What is ESG Reporting?

What is ESG Reporting?

ESG reporting is the act of an organization or business publicly disclosing its environmental, social, and government performance through structured reporting frameworks and data. ESG reporting provides comprehensive and standardized data based on the three pillars of ESG: environmental, social, and governance.

Some examples of what’s communicated in an ESG report include:

• Greenhouse gas emissions and carbon reduction goals
• Workforce diversity and inclusion metrics
• Executive pay ratios
• Ethical supply chain practices
• Anti-corruption policies and incidents
• Board composition and governance structure

Major ESG Reporting Frameworks

ESG reporting offers a few frameworks for metrics, methodologies, and presentation guidelines. This makes it easier for investors, organizations, and other stakeholders to compile reports consistently and concisely.

Several ESG reporting frameworks provide guidelines on metrics, methodologies, and presentation. These include:

• Global Reporting Initiative (GRI): An international reporting standard that helps organizations communicate their impact on important issues like climate change, human rights, and corruption. This framework was first introduced in March of 1999.
• Sustainability Accounting Standards Board (SASB): An independent non-profit aiming to develop accountability standards to help public corporations disclose key decision-making metrics to investors.
• Task Force on Climate-Related Financial Disclosures (TCFD): While this task force was disbanded as of October 2023, it helped survey asset managers and asset owners on their climate-related financial reporting practices. Companies are still encouraged to use the framework outlined by the TCFD.
• International Financial Reporting Standards Foundation (IFRS) S1 and S2: The IFRS has been asked to take over the monitoring of climate-related responsibilities from the TCFD upon its closure in 2023. IFRS S1 and S2 provide a global baseline of sustainability-related disclosures around the world.

What’s Required in ESG Reporting?

In both the United States and Europe, ESG reporting requirements are becoming increasingly rigorous. After two years of intense public debate, the SEC approved the nation’s first national climate disclosure rules on March 6, 2024, setting out requirements for publicly listed companies to report their climate-related risks and, in some cases, their greenhouse gas emissions. California has passed state laws mandating emissions disclosures from larger companies operating within its borders. Meanwhile, Europe has led with the Corporate Sustainability Reporting Directive (CSRD), mandating comprehensive ESG disclosures for large companies starting in 2024, with non-EU companies also included if they meet revenue thresholds. Together, these regulations signal a shift toward standardized ESG reporting worldwide.

Effective ESG reporting requires:

• Selecting a reporting framework fitting your needs
• Identifying material ESG factors to prioritize
• Developing data gathering and analytical processes
• Setting ESG targets to demonstrate strategic commitment
• Designing reports that convey performance, goals, and culture
• Verifying data through independent auditing
• Releasing annual reports and interim updates

While demanding, excellent ESG reporting strengthens stakeholder relations, transparency, and sets positive change in motion. Adopting carbon reduction strategies like Scope Zero’s Carbon Savings Account can help organizations better account for their carbon emissions in the long run and assist with reporting. Request a demo today to learn more.

ESG Reporting FAQs

Is ESG reporting mandatory?

In the U.S., ESG reporting lacks a federal mandate. Still, new SEC proposals may soon require public companies to disclose climate-related risks and emissions. The State of California has passed state-specific reporting laws for larger companies​. In contrast, Europe’s Corporate Sustainability Reporting Directive (CSRD) mandates extensive ESG disclosures for large companies starting in 2024, impacting even non-EU firms with significant European operations​.

Why is ESG reporting important?

The goal of ESG reporting is to ensure that a company or organization maintains ethical practices in three main areas of business: environmental, social, and governance. This helps key decision-makers, such as leadership teams and investors, make long-term decisions regarding the health of an organization.

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