ESG Reporting: Understanding what it is, the different steps, and the standards for implementing it in a company

ESG reporting is a key strategic lever for companies, enabling them to assess their impacts and drive their environmental, social, and governance actions. In the face of increasing regulatory demands and investor expectations, mastering this reporting becomes crucial for enhancing transparency and competitiveness. In this article, Greenscope helps you fully understand ESG reporting, decipher its challenges, benefits, and the necessary tools to turn it into a driver of sustainable transformation.

ESG reporting is the process by which companies assess and communicate their environmental, social, and governance sustainability performance. It offers organizations a structured framework to disclose their ESG data, measure impact, and identify improvement areas. This report can be public or shared with selected stakeholders, according to the requirements of normative or regulatory frameworks. It enables more transparent communication with all stakeholders: companies, employees, investors, financial institutions, regulators, and civil society actors (consumers, NGOs, etc.).

Framed by regulations such as the CSRD, SFRD, and the European Taxonomy, ESG reporting is not just a legal obligation. It's a true strategic lever for companies that want to anticipate future environmental and social challenges. ESG reporting allows companies to:

• Comply with regulations in a changing regulatory landscape, thereby reducing legal and financial risks.
• Identify and anticipate environmental and social risks and impacts, while seizing emerging opportunities.
• Structure and manage their CSR strategy by relying on clear quantitative indicators.
• Improve overall performance by integrating sustainability into their business strategy.
• Establish a climate of trust by communicating transparently with different stakeholders.
• Meet the growing expectations of investors and consumers, who are increasingly demanding on these issues.
• Facilitate access to responsible financing, which favors companies committed to solid ESG approaches.
• Enhance their reputation and brand image by demonstrating a sincere and measurable commitment.

ESG reporting can be voluntary or mandatory depending on the size and industry of the company. Over the past decade, legislation on this topic has evolved. In Europe, large companies have been subject to reporting obligations since 2014 with the NFRD. Adopted in 2022, the CSRD (Corporate Sustainability Reporting Directive) has expanded the scope established by the NFRD - although the Omnibus simplification project may induce a rollback. It notably introduces more precise standards to ensure the harmonization and comparability of data.

For more information about Omnibus, see our article "What you need to know about the Omnibus directive".

Small and medium-sized non-listed companies not subject to the CSRD may nevertheless need to conduct ESG reporting. Indeed, banks and investors often require ESG reporting from SMEs to access financing. The VSME (Voluntary Sustainability Reporting Standard for non-listed SMEs) is thus a framework suited to their resources, allowing them to structure their sustainability commitmentis thus a framework suited to their resources, allowing them to structure their sustainability commitment.

Sustainability reporting is structured around the three ESG pillars: Environment, Social, and Governance. They allow companies to assess their impact and improve their practices based on key indicators.

Environmental KPIs

The environmental indicators assessed in sustainability reporting allow companies to measure their ecological footprint. They cover key aspects such as carbon emissions, energy consumption, waste management, and biodiversity preservation.

The main environmental KPIs are:

• Greenhouse Gas Emissions (GHG): measured in tons of CO₂ equivalent and divided into three scopes. (scope 1 - direct, scope 2 - indirect related to energy, and scope 3 - value chain).
• Energy Consumption: amount of energy used (in megawatt-hours - MWh).
• Waste Management: volume produced, recycling rate, recovery, and reduction actions.
• Biodiversity Preservation: limiting impact on ecosystems, consuming natural resources, and evaluating dependencies on ecosystem services.

Social KPIs

The social indicators in ESG reporting allow evaluating a company's impact on its employees, stakeholders, and society in general. They encompass aspects such as working conditions, diversity, health and safety, and societal engagement.

The main social KPIs are:

• Gender Equality: measuring pay gaps, promotions, and parity in the company
• Working Conditions: tracking absenteeism rate, turnover, overtime, and training days.
• Health, Safety, and Inclusion: compliance with standards, diversity of teams (accident rates, inclusion of people with disabilities or in professional integration)
• Human Rights: compliance with international conventions (certifications obtained, potential sanctions)
• Societal Commitment: participation in solidarity projects

Governance KPIs

In ESG reporting, governance indicators evaluate how organizations are led, managed, and controlled. Strong governance enhances investor trust and ensures responsible decision-making.

The main governance KPIs are:

• Board Structure: parity, transparency of remuneration, independence, and specialized committees
• Combatting Corruption and Fraud: reported cases, sanctions, training, and control mechanisms
• Risk Management: integration of ESG risks into strategy and implementation of action plans
• Responsible Tax Practices: transparency of tax strategies and fair contribution to public resources
• Supply Chain Responsibility: supplier engagement in sustainable practices and adherence to environmental and social standards

Organizations' ESG reporting is governed by standards, frameworks, and regulatory frameworks. There are many ESG frameworks applicable at different levels: global, European, or national. As a single framework does not always cover all required information, companies often combine multiple frameworks to provide a comprehensive view of their sustainable initiatives.

The main international frameworks are as follows:

• Global Reporting Initiative (GRI): Created in 1997, the GRI is one of the most established reporting frameworks. It requires companies to publish reports on their economic, social, and environmental impacts in connection with the UN's Sustainable Development Goals (SDGs). The GRI offers a universal framework adaptable to all organizations.
• Carbon Disclosure Project (CDP): A non-profit organization, the CDP annually assesses companies on their carbon emissions, water management, and deforestation through a questionnaire rated from A to D-. In 2023, more than 18,700 companies submitted their data.
• Sustainability Accounting Oversight Board (SASB): Established in 2011, the SASB defines sector standards covering the environment, social and human capital, innovation, and governance. Over 2,200 companies use it.
• Task Force on Climate-Related Financial Disclosures (TCFD): Created at COP21, the TCFD structures the reporting of climate-related financial risks. It was dissolved in December 2023 and replaced by the ISSB standards.
• International Sustainability Standards Board (ISSB): Under the IFRS Foundation, the ISSB aims to unify ESG reporting standards. These standards align with existing frameworks (CDSB, SASB, ESRS, GRI, TCFD) to improve the comparability and transparency of ESG information for investors.
• Science-Based Targets initiative (SBTi): Launched in 2015, it helps companies set climate targets aligned with the Paris Agreement and achieve Net Zero through tailored sectoral pathways.
• GHG Protocol: This international framework establishes standards for accurate emissions inventory and reduction. It distinguishes three types of emissions: Scope 1 (direct emissions), Scope 2 (indirect emissions related to energy), and Scope 3 (other indirect emissions across the entire value chain).

At the European level, regulations are in place to frame corporate ESG reporting:

• Corporate Sustainability Reporting Directive (CSRD): Replacing the NFRD, the CSRD mandates detailed ESG reporting for European companies, with progressive implementation starting in 2025 based on their size and activity. The CSRD relies on a set of standards, the ESRS (European Sustainability Reporting Standards), developed in collaboration with EFRAG (European Financial Reporting Advisory Group).
• Sustainable Finance Disclosure Regulation (SFDR): This regulation requires financial actors to disclose a selection of ESG criteria and standardized indicators (PAI), thereby enhancing transparency and promoting responsible investments. It also established categories of financial products (articles 6, 8, or 9), facilitating better identification of “sustainable” products.
• European taxonomy: Established as part of the Green Deal, it classifies economic activities based on their sustainability and helps guide investments towards low-carbon sectors. Companies and financial actors must declare the share of their turnover compliant with this taxonomy.

Certain national regulations also require financial actors or companies to carry out ESG reporting:

• In the European Union, several countries have their own regulations for due diligence - LkSG, or Lieferkettensorgfaltspflichtengesetz in Germany, Law No. 2017-399 in France - for sustainable finance (Article 29 of the Energy Climate Law in France) or corporate reporting. These regulations precede or complement European regulations.
• In the rest of the world, many countries are also engaging in regulating ESG reporting: China with the China Sustainability Disclosure Standards (source), Japan (source), and the United Kingdom with the Sustainability Disclosure Requirements (source).

To structure an effective ESG reporting that complies with regulations and stakeholder expectations, companies must follow a progressive and rigorous approach. Here are the key steps in the process:

1. Define the objectives and scope of the report: Initially, it is important to identify the applicable frameworks (GRI, SASB, IFRS S1 & S2) and select the ESG indicators relevant to the business. This step is conducted in collaboration with internal committees (ESG committee, financial management, operational teams) to ensure a consistent and cross-functional approach.
2. Engage stakeholders and identify material issues: Map stakeholders (customers, suppliers, investors, regulators) and engage in dialogue to identify the company's ESG priorities. A materiality matrix helps to prioritize these issues and align strategy with internal and external expectations.
3. Collect, analyze, and centralize data: Data collection and analysis is a key component of reporting. Its quality depends on the reliability and traceability of the data used. Data maturity varies between organizations. Validation by an internal audit or a third-party organization enhances the report's credibility and limits the risk of non-compliance.
4. Design a clear and compliant report: The ESG report should be designed to ensure clarity and transparency. The document should be structured around the three ESG pillars, integrate measurable KPIs, set short, medium, and long-term goals, and provide stakeholders with a clear view of the company's ESG strategy.
5. Commit to continuous improvement: ESG reporting does not end with its publication; it must be a lever for continuous improvement. Regular monitoring of indicators, frequent audits, and support from experts or ESG consultants [link] allow refining the strategy and optimizing the process over time.

👉 How can Greenscope help you?

At Greenscope, we support companies and financial institutions in managing their ESG strategy. We intervene at every stage of the reporting process, from data collection to report publication. Our ESG solution simplifies data collection and analysis, tracks progress in real-time through customizable dashboards, and communicates effectively with stakeholders through automated, tailor-made reports that comply with current regulations.

As you may have understood, ESG reporting is a strategic challenge for companies and requires efficient tools to automate data collection and analysis, anticipate changes, and optimize decision-making. One of the main challenges is managing a significant volume of data coming from multiple sources. Automation is therefore essential to reduce human error and improve processes, especially when data collection relies on scattered manual entries.

Use ESG reporting software

Among existing solutions, ESG reporting software, used by more and more companies, greatly facilitates the process by centralizing and automating data collection and generating reports that comply with regulatory frameworks. These tools offer many benefits:

• Time-saving and efficiency: They automate repetitive tasks and centralize data from various sources (ERP, CRM, HR databases). Interoperability between different information sources is essential to ensure seamless data flow and their continuous update.
• Data reliability and quality: By reducing manual errors and ensuring traceability through automated controls, ESG software can generate reliable and high-quality reporting.
• Compliance Support : they integrate up-to-date regulatory frameworks and preconfigure mandatory data points, minimizing the risk of penalties and allowing you to stay up-to-date with legal developments and the growing demand for ESG transparency.
• In-depth ESG Impact Analysis : thanks to sustainability-specific calculation engines, these tools offer detailed analyses that allow strategies to be refined based on stakeholder expectations and future developments.

👉 Discover Greenscope's ESG software

Greenscope's ESG reporting software relies on advanced technologies and AI to collect, analyze, and control the consistency of ESG data. It also ensures compliance with the latest regulatory standards. It offers advanced visualization tools and customization tailored to each organization, while being auditable and intuitive.

Finally, more and more companies are using artificial intelligence and predictive analytics to anticipate trends and model different scenarios. Specialized tools allow, for example, conducting ESG audits [link] and specifically evaluating the impact of climate risks on a supply chain, predicting the evolution of regulatory requirements, or optimizing the use of energy resources. Rather than undergoing market and regulatory changes, companies can thus gain a competitive edge and proactively adjust their strategies.

Once ESG reporting is completed, it must be publicly communicated. For effective communication, companies must adopt a multidimensional approach and diversify report formats by combining traditional annual reports with interactive online publications.

The digital format of the annual report is mandated by the CSRD and must present data in a clear and understandable manner for all stakeholders. In a report published at the beginning of 2025, the AMF (Autorité des Marchés Financiers)¹ studied the sustainability reports of listed companies and made several recommendations, including making the reports clearer and more accessible by including explanatory tables and diagrams.

The communication targets are diverse: investors, clients, regulators, employees, and civil society, each with specific expectations. Investors focus on financial and long-term performance, clients and civil society on social and environmental impacts, and regulators on compliance and transparency.

Finally, for effective dissemination, multiple channels should be used. Publishing on the company’s website allows reaching a broad audience. ESG transparency platforms, such as the Carbon Disclosure Project (CDP) or the future European platform ESAP (European Single Access Point), strengthen the credibility of the data. Additionally, shareholder-specific materials can be created to provide reports focused on their expectations. Finally, throughout the process, it is essential to keep in mind the principles of responsible communication, established by ADEME², to avoid greenwashing and ensure the transparency and integrity of reporting.

1. https://www.amf-france.org/sites/institutionnel/files/private/2024-12/rapport-amf-2024-bilan-reporting-durabilite-des-societes-cotees_fr.pdf
2. https://communication-responsable.ademe.fr/