• Focus: Climate-related risks and opportunities

• Application: Discloses carbon emissions and other climate risks

• Strength: Supports companies in aligning with climate goals

Implementing TCFD guidelines allows companies to manage and disclose their climate-related risks, helping them align with global climate goals and strengthen their sustainability efforts.

Comparing ESG frameworks: Which One Is Right for You?

Each ESG reporting framework has its own strengths and is suited to different business needs. Here’s a brief comparison:

• GRI is ideal for companies focusing on broader sustainability reporting.

• SASB is better for companies prioritizing investor-centric disclosures.

• ISSB is best for businesses looking for global standardization and comparability.

• TCFD is essential for companies focused on climate-related financial risks.

Companies may choose to combine frameworks based on their unique needs and stakeholder requirements, such as using GRI for sustainability reporting and SASB for more investor-focused disclosures.

How to Do ESG Reporting: Step-by-Step Guide

To do ESG reporting, businesses need to systematically track and disclose their environmental, social, and governance performance. This involves gathering and reporting on key sustainability metrics that reflect a company’s impact on the environment, society, and its internal governance.

Step 1: Understand the Importance of ESG Reporting

What is ESG reporting, and why is it critical for business success? ESG reporting is the process by which companies disclose their environmental, social, and governance performance. It allows businesses to showcase their commitment to sustainability, ethical practices, and accountability, which directly influences their long-term growth and market reputation.

Effective ESG reporting helps businesses:

• Identify and manage risks related to environmental, social, and governance factors.

• Attract investment by demonstrating ethical business practices and a commitment to sustainability.

• Enhance stakeholder trust by showcasing transparency in a company's operations.

By focusing on these factors, companies can align their operations with global standards, meet regulatory requirements, and appeal to a sustainable investment market. 

Step 2: Set Up Your ESG Strategy and Governance Structure

To implement ESG reporting, businesses need a well-defined ESG strategy and a strong governance structure. This includes setting up a dedicated ESG team or committee that is aligned with the company’s top leadership. The team will oversee the company’s sustainability goals and integrate them into the overall business strategy. 

A robust governance structure ensures that ESG goals are prioritized across all departments and levels of the business.

Step 3: Identifying Key ESG Metrics and Data Points

What is ESG reporting, and how do you identify the right metrics to track? ESG reporting involves choosing and tracking the most relevant environmental, social, and governance metrics that align with both your business goals and stakeholder expectations. To ensure these metrics are accurate, consistent, and actionable, businesses must implement data governance practices.

Why Data Governance Matters:

To make sure the ESG metrics are accurate and transparent, businesses need to:

• Use a centralized system that integrates data across departments, ensuring consistency and real-time tracking of ESG performance.

• Implement automated data quality checks to minimize errors, ensuring data integrity for credible reporting.

Step 4: Data Collection – Gathering Relevant Information Across Departments

Effective ESG reporting begins with gathering accurate and relevant data from multiple departments, each contributing critical information on environmental impact, social responsibility, and governance practices. Data is often fragmented across various systems, and collecting it efficiently is key to creating transparent, trustworthy reports.

Steps to Collect ESG Data:

• Identify Relevant Departments:

  ESG data is often fragmented across different teams, so businesses must centralize this information to ensure consistent reporting. Tools like data integration platforms can help centralize and organize ESG data across systems.

• Establish Data Governance Standards:

  Set up standardized definitions and reporting protocols to ensure data consistency across departments. This makes sure each department’s contribution is uniform and aligned with global ESG reporting standards.

• Automate Data Collection:

  Implement tools to automate ESG data collection, minimizing manual errors and enabling real-time insights across departments.

• Ensure Compliance:

  Regularly verify that collected data meets global regulations and industry standards, such as TCFD or EU Taxonomy.

Step 5: Selecting the Right ESG Reporting Framework

When implementing ESG reporting, choosing the right reporting framework is essential to ensure that the company’s data is accurately reported, compliant with global standards, and aligned with investor expectations. An ESG reporting framework provides companies with a structured approach to disclose their sustainability efforts across the three ESG pillars: environmental, social, and governance.

Types of ESG Reporting Frameworks:

• Global Reporting Initiative (GRI): Broad sustainability metrics for global challenges like climate change and water usage. Ideal for companies with a global footprint.

• Sustainability Accounting Standards Board (SASB): Industry-specific standards that focus on financial materiality. Best for attracting investors by addressing financial risks tied to sustainability.

• Task Force on Climate-related Financial Disclosures (TCFD): Focuses on climate-related risks and opportunities affecting financial performance. Essential for companies with climate risks.

• International Sustainability Standards Board (ISSB): Provides global standardization in ESG reporting. Perfect for companies seeking consistent and comparable ESG disclosures.

Step 6: Structuring the ESG Report for Transparency

Structuring your ESG report is crucial for ensuring clarity and transparency. A well-organized report helps stakeholders quickly understand your company’s sustainability efforts. It also builds trust and demonstrates accountability.

Steps for Structuring Your ESG Report:

1. Use Clear Sections for Each ESG Pillar: Divide the report into Environmental, Social, and Governance sections, each with relevant metrics and progress towards goals.

2. Highlight Key Metrics: Focus on important ESG metrics, such as carbon emissions, employee diversity, and board diversity, and track progress.

3. Ensure Consistency: Report metrics consistently year-over-year, making data comparable and easily interpretable.

4. Use Visuals for Clarity: Incorporate charts and graphs to make the report more digestible and enhance data visualization.

5. Align with Industry Standards: Align your structure with global frameworks like GRI, SASB, or TCFD for compliance and global comparability.

Step 7: Publishing and Sharing Your ESG Report with Stakeholders

Publishing and sharing your ESG report is a critical step in ensuring transparency and engaging stakeholders. A well-published ESG report not only meets regulatory requirements but also builds trust with investors, employees, customers, and regulatory bodies. The way you share the report can determine how accessible and effective the message is.

Steps for Publishing and Sharing Your ESG Report:

1. Make the Report Easily Accessible: Publish the ESG report on your company website and ensure it is easily accessible for stakeholders, such as investors and customers.

2. Use Multiple Channels: Share the report not only on your website but also through annual reports, press releases, and social media to reach a broader audience.

3. Ensure Clear Communication: Present the report in a clear, user-friendly format with summary pages, key metrics, and visualizations for easy interpretation.

4. Align with Regulatory Requirements: Ensure that the report aligns with local and international regulations (e.g., EU Taxonomy, TCFD). This helps ensure compliance and that your report is considered credible by regulatory bodies.

5. Engage Stakeholders for Feedback: After publishing the report, engage stakeholders through surveys or feedback sessions. This helps companies improve their future reports and increases stakeholder buy-in.

Step 8: Monitoring and Updating ESG Reports for Continuous Improvement

ESG reporting is not a one-time event. It requires ongoing monitoring and regular updates to ensure that the data remains relevant, accurate, and aligned with evolving sustainability goals. Continuous improvement in ESG reporting demonstrates a company’s commitment to transparency, helps identify gaps, and ensures that the company stays ahead of regulatory requirements and stakeholder expectations.

Steps for Monitoring and Updating ESG Reports:

• Set a Regular Review Cycle: Establish a set schedule for reviewing and updating your ESG report, whether annually, quarterly, or biannually, depending on the level of reporting detail and the speed at which your company makes progress on sustainability goals.

• Track Key Metrics Over Time: Monitor the key ESG metrics you’ve reported on, such as carbon emissions, energy consumption, and employee diversity. Track changes over time to show the company’s evolution and the impact of sustainability initiatives.

• Incorporate Stakeholder Feedback: Engage stakeholders for feedback on previous reports. Use this input to refine your data collection, reporting structure, and transparency, addressing any concerns or gaps.

• Adapt to Regulatory Changes: Stay informed about evolving regulations and reporting standards (such as EU regulations or SEC guidelines) to ensure your ESG reporting remains compliant. Update your report to reflect any new requirements.

• Highlight Achievements and Areas for Improvement: In each update, emphasize accomplishments and progress made in ESG goals, but also acknowledge areas that still require attention. This shows transparency and a commitment to continuous improvement.

Coca-Cola’s Continuous ESG Reporting Updates

For instance, Coca-Cola consistently updates its ESG report to reflect progress on key sustainability metrics, such as water usage reduction and carbon emissions. By regularly updating their data and aligning with new regulations, Coca-Cola keeps stakeholders informed about their ongoing efforts and the impact of their initiatives.

By following these clear, actionable steps for ESG reporting, businesses can not only meet regulatory requirements but also build a foundation for long-term sustainability, transparency, and stakeholder trust, ultimately driving growth and value in today’s ethical economy.

ESG Reporting using OvalEdge

OvalEdge streamlines ESG reporting by providing robust data governance capabilities. Here’s how it supports the key steps in ESG reporting:

• Data Collection: OvalEdge centralizes ESG data from multiple systems, including HR, operations, and supply chain, breaking down silos and ensuring easy access to relevant information.

• Data Quality & Consistency: OvalEdge automates data quality checks to ensure that ESG data is accurate, standardized, and ready for reporting. This reduces errors and ensures consistent metrics across departments.

• Data Lineage & Traceability: OvalEdge tracks data lineage, providing full transparency into how ESG data flows through your organization. This enables auditability and helps maintain compliance with regulations.

• Ensuring Transparency and Auditability: OvalEdge offers detailed audit trails and full data lineage, ensuring that changes and updates to ESG data are traceable. This supports compliance and ensures that ESG data is always ready for audits.

By offering centralized data management, automated quality assurance, and complete data traceability, OvalEdge helps businesses ensure that their ESG reporting is consistent, reliable, and compliant.

Why ESG Reporting Matters

ESG reporting is essential for businesses as it directly impacts their long-term success by promoting transparency, risk management, and ethical practices. 

Here's why it's critical for companies:

• Builds Stakeholder Trust: Demonstrating transparency through ESG reporting helps build strong relationships with investors, customers, and employees, creating trust and accountability.

• Attracts Sustainable Investment: Clear ESG disclosures make businesses attractive to sustainable investors, showcasing resilience against long-term risks and improving access to capital.

• Enhances Risk Management: ESG reporting helps identify and manage risks related to climate change, social issues, and governance failures, reducing financial and reputational damage.

• Ensures Regulatory Compliance: Meeting global regulations is critical. Regular ESG reporting helps businesses stay compliant with local and international standards, avoiding legal penalties and reputation loss.

• Promotes Ethical Decision-Making: ESG reporting supports ethical decision-making by pushing companies to consider the long-term effects of their actions, fostering sustainability and fairness throughout the value chain.

Adopting robust ESG reporting practices is not only essential for compliance but also crucial for fostering sustainable growth, building trust, and creating long-term value in an increasingly transparent world.

Conclusion

As businesses navigate the complexities of ESG reporting, it’s essential to have a robust system in place that ensures data accuracy, transparency, and compliance. OvalEdge helps businesses streamline their ESG reporting by centralizing and governing all ESG-related data, ensuring that your reporting is not only accurate but also compliant with global standards.

With OvalEdge, you can eliminate the challenges of fragmented data, automate quality checks, and create trusted, regulator-ready reports. Empower your organization to build stronger stakeholder trust, attract sustainable investment, and mitigate risks through effective and transparent ESG reporting.

Take the next step towards comprehensive ESG reporting. 

Schedule a demo with OvalEdge today and see how we can help you transform your ESG data into a powerful tool for growth and compliance.

FAQs

1. What are the key benefits of ESG reporting for businesses?

ESG reporting helps businesses build trust with stakeholders, attract sustainable investment, and manage environmental, social, and governance risks. It also improves brand reputation, ensures regulatory compliance, and enhances long-term profitability by aligning with ethical and sustainable business practices.

2. How does ESG reporting impact investment decisions?

ESG reporting provides investors with transparent data on a company’s sustainability practices, helping them assess risks and growth opportunities. Companies with strong ESG performance are seen as less risky and more likely to generate long-term returns, attracting capital from sustainable investors.

3. What are the common challenges in ESG reporting?

Challenges in ESG reporting include data fragmentation, inconsistent quality, lack of standardized definitions, and difficulty in tracking across departments. These issues can lead to gaps and inaccuracies in the report, risking credibility and compliance.

4. Is ESG reporting mandatory for all businesses?

ESG reporting is becoming mandatory for many public companies, especially in regions like the EU and the US. Laws like the EU’s CSRD and SEC’s climate disclosures require companies to report ESG metrics. However, requirements vary by jurisdiction and industry.

5. How does ESG reporting improve risk management?

ESG reporting helps businesses identify and manage risks related to climate change, social issues, and governance failures. By tracking ESG metrics, companies can mitigate financial losses, avoid reputational damage, and proactively address potential risks in operations and supply chains.

6. What are the best frameworks for ESG reporting?

Popular ESG reporting frameworks include the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and International Sustainability Standards Board (ISSB). Each framework offers unique metrics and is tailored to different business needs and regulatory requirements.