ESG Reporting

Sustainability is rapidly gaining importance in the business world. More and more companies are making “Environmental, Social & Governance (ESG)” an immovable pillar of their business strategy. Regulatory provisions such as the European Union’s Corporate Sustainability Reporting Directive (CSRD) require companies to intensify their sustainability efforts and report their progress transparently.

With regard to ESG reporting, companies have to overcome a number of challenges:

• It is difficult to measure and record the emissions caused across the entire supply chain.

• The relevant data is often scattered across different IT systems and the database is incomplete.

• Data is currently often compiled in Microsoft Excel, which involves a great deal of manual effort for those involved and is prone to significant errors.

In their current study “The State of ESG & Sustainability Reporting”, the analysts at BARC examine the challenges that companies encounter in running ESG reporting. The most frequently identified challenges are:

1. Lack of quality and reliability of data (42%)

2. Too many different data sources (36%)

3. Lack of resources (32%)

Transparent sustainability reporting requires a large amount of high-quality data from various centralized and decentralized data sources. The right software tools make ESG reporting significantly more efficient by automating the collection, analysis and reporting of ESG data.

The regulatory pressure on medium-sized and large companies in terms of sustainability reporting will continue to increase. The Corporate Sustainability Reporting Directive (CSRD) significantly expands the group of companies subject to reporting requirements. In Germany alone, around 15,000 companies will have to disclose their sustainability activities from the 2025 financial year. ESG reporting plays a crucial role in meeting this requirement.

Companies should not view sustainability reporting merely as a necessary exercise and a legal obligation. In fact, the topic of sustainability has developed into a strategic competitive factor in many respects.

More and more companies are asking their business partners and suppliers for proof of their efforts to reduce their carbon footprint and achieve climate neutrality as a prerequisite for cooperation. If companies have an ESG reporting, they can provide direct information on this. Access to the capital market is also made easier as investors pay more attention to sustainable business practices.

Similarly, applicants are increasingly making their decision for or against an employer dependent on its efforts in terms of sustainability. ESG reporting is therefore an opportunity to actively counteract the shortage of skilled workers and strengthen the company’s positive public image.

With ESG reporting, the measures identified to avoid emissions and achieve climate neutrality can be quantified and tracked. Many measures not only reduce carbon emissions, but also lead to significant cost savings.