Strategic ESG Reporting: Your Path to More Transparency

ESG reporting has become a central element of sustainable corporate governance. Before the adoption of the CSRD, only a few companies produced a sustainability report — but since 2024, large companies have been legally obliged to report comprehensively on their environmental, social and governance practices.

The regulatory requirements for ESG reporting are intended not only to create transparency, but also to offer long-term added value for all stakeholders. In this article, we explain the basics of ESG reporting and how companies can efficiently fulfill their ESG reporting requirements.

Why ESG Reporting is Essential

Not only legal requirements such as the CSRD, but also increasing demands from investors, customers, and the public for more transparency and sustainable business practices make ESG reporting essential. By publishing an ESG report, various stakeholders can compare companies in terms of their efforts towards greater sustainability and social responsibility.

Solid ESG reporting helps

• Build trust and a good reputation
• Identify and minimize risks at an early stage (e.g. geopolitical instability, climate change or regulatory changes)
• Influence investment decisions
• Make sustainability goals more visible
• To be successful in the long term (e.g. through stronger market positions due to better ESG ratings)

ESG Reporting as a Strategic Tool

ESG reporting goes far beyond simply collecting and documenting ESG data. It is a central component of a comprehensive ESG strategy that helps companies comply with regulations, proactively manage opportunities and risks and define long-term goals. Before publishing an ESG report, companies should therefore develop a clear ESG strategy that defines what data is analyzed and reported.

This strategy is not only for compliance purposes, but also enables companies to evaluate their sustainability goals in comparison to industry benchmarks and standards. This enables them to identify potential opportunities and risks and take early countermeasures to achieve their sustainability goals.

ESG reporting enables companies to make the progress made in implementing their sustainability goals visible and provide stakeholders with valuable insights. The reports show how well the milestones defined in the strategy are being achieved and highlight the materiality and impact of the measures. In this way, ESG reporting supports transparent decision-making and strengthens stakeholder confidence.

There are various ways to show ESG progress in the annual ESG report. Our customer Ingredion, for example, uses a traffic light scale to show its current ESG progress:

‍This view serves as a rough direction and initial assessment for stakeholders, while detailed target achievement is covered in the following pages of the ESG report.

ESG Reporting Obligations and Regional Differences

The ESG reporting obligation is regulated differently around the world and varies depending on the region and supervisory authority. While strict requirements have been in place in Europe since 2023 with the CSRD, the Securities and Exchange Commission (SEC) in the USA focuses on material information for investors. Companies should inform themselves in advance in order to select a suitable reporting framework and comply with the legal requirements.

Large companies in particular that exceed certain CSRD thresholds must deal with ESG reporting. However, all other companies can also be affected by an ESG reporting obligation. Stakeholders often expect voluntary reports from these companies to ensure compliance with standards such as the GRI (Global Reporting Initiative) or SASB (Sustainability Accounting Standards Board).

The selection of the ESG reporting framework used provides guidance on which ESG topics are prioritized for a company. When choosing an ESG framework, companies should consider the wishes and requirements of stakeholders in addition to the focus of the topic. Factors such as the company's own business objectives, geography, and industry also play a role.

Regardless of the approach selected, the accuracy, automation, and verifiability of the data remain key success factors for the creation of an ESG report. To adapt flexibly to the dynamic ESG landscape and ensure transparent communication, companies can use specialized software solutions for ESG reporting.

ESG Reports and their Contents: What belongs in an ESG Report?

An ESG report should contain all ESG indicators relevant to the company and its stakeholders. Many international companies use the GRI framework as a guide, which specifies which ESG data should be included in a sustainability report. The ESRS standards, which companies based in the EU must comply with in their reporting due to the CSRD, were also developed on the basis of the GRI framework. Companies that have previously reported in accordance with GRI are therefore already prepared for a sustainability report in accordance with ESRS as a first step. You can find an overview of the overlaps and differences between GRI and ESRS in our blog post: GRI vs. ESRS

The GRI standards enable detailed, comprehensive reporting. Our customer Symrise shows an exemplary implementation of an ESG report based on GRI. The company has published a wide range of ESG data in the ESG Report of 2023 so that stakeholders are fully aware of the company's ESG performance and can make decisions based on this information.

In addition to GRI, companies often also use the SASB standards. These tend to focus on sector-specific key figures that are particularly relevant for investors.

The use of such frameworks or standards ensures that the ESG performance of companies can be compared transparently. This not only helps stakeholders, but also the company itself to see how the ESG performance of its competitors is.

If no frameworks or standards are used, a company should at least take care to integrate relevant data from the various ESG areas, for example

• Environmental: carbon footprint, energy consumption, water, and waste management
• Social: Occupational safety, diversity and equality, community engagement
• Governance: Corporate governance, compliance, risk management

The Future of ESG Reporting

ESG reporting will continue to grow in importance over the coming years as regulators, investors, and consumers increasingly demand transparency and sustainability. Companies that act proactively and invest in modern technologies such as Sunhat software with AI integration can not only secure competitive advantages, but also strengthen trust and reputation in the long term.

With a well-thought-out strategy and the right tools, ESG reporting not only becomes an obligation, but also an opportunity to ensure sustainable success. Companies should implement best practices, integrate automated data management systems, and regularly train employees on ESG topics. In this way, the company can ensure its sustainable success and take a leading role in a future-oriented economy.