ESG Reporting Guide: How to Meet Global Standards

Corporate disclosure requirements have shifted fundamentally. ESG reporting has moved from voluntary practice to legal mandate across major economies, with regulators now treating sustainability disclosures with the same seriousness as financial statements. More than 50,000 companies globally face mandatory requirements introduced since 2020, according to the Global Reporting Initiative. Non-compliance carries tangible penalties: fines reaching millions of euros, exclusion from public procurement, and restricted capital access. This guide provides a practical framework for meeting global standards and building systems that deliver compliant disclosures.

1. Identify Your Legal Obligations

Three primary frameworks dominate the landscape. Understanding which ESG reporting requirements apply to your organisation represents the critical first step. The Corporate Sustainability Reporting Directive (CSRD) covers approximately 50,000 companies with EU nexus. You fall under CSRD if you are an EU-listed entity of any size, an EU company exceeding two of three thresholds (250 employees, €50m turnover, €25m balance sheet), or a non-EU company with €150m EU turnover plus qualifying subsidiary or branch. Large listed companies (over 500 employees) report first in 2025 for fiscal year 2024. Large unlisted companies follow in 2026, with listed SMEs reporting from 2027-2028. The CSRD mandates double materiality assessment across 12 European Sustainability Reporting Standards covering environmental, social and governance topics.

The International Sustainability Standards Board (ISSB) framework applies based on jurisdiction adoption. More than 20 countries including the UK, Canada, Singapore, Japan and Australia have committed to implementation. The UK requires premium-listed companies to apply IFRS S1 (general sustainability) and IFRS S2 (climate) for periods beginning 1 January 2025. The ISSB focuses exclusively on investor materiality: sustainability matters that could reasonably affect enterprise value.

US Securities and Exchange Commission rules remain in flux. The SEC proposed comprehensive climate disclosure in March 2022, mandating Scope 1 and 2 emissions for all registrants, plus Scope 3 for large filers when material. Legal challenges have delayed implementation. US-listed companies should monitor developments and prepare systems for the proposed disclosures. Financial institutions face additional requirements from the European Banking Authority and Bank of England.

2. Conduct Your Materiality Assessment

Materiality assessment determines which ESG topics warrant disclosure. For ISSB compliance, focus on sustainability matters that could reasonably influence investor decisions. This captures issues affecting cash flows, access to finance, or cost of capital. Review disclosures from direct competitors first. Institutional investors now integrate ESG factors into 89% of allocation decisions according to PwC’s 2024 survey.

Key questions include: Could physical climate risks (flooding, extreme heat, water scarcity) damage facilities or disrupt operations? Could transition risks (carbon pricing, emissions regulations, technology shifts) increase costs or strand assets? Could social factors (labour shortages, community opposition, supply chain violations) affect operations? Could governance failures trigger regulatory action?

For CSRD compliance, conduct double materiality assessment covering both impact materiality (how your company affects people and planet) and financial materiality (how sustainability issues affect your company). A topic meets the threshold if it satisfies either dimension. Impact materiality assessment requires stakeholder engagement beyond investors. The European Financial Reporting Advisory Group expects consultation with affected communities, employees, trade unions, NGOs, customers and suppliers.

Document who you consulted, when, through what methods, what questions you asked, and how you weighted inputs. Work systematically through the 12 ESRS standards: five environmental (climate, pollution, water, biodiversity, circular economy), four social (own workforce, value chain workers, affected communities, consumers), and three governance topics. The process typically takes 3-6 months for first-time implementation.

3. Build Your Data Collection Systems

ESG reporting quality depends entirely on data infrastructure. Research from Deloitte indicates 62% of companies cite data collection as their primary challenge. Establish governance first. Appoint an executive sponsor with budget authority. The CFO proves most effective since ESG reporting increasingly mirrors financial reporting in rigour and audit requirements.

Form a steering committee covering finance (owns overall process and data quality), operations (provides facility environmental data), HR (supplies workforce metrics), procurement (gathers supplier information), legal (ensures compliance), and IT (manages systems integration).

Climate disclosures under IFRS S2 or CSRD ESRS E1 require greenhouse gas emissions across three scopes. Scope 1 covers direct emissions from sources you control: natural gas and fuel oil for heating, diesel and petrol for vehicles, refrigerant leakage, and process emissions. Scope 2 captures indirect emissions from purchased electricity, heat and cooling. Scope 3 includes value chain emissions: purchased goods, transportation, business travel, waste, and product use.

Collecting this data requires electricity consumption (kWh) from every facility, natural gas and heating oil usage, fleet fuel consumption by type, refrigerant quantities, supplier emissions or spend data, transportation distances and modes, employee travel bookings, and waste volumes by disposal method.

Social metrics demand workforce data broken by gender, age and employment type. You need health and safety statistics including total recordable incident rate (TRIR, calculated per 200,000 hours worked), lost time injury frequency rate, training hours per employee, and turnover rates. Governance reporting needs board composition (diversity, independence, tenure), executive compensation including ESG-linked targets with outcomes, whistleblower reports and substantiated incidents.

Technology platforms have become essential for effective ESG reporting. Enterprise ESG management software from providers including Workiva, SAP Sustainability Control Tower, Persefoni and Sphera automate data collection across sites, apply calculation methodologies like the GHG Protocol, maintain audit trails, and generate outputs for multiple frameworks simultaneously. Evaluate platforms on framework coverage (CSRD, ISSB, SEC compliance), data integration (connections to ERP, HR, facilities systems), audit trail capabilities, and supplier engagement features.

Enterprise platforms typically cost £50,000 to £500,000 annually depending on company size and complexity. Implementation takes 4-9 months. Smaller companies can start with specialist tools like Watershed or Normative for carbon accounting at £10,000-£50,000 annually.

4. Prepare for External Assurance

The CSRD requires limited assurance beginning with first reports, progressing to reasonable assurance from 2028. The UK mandates climate assurance from 2026. Limited assurance involves auditors checking whether anything suggests your report contains material misstatements. Reasonable assurance requires auditors to gain sufficient confidence that the report is free from material misstatement, demanding substantially more evidence and testing.

Design for controls from the start. Document data collection processes: who collects each metric, what source systems provide data, what calculations apply, what checks occur, who reviews and approves, and how corrections flow through. Auditors will test these controls just as they test financial controls. Common assurance failures include incomplete calculation documentation, lack of evidence trail for underlying data, inadequate controls over supplier-provided information, and missing approval workflows.

Engage assurance providers at least 12 months before your first assured report. The Big Four accounting firms (PwC, EY, Deloitte, KPMG) plus specialists like ERM and DNV dominate the market, but capacity remains constrained. Ask about their capacity, sector experience, what evidence they require, what your teams should prepare, and expected fees. Limited assurance typically costs £25,000 to £500,000 depending on size and complexity. Reasonable assurance costs roughly double to triple this amount given substantially greater testing required.

5. Produce Your Final Disclosures

Structure reports according to framework requirements. CSRD mandates specific disclosure within the management report section of your annual report. ESRS 2 sets out general requirements: basis of preparation, governance, strategy, impact and risk management, and metrics and targets. Topic-specific standards follow this structure for each material topic. ISSB reports follow IFRS S1 and S2 structure covering governance, strategy, risk management, and metrics and targets.

Write with precision and specificity. Vague statements like “we are committed to reducing emissions” provide no decision-useful information. Instead: “We target 42% reduction in absolute Scope 1 and 2 emissions by 2030 from 2021 baseline (from 125,000 to 72,500 tCO2e). In 2024 we achieved 18% reduction to 102,500 tCO2e through renewable electricity procurement (12 percentage points) and fleet electrification (6 percentage points).”

Quantify impacts wherever possible. “Material water usage” means nothing; “withdrew 2.3 million cubic metres from water-stressed regions in 2024, representing 34% of total withdrawal” provides useful information. Include forward-looking information linking sustainability matters to business strategy and financial planning.

Address data limitations transparently. Many companies lack complete data, especially for Scope 3 emissions and supply chain social metrics. Explain what data you have, what’s missing, how you’ve estimated gaps, and plans to improve quality. This satisfies regulators and maintains credibility with investors who understand that ESG reporting maturity varies.

Integrate with financial reporting. Modern standards require connections to financial statements. Under CSRD, sustainability reporting sits within the management report, requiring consistency with financial periods and definitions. IFRS S1 requires consistency with IFRS Accounting Standards. Ensure your reporting perimeter matches your financial consolidation scope.

Budget adequate time for report production. First-time reporters typically need 3-4 months from data closure to publication, including drafting, internal review, external assurance, legal review, board approval and formatting. Subsequent years require 6-10 weeks. Many companies underestimate iteration cycles needed to address assurance findings.

Meeting global ESG reporting standards requires sustained investment in data infrastructure, governance processes and technical capability. Successfully implementing ESG reporting systems enables companies to embed sustainability data into core business operations, gaining operational insights, identifying risks earlier and building competitive advantage. The disclosure becomes valuable proof that material sustainability issues receive appropriate management attention and board oversight.