Environmental, social, and governance (ESG) reporting is now a standard part of business operations—especially for companies with global supply chains or exposure to regulatory compliance risks. But for many, the term still feels broad or unclear.
This guide explains ESG reporting in practical terms. It covers what it is, how it works, and why it now plays a central role in business strategy, particularly in industries like manufacturing, energy, and food and beverage.
The focus is on clarity, not complexity. Whether the interest is regulatory compliance, investor expectations, or internal governance, this guide provides a structured breakdown of ESG reporting in 2025.
ESG reporting is the structured disclosure of data related to a company's environmental, social, and governance practices. It includes both numbers and stories that show how an organization impacts the environment, treats people, and governs itself.
Environmental data covers greenhouse gas emissions, energy use, and waste management. Social data tracks labor practices, human rights, and community engagement. Governance data shows board structure, ethics policies, and corporate decision-making.
Companies typically publish ESG reports annually. Many follow frameworks like the Global Reporting Initiative (GRI), SASB, or the European Sustainability Reporting Standards (ESRS).
In 2025, ESG reporting is shifting from voluntary to mandatory in many regions. New regulations in the EU, US, and UK require companies to publish environmental and social performance data alongside financial results.
ESG reporting offers several key benefits:
ESG metrics help investors spot risks and opportunities that don't show up in financial statements
Tracking ESG data helps companies identify problems before they become crises
Strong ESG performance can attract customers and employees who care about sustainability
Proper reporting helps companies meet legal requirements and avoid penalties
The rules around ESG reporting are changing fast. What was once voluntary is becoming mandatory in many parts of the world.
In the United States, the Securities and Exchange Commission (SEC) adopted climate disclosure rules in 2024. These rules ask public companies to report their climate risks and greenhouse gas emissions. However, enforcement timelines may change based on legal and political developments.
The European Union has gone further with its Corporate Sustainability Reporting Directive (CSRD). This regulation requires detailed ESG reporting from large companies, including non-EU businesses with significant European operations.
Regional ESG reporting requirements vary widely:
|
Region |
Key Regulation |
Who It Affects |
When It Starts |
|
EU |
CSRD |
Large companies (including non-EU firms with €150M+ EU revenue) |
2024–2028 (phased) |
|
US |
SEC Climate Rules |
Public companies |
2025 (with delays) |
|
UK |
TCFD-aligned Disclosures |
Premium-listed and large private companies |
Since 2022 |
|
California |
SB 253 & SB 261 |
Companies with $1B+ revenue doing business in CA |
2026–2027 |
Different industries face different reporting expectations. Manufacturing companies often report on emissions, water usage, and energy efficiency. Energy companies track methane leakage and renewable investments. Food producers disclose sustainable sourcing and packaging waste.
As ESG reporting becomes more regulated, third-party verification is becoming common. This means having an outside expert check your ESG data, similar to a financial audit. Companies are setting up systems to track their ESG data carefully so it can stand up to this scrutiny.
People often mix up ESG reporting, sustainability reporting, and Corporate Social Responsibility (CSR), but they're different concepts.
ESG reporting focuses on sharing specific environmental, social, and governance data points. Investors and regulators use this information to evaluate company performance and risk. ESG reporting follows structured frameworks and includes measurable metrics.
Sustainability reporting takes a broader view of a company's environmental and social impacts. It looks at how a business contributes to long-term environmental protection and social well-being. While ESG reporting is often numbers-focused, sustainability reporting includes more narrative about goals and strategies.
CSR refers to voluntary company initiatives to benefit society. This might include charitable donations, employee volunteer programs, or ethical business practices. Unlike ESG reporting, CSR activities aren't typically standardized or regulated.
Here's how they compare:
|
Feature |
ESG Reporting |
Sustainability Reporting |
Corporate Social Responsibility |
|
Primary Focus |
Environmental, Social, and Governance data |
Environmental and social performance |
Voluntary social initiatives |
|
Audience |
Investors, regulators, rating agencies |
Stakeholders, NGOs, customers |
Communities, employees, public |
|
Metrics |
Quantitative (e.g., emissions, board diversity) |
Mix of numbers and stories |
Often qualitative, story-based |
|
Regulation |
Increasingly mandatory |
Sometimes required, often voluntary |
Voluntary |
|
Frameworks |
GRI, SASB, TCFD, ISSB |
GRI, UN SDGs |
No standard frameworks |
An ESG report shows how a company performs in three main areas: environmental, social, and governance. These three pillars form the foundation of ESG reporting.
The environmental section tracks how a company interacts with the natural world. For manufacturing companies, this includes air emissions, energy consumption, water usage, and waste management. A food producer might report on agricultural practices, packaging materials, and food waste. Energy companies often focus on carbon emissions and renewable energy investments.
Key environmental metrics include:
Greenhouse gas emissions (Scope 1, 2, and 3)
Energy consumption and renewable energy percentage
Water withdrawal and discharge
Waste generation and recycling rates
The social section examines how a company treats people—both inside and outside the organization. This covers employee well-being, community relations, and supply chain practices. Companies with global supply chains often report on supplier labor conditions, human rights policies, and community engagement programs.
Common social metrics include:
Workplace safety incidents and injury rates
Employee diversity statistics
Supply chain labor audits and findings
Community investment and impact
The governance section reveals how a company is run and overseen. This includes the structure of the board of directors, executive compensation policies, and systems to prevent corruption or unethical behavior. Good governance reporting shows that a company has proper checks and balances in place.
Typical governance metrics include:
Board composition and diversity
Executive pay structure and ESG performance links
Ethics violations and resolution processes
Whistleblower protection policies
Collecting and reporting ESG data isn't always straightforward. Companies often struggle with inconsistent data formats, information gaps, and difficulty getting data from suppliers. These challenges can lead to reporting errors or make it hard to compare performance over time.
To overcome these obstacles, companies can establish reliable data collection systems. This means identifying all ESG data sources, assigning clear ownership for each metric, and creating regular update schedules. For example, a manufacturing company might assign energy data collection to facility managers, diversity metrics to HR, and supplier information to procurement.
When selecting which ESG metrics to report, it helps to use established frameworks. These provide standard definitions and methodologies that make data more comparable and credible.
Popular ESG reporting frameworks include:
Building internal accountability is also crucial. This means creating clear roles and responsibilities for ESG reporting. A typical structure might include data owners who collect specific metrics, an ESG reporting lead who compiles the report, and executive sponsors who review and approve disclosures.
For many companies, especially in manufacturing and retail, most environmental and social impacts happen in their supply chains. This makes supplier data essential for comprehensive ESG reporting.
Supply chain ESG reporting involves tracking environmental and social performance across your network of suppliers. This might include supplier emissions, labor practices, resource use, and governance policies. For example, a food company might report on sustainable farming practices used by its agricultural suppliers, while an electronics manufacturer might track conflict minerals in its component supply chain.
Effective supply chain ESG reporting connects several key areas:
Including ESG criteria in supplier evaluations helps identify risks and opportunities. This might involve questionnaires about environmental practices, labor policies, or governance structures.
Regular tracking of supplier ESG performance helps spot potential problems before they become serious. For instance, monitoring suppliers in water-stressed regions can highlight potential disruption risks.
Gathering consistent ESG data from suppliers requires standardized forms, clear metrics, and sometimes technology platforms. Many companies use supplier portals or specialized software to collect this information.
Effective ESG reporting isn't just about disclosure—it's also about progress. Working with suppliers to improve their environmental and social performance can reduce risks and enhance reporting outcomes.
Companies that manage supplier ESG data well often use centralized systems that connect procurement, compliance, and sustainability functions. These systems help ensure that ESG considerations are part of everyday supplier management, not just annual reporting exercises.
In ESG reporting, "materiality" means focusing on the issues that really matter. Not all environmental or social topics are equally important for every company. A mining company might prioritize land use and community relations, while a software firm might focus on data privacy and energy use.
Traditionally, ESG reporting used financial materiality as its guide. This means reporting on environmental, social, or governance issues that could affect a company's bottom line or stock price. For example, a beverage company might report on water scarcity because it directly impacts production costs.
Now, many reporting frameworks are adopting "double materiality." This expanded approach considers both:
The European Union's Corporate Sustainability Reporting Directive (CSRD) uses double materiality as its foundation. This means companies must report not only on climate risks that threaten their business but also on how their operations contribute to climate change—regardless of financial impact.
This shift represents a fundamental change in ESG reporting philosophy. It recognizes that companies have responsibilities beyond shareholder returns and acknowledges their role in addressing broader environmental and social challenges.
ESG reporting continues to evolve rapidly. In 2025, we're seeing several important trends that shape how companies report their environmental, social, and governance performance.
Regulatory requirements are expanding globally. The EU's Corporate Sustainability Reporting Directive is now in effect for many companies, with more being phased in through 2028. In the US, the SEC's climate disclosure rules are being implemented despite some legal challenges. Many other countries are developing their own ESG reporting requirements, often based on international frameworks.
At the same time, reporting standards are becoming more aligned. The International Sustainability Standards Board (ISSB) has released baseline standards that many countries are adopting or referencing in their regulations. This is slowly creating more consistency in ESG reporting globally.
Stakeholders are asking for more detailed and reliable ESG information. Investors want to understand ESG risks and opportunities. Customers want to know about product sustainability. Business partners want assurance that their supply chains meet environmental and social standards.
For companies with complex supplier networks, integrated approaches to ESG reporting are becoming essential. Systems that connect supplier data, procurement processes, and sustainability metrics help create more comprehensive and accurate ESG reports.
Organizations interested in learning how supplier management platforms can support ESG reporting can find more information at Kodiak Hub.
An ESG report shows a company's environmental, social, and governance performance, while an annual report focuses on financial results. Many companies now include ESG information in their annual reports, but dedicated ESG reports typically provide more detailed sustainability data.
ESG reporting remains mostly voluntary in the United States as of 2025. The SEC has adopted climate disclosure rules for public companies, but implementation is gradual and faces legal challenges. Some states like California have their own ESG reporting laws for companies operating there.
The most widely used ESG reporting frameworks include the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and International Sustainability Standards Board (ISSB) standards.
Companies can prepare by conducting a materiality assessment to identify relevant ESG topics, establishing data collection systems, benchmarking against industry peers, and engaging stakeholders to understand expectations.
Manufacturing companies typically track greenhouse gas emissions, energy efficiency, water usage, waste management, worker safety statistics, supplier labor practices, board diversity, and ethics policy compliance.