By 2025, US companies will want to prioritize Environmental, Social and Governance or ESG reporting as expectations move beyond traditional financial metrics. Investors, customers, employees and regulators increasingly seek transparency about how companies manage their environmental impact, social responsibilities and ethical practices. ESG reporting allows businesses to demonstrate their commitment to sustainability, diversity and responsible leadership while supplying measurable evidence of their efforts to all stakeholders.
In addition, providing detailed ESG reporting meets the growing demands for transparency, boosts a company's reputation, attracts socially conscious investors (who are always increasing), and reduces the risk of non-compliance. As ESG considerations play a larger role in investment decisions and consumer preferences, companies that embrace detailed ESG practices can gain a competitive advantage.
why ESG reporting is important right now
ESG is crucial for companies, especially in 2025. Your organization’s commitment to accountability and transparency is demonstrated by your ESG metrics. But that’s not the only reason. Recent regulations are forcing businesses to provide ESG reporting. The European Union's Corporate Sustainability Reporting Directive (CSRD) came into effect on January 5, 2023. While the CSRD does not directly apply to US, corporate sustainability reporting is evolving in the country, with significant steps taken by the Securities and Exchange Commission (SEC). In 2022, the SEC proposed a rule aimed at enhancing disclosures related to climate risks, aligning with global frameworks like the Task Force on Climate-related Financial Disclosures (TCFD). Companies will be required to disclose their governance over climate-related risks, the impact of these risks on their business, and specific emission data, including Scope 1 and Scope 2 emissions for large filers.
huge increase in ESG reporting-related investment
While the above current and proposed regulations are reasons enough for companies to pay attention to ESG reporting, there are more reasons to take ESG seriously than compliance.
Stakeholders and investors are increasingly prioritizing sustainable and responsible investing and they want to see the integration of ESG factors into a company’s decision-making process. There's widespread recognition of the significance of environmental, social and governance risks and opportunities on the financial health of a business. The numbers are convincing on their own: a 2022 report found that ESG-focused institutional investment was expected to increase 84 percent to $33.9 trillion by 2026.
fuel innovation and increase trust
By being more transparent and providing comprehensive ESG disclosures, companies can increase trust with just about everyone, including investors, customers, employees and the broader community. In addition, ESG reporting can fuel innovation and offer a competitive edge. It pushes companies to rethink operations, often leading to cost savings through resource efficiency and waste reduction.
Additionally, proactive sustainability efforts also strengthen supply chain relationships. By focusing on sustainability, businesses have more opportunities to explore new markets, perhaps developing products and services that address emerging environmental and social challenges.
what are some popular ESG frameworks?
These are two of the top ESG frameworks which provide standards for ESG reporting:
global reporting initiative (GRI)
Used by more than 10,000 organizations worldwide, GRI is the most commonly used standard for companies. It’s an independent organization that helps businesses understand and convey their environmental, social and economic impact. By laying out a detailed set of standards and guidelines, including those that deal with health and safety, emissions and diversity, GRI makes reporting on the impact of sustainability and performance easy and effective.
IFRS sustainability disclosure standards
The IFRS Sustainability Disclosure Standards help companies report on their sustainability practices. IFRS S1 requires companies to disclose information about sustainability risks and opportunities, including governance, strategy, risk management and performance tracking. Meanwhile, IFRS S2 focuses on climate-related risks, asking companies to report on how climate change impacts their business. Now part of IFRS, the popular SASB Standards are industry-specific guidelines that help companies report on key ESG issues.
top ESG reporting tools
- Prophix centralizes ESG data management, automates reporting and offers dashboard analytics.
- Workiva is a cloud platform for ESG reporting with collaboration and data integration features.
- IBM Envizi ESG Suite is a SaaS solution that consolidates enterprise ESG data for analysis and reporting.
- Workday Adaptive Planning integrates ESG reporting capabilities into financial management software.
ESG best practices
If you would like to begin or improve upon ESG reporting, here are 10 best practices to follow:
- Assemble a dedicated ESG team with diverse expertise to oversee strategy and implementation.
- Choose an appropriate ESG reporting framework, like IFRS or GRI as mentioned above.
- Set clear, measurable ESG goals linked to your company's long-term strategy.
- Integrate ESG considerations into core business operations and decision-making processes.
- Identify and track relevant metrics and key performance indicators for each ESG goal.
- Implement strong data collection and management systems to ensure accurate and reliable ESG reporting.
- Utilize ESG technology and software solutions to streamline reporting processes and enhance data accuracy.
- Engage with stakeholders, including investors, employees and customers to better understand their ESG priorities and expectations.
- Ensure transparency by disclosing both positive achievements and areas for improvement in ESG reports. Communicate your findings to all stakeholders in an accessible manner.
- Regularly review and update ESG policies and practices to align with evolving industry standards and stakeholder expectations.
how we can help your ESG reporting
Randstad can help you meet ESG reporting requirements by providing your company with professionals who are experts in sustainability, regulatory compliance and ESG frameworks. We have a vast network of skilled talent who can assist in building dedicated ESG teams or improving existing departments.
Randstad can also offer insights into market trends in this area and suggest competitive compensation packages to attract top talent. By conducting thorough candidate assessments, we make sure the professional is aligned with your company's ESG objectives and we can advise on structuring roles to effectively manage reporting processes. And by staying up-to-date on evolving ESG regulations, we can help you adapt your hiring strategies to meet changing requirements. This ensures you have a skilled team in place to satisfy ESG requirements and stakeholder demands.