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Stakeholder demand for business transparency on Environmental, Social, and Governance (ESG) topics continues to increase. A recent Deloitte survey revealed that 85% of technology, media, and telecommunications companies have prioritised improving ESG disclosure capabilities, with 38% establishing dedicated cross-functional ESG councils. Furthermore, 69% of these firms report that customers often request disclosures of greenhouse gas emissions as a requirement for business engagements, underscoring the rising demand for sustainability transparency in corporate operations.
Sustainability reporting builds trust among stakeholders while ensuring compliance with evolving regulations. For example, the Corporate Sustainability Reporting Directive (CSRD) requires companies to report material sustainability impacts. In contrast, the Corporate Sustainability Due Diligence Directive (CSDDD) requires due diligence on human rights and environmental risks.
As climate and regulatory pressures intensify, businesses gain a strategic advantage by integrating sustainability deeply into operations—setting clear goals, tracking progress, and demonstrating transparency. This approach reduces risk for investors, signals growth potential, and showcases a corporate commitment to sustainability for customers and governments.
What is sustainability reporting?
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Sustainability reporting is how organisations measure, disclose, and take responsibility for their ESG performance. This practice provides stakeholders with a transparent view of a company’s sustainability initiatives, impacts, and strategy as a whole.
It encompasses a wide range of topics, including:
- Carbon emissions;
- Energy usage;
- Waste management;
- Employee relations;
- Community engagement.
By focusing on transparency, companies can build trust with their stakeholders (e.g., investors, customers, employees, and regulators), allowing for informed decision-making and fostering long-term relationships.
Key components of ESG reporting
Key components of sustainability reporting include metrics, targets, and performance indicators.
Metrics
Metrics are quantitative measures that assess a company’s performance in various sustainability areas, such as environmental impact, social well-being, and governance practices.
Metrics allow businesses to track progress, identify areas of improvement, and compare performance across industries or periods. They are often standardised to enable comparability and transparency.
Here are some concrete examples:
- Greenhouse Gas (GHG) emissions: A company may report on its Scope 1, Scope 2, and Scope 3 emissions, measured in metric tons of CO2 equivalent (CO2e).
- Energy consumption: Total energy usage is measured in megawatt-hours (MWh) or gigajoules (GJ). It can be further divided into renewable vs. non-renewable energy usage.
- Water usage: This metric typically measures the total amount of water a company withdraws, consumes, or discharges.
- Waste management: The amount of waste generated, diverted from landfills, or recycled, reported in metric tons.
- Employee turnover: This metric tracks the percentage of employees leaving the organisation annually and can be broken down by gender, role, or region.
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Targets and KPIs
Targets refer to a company's specific, time-bound goals to improve its sustainability performance. At the same time, Key Performance Indicators (KPIs) are the measurable benchmarks that help assess the company’s progress towards achieving these targets. Setting clear and actionable targets helps establish concrete objectives for improving sustainability practices, providing a roadmap for achieving them.
KPIs are an effective way to track progress over time, ensuring the company moves toward these objectives.
Plan A supports your business in reaching its decarbonisation targets by offering a robust platform with over 1,000 solutions for carbon accounting and effective emission reduction. Our tools enable you to set clear targets, measure progress, and drive substantial improvements toward net-zero.
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International sustainability reporting standards, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), provide frameworks that support companies in developing their metrics, targets, and KPIs. These standards ensure consistency and comparability, with SASB offering industry-specific guidelines to tailor reporting across different sectors.
By aligning with these frameworks, businesses enhance the credibility of their reports and ensure their sustainability efforts are actionable and measurable.
Additionally, investing in data collection and centralisation tools allows companies to operationalise these frameworks, making it easier to track sustainability performance, report accurately, and ensure transparency in stakeholder communications. This integration reduces the risk of greenwashing and ensures companies can benchmark their efforts against industry peers.
The importance of sustainability reporting for companies
Sustainability reporting can boost corporate reputation and build stakeholder trust. Transparent ESG reporting strengthens relationships with investors, customers, and regulators who prioritise sustainability. As regulations like the CSRD tighten and consumer expectations rise, businesses must comply and show progress on sustainability goals.
With the right tools, companies can offer clear insights into their sustainability efforts, fostering trust and demonstrating commitment to positive environmental and social impact. This transparency attracts sustainability-focused investors, improves access to capital, and creates competitive advantages.
High-quality reports also uncover resource-saving opportunities, enhance operational efficiency, and support long-term success. As Wong et al. (2024) noted, such reporting helps firms stand out in a market where environmental responsibility drives consumer and investor behaviour.
With increasing regulatory pressure, companies must align with standards like the Corporate Sustainability Reporting Directive (CSRD).
Corporate Sustainability Reporting Directive (CSRD)
The CSRD is a significant legislative framework introduced by the EU to standardise sustainability reporting across the continent. This directive mandates that approximately 50,000 companies eventually disclose relevant sustainability information, emphasising the principle of double materiality.
This principle requires businesses to consider both the impact of their activities on the environment and society and how sustainability issues might affect their financial performance. In the context of sustainability reporting, financial materiality refers to sustainability topics that could generate risks or opportunities likely to influence a company's future cash flows and enterprise value over the short, medium, or long term - factors not captured by traditional financial reporting.
Challenges and opportunities
The CSRD presents businesses with both challenges and opportunities. One of the primary challenges is the need for improved data collection and reporting processes, which may require significant investment in technology and training.
However, the directive also offers opportunities for companies to enhance their sustainability practices, improve stakeholder engagement, and differentiate themselves in an increasingly environmentally and socially conscious marketplace.
By adopting robust sustainability reporting practices, businesses can better manage risks, identify new market opportunities, and enhance their overall reputation.
Common frameworks for sustainability reporting
Several widely recognised frameworks guide companies in sustainability reporting:
- Global Reporting Initiative (GRI): GRI provides reporting standards on economic, environmental, and social impacts, enhancing transparency and accountability.
- Sustainability Accounting Standards Board (SASB): SASB focuses on the financial materiality of sustainability, offering industry-specific standards for relevant data disclosure to investors. For example, the SASB Apparel standard includes metrics on labour conditions, waste management, and raw material sourcing to help investors assess sustainability risks and opportunities.
Aligning with these frameworks ensures consistency, transparency, and credibility in sustainability reporting, helping companies build trust, benchmark against peers, and reduce the risk of greenwashing.
Best practices for effective ESG reporting
Companies must invest in the right tools to streamline data collection, analysis, and reporting processes to facilitate effective sustainability reporting. These tools are essential for accurate reporting and are crucial in strengthening a company's overall sustainability approach.
By setting clear targets, defining KPIs, and implementing robust data collection methods, businesses can align their sustainability practices with their performance metrics, ultimately driving long-term improvement. For instance, carbon accounting software like Plan A is essential for accurately measuring and managing GHG emissions.
Key functionalities include:
- Tracking Scope 1, 2, and 3 emissions: Comprehensive tracking of direct and indirect emissions across all scopes ensures a complete understanding of a company’s carbon footprint. For example, these tools can monitor emissions from a company’s operations (Scope 1), purchased energy (Scope 2), and across its entire supply chain and product lifecycle (Scope 3).
- Setting science-based targets: These tools assist organisations in establishing targets that align with climate science, such as reducing emissions in line with the Paris Agreement’s goal to limit global warming to 1.5°C, ensuring a measurable path towards decarbonisation.
- Reporting on progress and performance: Tools generate reports detailing emissions reductions and progress towards sustainability goals, facilitating stakeholder communication.
- Engaging stakeholders in sustainability efforts: These tools provide platforms for collaboration and communication with stakeholders, enhancing engagement and support for sustainability initiatives, such as reducing carbon footprints or implementing energy efficiency initiatives across the value chain.
Plan A offers a comprehensive carbon management platform to streamline companies' carbon accounting, reporting, and decarbonisation efforts. Leveraging the latest scientific standards, Plan A enables businesses to efficiently manage their ESG requirements while providing expert guidance and a network of service partners to ensure impactful decarbonisation strategies.
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Overall, investing in these tools is essential for companies aiming to enhance their sustainability reporting and drive meaningful change. By leveraging advanced technologies, organisations can gain insights into their sustainability performance, identify areas for improvement, and engage effectively with stakeholders.
Sustainability reporting: Takeaways
Sustainability reporting has become a strategic necessity for companies, enhancing reputation, trust, and long-term growth. PwC’s Global Investor Survey 2022 highlights that businesses with strong sustainability practices outperform peers financially as they better manage risks and identify new opportunities.
Investing in the right tools, such as Plan A's carbon accounting software, enables businesses to track emissions, set science-based targets, and report on progress, fostering stakeholder engagement. In an eco-conscious market, robust sustainability reporting meets regulatory demands and positions organisations for success.
Book a demo today to see how Plan A can support your sustainability goals.
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