Understanding ESG reporting

What is ESG Reporting?

ESG reporting involves disclosing information about a company’s ESG practices. ESG stands for Environmental, Social, and Governance. ESG factors are not just about compliance or risk management. Reporting helps stakeholders understand how a company manages sustainability-related risks and opportunities. ESG reports typically cover areas such as carbon emissions, energy consumption, employee diversity, labour practices, and corporate governance. ESG is all about creating long-term value and promoting corporate responsibility. 

Why is ESG Reporting Important?

ESG reporting is vital for several reasons:

• Transparency and Accountability: It allows companies to be open about their sustainability practices, fostering trust with investors, customers, and other stakeholders.
• Risk Management: By identifying and managing ESG risks, companies can mitigate potential financial losses and reputational damage.
• Competitive Advantage: Companies with robust ESG practices often gain a competitive edge, attracting investors and customers who prioritise sustainability.
• Regulatory Compliance: With increasing regulations mandating ESG disclosures, companies must comply to avoid legal repercussions.

Is CSRD ESG reporting?

Understanding the difference and relationship between ESG and CSRD is crucial. ESG is a concept that focuses on sustainability but is not a defined set of rules. CSRD, the new European sustainability reporting directive, mandates companies to produce a standardised sustainability report, an ESG report.

The ESRS reporting requirements for CSRD are built on the foundation of ESG. The ESRS are mandatory disclosure standards that companies obliged to report under CSRD must adhere to. They focus on reporting on environmental, social, and governance-related sustainability matters.

What are ESG Reporting Frameworks?

The CSRD and ESRS are the new, mandatory European ESG reporting standards. But are the CSRD or ESRS standards considered an ESG framework? The terms ESG standard and ESG framework are often used interchangeably, but they serve different purposes and have distinct characteristics.

ESG standards are mandatory criteria or metrics that companies must meet or report on. They outline specific requirements for disclosure and measurement, aiming to ensure consistency and comparability in ESG reporting.

ESG Frameworks offer broader guidelines on how to structure and present ESG information. They are more flexible and can be adapted to different contexts and reporting needs. The Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD) are some of the most well-known ESG frameworks.

Ecobio Manager – upgrade from ESG software to all-in-one CSRD software

The ESG standards and frameworks can be complicated to navigate. Specialised software for sustainability reporting is needed to achieve the best results and compliance with, in the case of EU, CSRD. 

Ecobio Manager has been designed to help companies streamline sustainability reporting, achieve compliance with CSRD and reach their ESG goals.