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June 4, 2024 • Reading time: 10 Min

ESG reporting: a comprehensive guide

ESG reporting is an essential component of modern corporate management that makes the environmental, social and governance-related aspects of a company transparent. Companies are placing increasing emphasis on ESG reporting in order to communicate their sustainability efforts transparently and thus strengthen the trust of their stakeholders. But what exactly is behind this term and why is it so important for companies to address it? Compliance with ESG standards not only helps to minimize risk, but can also open up new business opportunities and promote long-term growth. By using recognized frameworks such as GRI, TCFD and SASB, companies can produce structured and meaningful ESG reports that meet the needs of different stakeholders. This guide provides you with a comprehensive overview of the basics of ESG reporting, the most important frameworks and standards, and practical tips for preparing an ESG report. We also shed light on regulatory requirements and offer insights into the challenges and best practices in ESG reporting. Read more about ESG reporting now and find out how you can position your company to be sustainable and future-oriented.

Abstract: ESG reporting at a glance

ESG reporting, which deals with the environmental, social and governance aspects of a company, is of great importance for responsible corporate behaviour. It includes the disclosure of sustainability strategies and social responsibility in reports that address a variety of ESG indicators. Companies are obliged to report on aspects such as energy consumption, CO₂ emissions, compliance with human rights and working conditions. These reports serve as a basis for investors and other stakeholders to make ESG investment decisions and can also have a positive impact on the company's image.

ESG reporting is becoming increasingly important as more and more companies are required to include non-financial aspects in their annual reports. Preparing an ESG report provides transparency, fulfils regulations, promotes consumer brand loyalty and serves risk management and innovation. ESG reporting has been mandatory for certain companies and sectors since 2017. The introduction of ESG reporting is staggered. Companies that were already subject to the Non-Financial Reporting Directive (NFRD) were obliged to report from 1 January 2024. From January 2025, companies with more than 250 employees or a balance sheet total of 20 million euros or an annual turnover of 40 million euros must report. Small and medium-sized enterprises (SMEs) will be required to report from January 2026.

The preparation of an ESG report requires both qualitative information and quantitative metrics to adequately document a company's impact on the environment, society and employees. The report should be divided into different sections, including general company information and specific areas such as environmental, social and governance. The EU has developed the European Sustainability Reporting Standards (ESRS) for this purpose, which European companies are obliged to comply with. In addition, the International Sustainability Reporting Board (ISSB) has adopted global standards for ESG reporting.

The ESG report should take into account regulatory requirements, such as the Corporate Sustainability Reporting Directive (CSRD), the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation. These regulations specify what information must be disclosed in the report, e.g. sustainability targets, climate change mitigation and investment in environmental and social objectives. Preparing a comprehensive ESG report can be a challenge, but it's a step worth taking. With thorough planning, data analysis and the use of appropriate reporting standards, companies can make their ESG efforts visible and communicate them transparently to their stakeholders.

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Basics of ESG reporting

Definition and meaning

ESG stands for "Environmental, Social, Governance" and encompasses a company's efforts in the areas of environment, social affairs and corporate governance. These three pillars form the basis for responsible corporate action.

ESG reporting is about reporting on these environmental, social and governance aspects (ESG aspects) of a company. These reports provide comprehensive insights into a company's sustainability strategies and social responsibility. Companies are currently obliged to evaluate more than 50 different key figures from the ESG area and address them in their reports.

As companies disclose sustainability information in ESG reporting, they are obliged to report on the following aspects: Energy consumption, CO₂ emissions, compliance with human rights, working conditions within the company or issues of corporate ethics. The aim is to make the company's impact on the environment, society and corporate governance transparent in order to provide investors and other stakeholders with a solid basis for their decisions, for example with regard to ESG investments. A detailed sustainability report can also have a positive impact on the company's performance and image.

ESG reporting should therefore summarize all of a company's activities that have an impact on the environment, society and its own employees. Reporting also provides an opportunity to transparently present progress in the areas of the environment, sustainability and corporate governance. Similar to an annual report or other forms of corporate publication, an ESG report acts as a key communication tool to provide relevant information for employees, investors and regulators. ESG criteria, qualitative content and quantitative key figures help to make ESG reporting measurable and comparable.

Goals and benefits: Why is ESG reporting becoming increasinglyimportant?

Companies are used to documenting and reporting on their business results in various forms. The traditional annual report, for example, is a widely used means of communication for reporting on business success. It is firmly established in most companies and communicates profits, losses and various business evaluations to stakeholders. In addition to this financial information, more and more non-financial aspects are now coming into focus: ESG criteria. ESG reporting has been mandatory for certain companies and sectors in the EU since 2017. However, the guidelines adopted at that time are no longer sufficient. The existing regulations have therefore been tightened and supplemented. Important directives today are the EU Taxonomy, the SFDR Disclosure Regulation and the CSR Directive, which companies must now comply with. They all contribute to the fact that a growing number of sectors and companies are obliged to prepare ESG reporting without financial disclosures.

ESG reporting is important for companies for many different reasons:

Transparency: Given the importance of climate change and corporate social responsibility, it is crucial that companies are transparent about their actions. ESG reporting enables precisely this transparency and gives companies the opportunity to disclose their ESG efforts and progress.

Investor demand: Investors have previously used various metrics to assess the value and growth potential of a company. An ESG report provides additional important information that helps investors to make informed decisions.

Loyalty to brands: Consumers prefer companies that share their values in terms of corporate governance and sustainability. Consumer brand loyalty is generally higher when the company is open and transparent about its ESG initiatives and progress.

Comply with regulations: Around the world, requirements for companies to disclose and report on ESG initiatives, sustainability and corporate governance are increasing. An ESG report enables proper disclosure and compliance.

Risk management: ESG-related issues can pose risks for companies. An ESG report makes it possible to take preventive action against risks by disclosing the company's activities and identifying potential risk areas.

Innovation: ESG reports also bring business benefits. They can help to promote the implementation and improvement of ESG strategies. This reporting can motivate companies to increase their efficiency and identify weaknesses.

Pursue objectives: An ESG report serves as a tool for a company to transparently account for ESG performance claims and strategies. Furthermore, ESG reporting enables effective monitoring of progress against targets, as many of these targets are long-term and need to be tracked over a period of time.

For which companies is it mandatory to prepare an ESG report?

The Non-Financial Reporting Directive (NFRD) has required insurance companies, banks and large capital market-oriented companies in the EU to prepare ESG reports since 2017. With the "European Green Deal", which was adopted in 2019, the EU is also aiming to become climate neutral by 2050. In order to achieve this goal, a sustainable economy is being promoted, whereby the transparency of companies with regard to their sustainability efforts is a central building block. ESG reporting therefore supports the Green Deal.

At the beginning of 2023, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD), which makes ESG reporting mandatory for most companies in Europe. The only exceptions are companies with fewer than 10 employees or a turnover of less than 20 million euros. Although not all countries make ESG reporting mandatory, this practice is widespread worldwide. For example, 99% of S&P 500 companies report on ESG issues.

When does the ESG reporting obligation apply?

The effective date for companies is staggered:

ESG reporting since 2024:

Companies that were already subject to the NFRD must already carry out ESG reporting in accordance with the CSRD in the financial year from January 1, 2024. Initially, this mainly affects capital market-oriented companies that are listed on a regulated market within the EU. For the remaining companies, reporting can currently still be carried out voluntarily.

ESG reporting from 2025:

From January 2025, companies with more than 250 employees, a balance sheet total of 20 million euros or an annual turnover of 40 million euros will be obliged to report. These include commercial partnerships with limited liability, banks, insurance companies and public interest entities.

ESG reporting from 2026:

Small and medium-sized enterprises (SMEs) must report from January 2026, but have the option of applying for a deferral until 2028. They fall under the ESG reporting obligation if they have at least ten employees and either a balance sheet total of at least 450,000 euros or turnover of at least 900,000 euros.

What should an ESG report contain?

The ESG report is about how a company's activities affect the environment, society and employees. To adequately document these impacts - both positive and negative - both qualitative information and quantitative metrics are required to assess the company's ESG performance. The ESRS clearly and precisely define the requirements for the structure of a sustainability report. In the first section of the report, the company provides general information, including on corporate governance and strategy. It should explain how it deals with impacts and the process used to assess materiality. This is followed by three separate sections on the ESG areas of environment, social affairs and corporate governance. The environmental sustainability topics that must be reported on are defined in accordance with the EU taxonomy. Specifically, these are climate change, pollution, water and marine resources, biodiversity and ecosystems, and resources and circular economy. Companies have the option of deleting aspects that they do not consider to be material.

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Standards and frameworks

The European Sustainability Reporting Standards(ESRS) will apply to all companies that are obliged to prepare ESG reports in accordance with the CSRD. These standards were developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the EU Commission. After a revision of the proposal in some key points and discussions with the member states, the ESRS were finally adopted on 31.07.2023. The ESRS officially enter into force with their publication in the Official Journal. The aim is to align ESG reporting as far as possible with traditional financial reporting. The European Sustainability Reporting Standards (ESRS) developed by EFRAG are binding requirements for all European companies that are required to carry out ESG reporting.

The International Sustainability Reporting Board (ISSB) has adopted the IFRS1 and IFRS2 standards for ESG reporting in parallel with the European Union. These standards, which stand for International Financial Reporting Standards, are intended to enable uniform reporting worldwide, but are voluntary. In contrast, the European Sustainability Reporting Standards (ESRS) are mandatory within the EU as part of the Corporate Sustainability Reporting Directive (CSRD). Experts are convinced that ESRS and IFRS are largely compatible.

Companies only have to report on sustainability aspects that are material to their business. This is determined by the principle of dual materiality: Aspects must either have an important impact on people or the environment or a significant financial impact on the company. If one of these criteria is met, the aspect must be addressed in the sustainability report. Although this regulation simplifies the reporting obligations, it requires a detailed examination to explain why certain ESG aspects are not taken into account.

The most important internationally and globally recognized ESG frameworks

ESG reports follow a specific approach or framework that provides clear guidance and structure for measuring and communicating the results of the report. There are various European ESG reporting frameworks that can be used by organizations to structure a sustainability report.

The Global Reporting Initiative (GRI) Framework is the most widely used framework worldwide. It is therefore used as a standard in many companies. It supports companies in transparently presenting both their positive and negative impacts on the environment, the economy and society. In this way, the ESG framework enables companies to communicate and manage their impact. The GRI Standards aim to provide comprehensive sustainability standards for reporting.

These standards are a set of guidelines that support companies in analyzing the impact of ESG data on their business decisions. In comparison to the GRI, SASB defines industry-specific guidelines that take particular account of financial aspects. The SASB framework is a significant approach to collecting information relevant to the financial reporting of an organization's sustainability activities. SASB was launched in 2011 and integrated into the IFRS Foundation in 2022 to establish a new framework for ESG reporting.

This ESG framework supports banks and other financial managers in reviewing a company's efforts to achieve ESG goals. Particular attention is paid to disclosing financial climate risks. The TCFD approach consists of four key areas: Governance, Strategy, Risk Management, and Metrics and Targets. These areas are closely linked and are supported by a total of eleven recommended disclosures. These provide investors and other stakeholders with insights into how companies assess and address climate risks.

The United Nations has various reporting frameworks that are relevant to ESG. One of these frameworks is the UNGPRF, which focuses on ethical corporate governance and human rights issues. In addition to the UNGPRF, there is the additional United Nations Global Compact, which supports organizations in implementing sustainable practices.

The CDSB framework was a tool to help companies quantify the environmental aspects of ESG reporting. Although the framework is still used in some ESG reports, it was merged with the International Financial Reporting Standards (IFRS) Foundation in January 2022 to establish the International Sustainability Standards Board (ISSB) together with the Sustainability Accounting Standards Board.

The ISSB (Initiative for the Harmonization of Global Sustainability Standards) is working on a pioneering series of standards that build on the proven CDSB and SASB frameworks. This innovative framework aims to provide a consistent and holistic view of a company's sustainability practices.

Step-by-step guide to ESG reporting

Many companies face the challenge of creating comprehensive ESG reporting. This process requires time and resources, as a solid report cannot be created overnight. In addition to the complexity of the preparation process, there are other hurdles to overcome: there are no clear guidelines from the European Commission on how an ESG report should be written and what information should be included.

Despite the difficulties, we encourage you to take the plunge into ESG analysis and reporting. We have therefore put together a model example of successful ESG reporting for you.

1.preparation and planning

  • Define the objectives of your ESG reporting (e.g. compliance, transparency, stakeholder information) and define a corresponding strategy.
  • Specify the reporting period and scope. Which divisions and subsidiaries should be included?
  • Put together an interdisciplinary team. The team should consist of employees from different departments such as Sustainability, Compliance, Finance, HR and Communications.

2.collect and analyze data

  • Identify the material ESG issues by analyzing internal and external stakeholders. Carry out a materiality analysis to prioritize the most important topics.
  • Determine the internal and external data sources for the relevant ESG key figures (e.g. energy consumption, emissions, employee satisfaction).
  • Gather the required data and ESG information from the identified sources. Ensure that the data is complete and correct.

3 Data analysis, quality assurance and validation

  • Analyze the collected data and ESG information to identify trends and key insights. However, this data does not necessarily say anything about the company's performance.
  • Therefore, compare your performance with industry averages and benchmarks and define specific ESG criteria and KPIs. You can then measure and compare your ESG efforts.
  • Validate the data and analyses through internal checks and controls. Involve external auditors where necessary to ensure data integrity.

4. selection of a suitable ESG framework

  • Once you have determined the KPIs, select the applicable reporting standards (e.g. GRI, SASB, TCFD) and regulatory requirements (e.g. CSRD, NFRD). There are still no generally applicable guidelines for reporting. There is therefore no such thing as a "wrong framework".

5 Preparation of the report

  • First define the structure and content of the report. To do this, create an outline based on the selected standards and key topics. Make sure that the report contains all the necessary sections (e.g. company profile, ESG strategy, performance indicators). Professional ESG software can help you create your ESG report.
  • Then move on to text creation and data integration. Write the corresponding texts for the individual sections of the report. Integrate the analyzed data and visualize it using charts and tables.
  • Once the report has been completed, you should have it reviewed by internal stakeholders and experts. Obtain feedback and make any necessary adjustments to the report.

6.Publication and communication

  • Publish the final ESG report on the company website and in other relevant channels. Make sure that the report is easily accessible to all stakeholders.
  • You should also communicate the most important results and findings to your stakeholders. Use various communication channels (press releases, social media, newsletters) to maximize your reach.

7 Continuous improvement

To optimize future reports, it is important to collect feedback from internal and external stakeholders. You can analyze the feedback to identify opportunities for improvement.

In addition, any processes such as data management or reporting processes can be optimized. You should also plan regular training for the ESG reporting team so that you are always up to date.

Regulatory requirements

The Corporate Sustainability Reporting Directive (CSRD) forms an integral part of the EU Commission's Sustainable Finance Framework, which aims to anchor sustainability more firmly in the economy. In addition to the CSRD, the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation are also part of this framework, as already mentioned above. The SFDR affects companies that offer financial products. Since mid-2022, they have been legally obliged to report on the negative ESG impact of their investment strategies. The EU Taxonomy Regulation, in turn, sets out criteria for assessing the environmental sustainability of economic activities. These criteria are applied in both the CSRD and the SFDR.

In addition to the ESRS, the three existing EU directives mentioned above must be complied with for ESG reporting. The following is a concise summary of the mandatory disclosures required by the CSRD, EU Taxonomy and SFDR:


The Corporate Sustainability Reporting Directive (CSRD) extends the existing regulations for non-financial reporting. This reporting obligation applies to all companies listed on the stock exchange in the European Union, with the exception of micro-enterprises. The CSRD stipulates that information must be provided on sustainability targets, the role of the management board or supervisory board, the company's main adverse impacts and intangible resources not previously reported.

EU taxonomy:

The EU taxonomy is a comprehensive set of rules for climate and environmentally friendly activities and investments. Its main objective is to drive forward the sustainable transformation of the European economy and thus promote the transition to a more resource-efficient and lower-emission economy. The taxonomy requires information on the following points in the ESG report: Combating climate change, adapting to conditions caused by climate change, protection and sustainable use of water, prevention and reduction of pollution, status of transition to a circular economy, measures to protect and restore biodiversity and ecosystems.


The Sustainable Finance Disclosure Regulation (SFDR ) requires all market participants to transparently disclose the sustainability aspects of financial products. This makes it easier for investors to assess how asset managers deal with sustainability issues. The SFDR stipulates that information on the following points must be provided in the sustainability report: Sustainability risks such as reduction in the value of assets due to environmental or social events, negative impacts on ESG criteria as well as respect for human rights and investments that contribute to environmental and social objectives.

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High costs: Introducing an ESG reporting system can initially be a major cost factor. In addition to the acquisition costs, the costs of collecting and analyzing the data and implementing software solutions should also be taken into account. Once the initial costs have been paid, ongoing costs must also be taken into account. Collecting, analyzing and reporting ESG data requires ongoing financial resources. This can be a burden, especially for smaller companies.

Time required: Creating an ESG report is extremely time-consuming. Several departments have to be involved, which leads to a redistribution of resources. As the collection and analysis of the data is very complex, this can lead to delays and an increased workload.

Regulatory uncertainty: ESG regulations and standards are still being changed and updated frequently in many regions and countries. This presents companies with the challenge of producing consistent reports in the long term and brings uncertainty.

Data availability and quality: It can be difficult for companies to collect reliable ESG data, especially in global companies that have complex supply chains. It is also a major challenge to ensure that the data is accurate and complete. Reliable data management systems are essential for this.

Standardization and comparability: As there are a large number of ESG reporting standards (GRI, SASB, TCFD), choosing the right standard can be difficult at first. In addition, the many standards make it difficult to compare ESG performance between companies.

Internal coordination and cooperation: In order to prepare an ESG report, cooperation between several departments must work well. It is necessary to train employees accordingly, which causes additional effort and costs.

Stakeholder management: It can be a challenge to meet all stakeholder expectations, requirements and interests equally. Careful and honest communication is necessary to ensure that the reports are credible and transparent. This is the only way to gain the trust of stakeholders in the long term.

Advantages of ESG reports

There are a number of advantages to producing and publishing an ESG report.

Transparency and customer loyalty: A detailed ESG report promotes the trust of investors, customers, suppliers and the general public in corporate governance and practices. Transparent reporting on ESG practices can help companies improve their reputation as responsible and sustainable actors.

Easy access to capital and inventions: Investors today are looking more for sustainable and responsible investment opportunities. Producing an ESG report can help to make the company more attractive to such investors. An ESG report can also improve creditworthiness. Banks and lenders are increasingly including ESG criteria in their credit assessments, which can lead to more favorable financing conditions.

Regulatory compliance: In many regions, particularly in the EU, companies are required by law to submit ESG reports. These reports show that companies comply with all legal requirements. At the same time, companies can avoid fines and reputational damage through proactive management and reporting of ESG risks.

Improved corporate governance and risk management: An ESG report helps to identify and counteract potential environmental, social and governance risks at an early stage. By addressing ESG issues, companies can also develop long-term strategies that promote sustainability and stability.

Efficiency and cost savings: By monitoring and reporting energy consumption, waste management and other environmental aspects, costs can be saved and resources used more efficiently. Similarly, socially responsible practices and transparent communication can increase employee satisfaction and retention, which in turn increases productivity.

Market access and competitiveness: Sustainability is becoming increasingly important to consumers. An ESG report can help to meet these expectations and strengthen the brand image. Companies that successfully implement ESG practices and communicate them transparently can also clearly differentiate themselves from their competitors and position themselves as industry pioneers.

Innovation and business development: ESG reporting motivates companies to find innovative ways to develop sustainable solutions and new business models. Companies that are actively committed to ESG have a better chance of entering into partnerships and collaborations, as they are perceived as responsible and attractive partners.

The preparation of an ESG report is associated with challenges such as high costs, considerable time expenditure, regulatory uncertainty and difficulties with data availability and quality. Despite these hurdles, the benefits outweigh the costs: An ESG report promotes transparency, boosts stakeholder confidence, facilitates access to capital and improves corporate governance and risk management. It also increases a company's efficiency, competitiveness and innovative strength. Overall, ESG reporting makes a decisive contribution to sustainable development and long-term stability.

Conclusion: ESG reporting is becoming increasingly important

ESG reporting is becoming increasingly important. An ESG report promotes transparency, accountability and sustainable business practices. Creating a report brings challenges such as high costs, considerable time and regulatory uncertainty. In addition, reliable data and effective internal coordination are required to produce a report. Despite these hurdles, an ESG report offers numerous advantages: It strengthens stakeholder confidence, facilitates access to capital, improves corporate governance and risk management and helps to increase efficiency and innovation.

The main aspects of ESG reporting include the careful collection and analysis of relevant data, compliance with legal requirements and transparent communication about sustainability measures. Companies that successfully implement and report on ESG practices can position themselves as responsible market participants and thus strengthen their competitiveness.

ESG reporting will become even more important in the future. Regulatory requirements are becoming stricter and more comprehensive, and stakeholders, especially investors, are placing increasing value on sustainable corporate practices. Trends such as the integration of ESG criteria into financial decisions and the development of new reporting standards such as the Corporate Sustainability Reporting Directive (CSRD) in the EU will continue to shape ESG reporting.

Companies need to adapt to these developments by developing robust ESG strategies and continuously improving their reporting processes. This will help them to adapt to future requirements and take advantage of the opportunities arising from the increasing importance of sustainability. Overall, ESG reporting is a crucial factor for the sustainable development and long-term success of companies.

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