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What is ESG Reporting? A Complete Guide
As governments mandate broad sustainability-related disclosures from companies, it’s time to build an ESG reporting strategy that works for you.
As governments mandate broad sustainability-related disclosures from companies, it’s time to build an ESG reporting strategy that works for you.
The old saying, “if you don’t measure it, you can’t manage it,” perfectly explains the necessity of measuring, monitoring, and reporting your company’s environmental, social, and governance (ESG) metrics. ESG reporting helps an organization share its ESG data and maintain accountability — both to itself and to its key stakeholders, namely investors, customers, suppliers, and employees. ESG factors can impact a company's reputation, bottom line, and ability to attract and retain top talent. By addressing ESG risks and opportunities, organizations can create a more sustainable and profitable business.
Organizations that are proactive about ESG management can get ahead now with the right tools. And companies that are serious about achieving ESG goals can also reap clear business benefits — including a stronger workforce and a healthier financial outlook. That’s a win-win.
The term “ESG” dates to a 2004 United Nations report called “Who Cares Wins” that brought the practice of integrating ESG factors into investment analysis. In an ESG report, a company publicly discloses information about its environmental, social, and governance practices to provide transparency to stakeholders. ESG reporting allows internal and external stakeholders to measure organizational performance and progress across sustainability initiatives and diversity and inclusion areas.
Common reporting areas include, but aren't limited to:
Get ready for all ESG reporting mandates, including CSRD, with automated reporting built on the trusted and flexible Salesforce platform.
Government agencies around the world are regulating ESG reporting and instituting requirements to make this information public to stakeholders. While improving your ESG reporting strategy can help you remain compliant and meet regulatory and disclosure standards, an effective ESG strategy can also deliver business value for your organization.
These business benefits include — but aren't limited to — cost savings and efficiency, improved brand perception, increased capital access and market value, and a happier, more productive workforce.
By tracking and reporting on ESG metrics, organizations can identify opportunities to reduce energy, waste, and water usage, choose energy-efficient equipment, switch to renewable energy resources, and more. By becoming more efficient overall, companies see lower operating costs in the long term. A thorough ESG strategy also helps to predict potential risks and opportunities for improvement.
Organizations that are transparent about their ESG metrics and are working to optimize them can also see improved brand perception as a result. In fact, the majority of U.S. consumers say they'll pay more for sustainable products.
Additionally, allowing stakeholders an opportunity to weigh the pros and cons of their investment improves the organization’s perception in the marketplace. According to PwC’s 2024 Global Investors Survey, 71% of investors agree that companies should incorporate ESG risks and opportunities into their corporate strategy. KPMG reports that 76% of CEOs would be willing to divest a profitable part of the business if it was damaging their reputation, and that 24% agree that the main downside of not meeting ESG expectations is that it gives their competitors an edge.
Improving your ESG reporting and strategy can benefit your employees, too. A 2023 report by Bain & Company and EcoVadis found that companies with ESG activities focused on the workplace improve employee satisfaction, thus increasing workforce productivity and the ability to attract and retain top talent. A 2022 Salesforce survey found that 82% of the global workforce wants their company to be more sustainable, which means you could save on hiring, training, and other costs associated with employee turnover.
Join Salesforce, Werner Enterprises, and Forrester, as they discuss what to look for in sustainability management software.
While demand for ESG transparency grows, companies can use the metrics to monitor impacts, opportunities, and risks. For environmental performance, consider measures like greenhouse gas emissions, carbon footprint, energy consumption, water usage, and biodiversity impact. For social performance, diversity and inclusion are factored in along with employee engagement and human rights practices. For governance, considerations include board diversity, corporate ethics, and risk management.
By reporting on these metrics, companies can show they’re hitting their milestones. Shareholders want to know how their investments are impacting the world, making ESG transparency a business imperative. With stakeholders ratcheting up the pressure on companies to report more transparently, ESG metrics will increasingly influence businesses’ performance.
At Salesforce, business is the greatest platform for change. Stakeholders want to make sure their investments align with their values, and an ESG strategy is a powerful way to show that a business is operating responsibly.
ESG regulation and disclosure requirements are rapidly increasing worldwide. Investors, customers, partners, and shareholders need to know that corporations are living up to their ESG reporting commitments and marketing claims.
Organizations of all sizes use ESG reporting standards to transparently disclose information about their business operations. There are hundreds of ESG frameworks, but only some apply to most companies.
In general, companies should ensure they’re aligned with three types of ESG metrics:
There are many agencies with proprietary methodologies to calculate and score ESG performance. An ESG score attempts to objectively measure how well a company performs on sustainability, social, and governance issues. It’s important to set guiding principles as you work to build a successful ESG reporting strategy at your company. Like understanding different reporting frameworks, the first step is to understand which topics are most important to your company and its stakeholders, and assess what data you're already tracking. Once you know your starting point, you can identify key gaps in your ESG reporting and prioritize how to address them.
Global systemic issues — such as poverty, human rights, and climate change — can’t be solved overnight. The most important step is to set targets and make an improvement plan over time. Don’t just look for a quick fix. It might take a few years to publish a comprehensive ESG report. Start small. Break it down, put what you believe in out there, listen to your stakeholders, and stay consistent.
Corporate social responsibility (CSR) is a voluntary business model that focuses on a business’s responsibility to society, and the strategies it uses to uphold that responsibility. Its initiatives generally include charitable donations, volunteer work, and philanthropy, along with efforts to maintain ethical labor practices.
ESG, on the other hand, tends to be driven by external requirements, standards, and frameworks. While ESG reporting used to be voluntary, we are moving toward an increasingly mandatory ESG reporting landscape. Businesses use this model to integrate environmental and social values into the core of their business plans, then report on them in a transparent way that investors can use to hold companies accountable. Because ESG reporting speaks to the company’s operations, it can improve a business’s valuation.
As climate change and social consciousness become more relevant in society and can present risks and opportunities for businesses, more companies are shifting away from CSR to a more transparent and accountable ESG reporting model.
ESG reporting and disclosure requirements will continue to grow and evolve. Organizations need to set goals, start tracking against those goals, and report out to stakeholders. Artificial intelligence (AI) will begin to play a bigger role as ESG AI becomes more mainstream.
In the ever-changing landscape of ESG disclosures, it’s key for your ESG technology to keep up. The Disclosure & Compliance Hub in Net Zero Cloud gives companies access to framework-specific report builders for CSRD, SASB, GRI, and CDP. As global disclosure and reporting requirements continue to grow, the platform will adapt to help organizations remain compliant. Also, Agentforce for Net Zero Cloud understands a company's ESG data model, reporting frameworks, and emissions factors. It streamlines ESG management and reporting by providing accurate insights, automating reporting tasks, and enhancing stakeholder trust.
You don’t need to do it all at once; the key is to get started. We can’t sit back waiting for the future to arrive. Together, we can shape the future today.
For many businesses worldwide, ESG reporting is now mandatory. As of January 1, 2025, the EU’s CSRD applies to companies with more than 250 employees, a revenue of €50 million, and total assets of more than €25 million. Both public and private companies are included if they meet these three criteria. This applies across all industries, but for non-EU companies, the revenue requirement is €150 million (not €50 million).
In October 2023, California also passed laws that require the disclosure of climate-related risk. Starting in 2026, per California’s Climate Corporate Data Accountability Act, companies that do business in California with revenues greater than $1 billion must report their emissions from all scopes annually. Also, companies doing business in California with revenues greater than $500 million must report climate-related financial risk and measures to reduce that risk, according to the Climate-Related Financial Risk Act.
There are hundreds of ESG reporting frameworks, but the most common are:
Two methodologies include:
ESG reporting benefits businesses by building trust with stakeholders and investors as well as internally, with employees. This long-term, holistic approach helps companies attract and retain talent, improve financial performance, optimize operations, and gain a competitive edge.
Investors are better able to review their investment opportunities and risks thanks to ESG reporting. And ESG investments tend to outperform those without ESG data.
Finally, consumers can know if their money supports businesses that share similar values around the environment and social issues.
The effective use of technology can help you manage ESG data in real time, streamline the reporting process, and increase efficiency. For example, Salesforce’s Net Zero Cloud is a complete sustainability management platform with ESG management built directly into it. This solution connects data from disparate systems (including your suppliers, partners, and value chain) and puts it all in one place. It also tracks progress in real time, forecasts progress from greater insights, creates intelligent insights, and automates accurate and complete report generation that aligns with ESG reporting frameworks. Companies can manage all ESG data on Net Zero Cloud and connect it with other apps, systems, and suppliers. Improving your technology allows you to expand your capabilities and align to global standards to achieve net zero emissions.