What is ESG Reporting? A Complete Guide

The old saying, “if you don’t measure it, you can’t manage it,” perfectly explains the necessity of measuring, monitoring, and reporting your company’s environmental, social, and governance (ESG) metrics. ESG reporting helps an organization share its ESG data and maintain accountability — both to itself and to its key stakeholders, namely investors, customers, suppliers, and employees. ESG factors can impact a company's reputation, bottom line, and ability to attract and retain top talent. By addressing ESG risks and opportunities, organizations can create a more sustainable and profitable business.

Organizations that are proactive about ESG management can get ahead now with the right tools. And companies that are serious about achieving ESG goals can also reap clear business benefits — including a stronger workforce and a healthier financial outlook. That’s a win-win.

• What is an ESG report?
• Business benefits of ESG reporting
• What goes into an ESG report?
• ESG vs CSR: What’s the difference?
• Looking ahead as ESG reporting evolves
• ESG reporting FAQs

The term “ESG” dates to a 2004 United Nations report called “Who Cares Wins” that brought the practice of integrating ESG factors into investment analysis. In an ESG report, a company publicly discloses information about its environmental, social, and governance practices to provide transparency to stakeholders. ESG reporting allows internal and external stakeholders to measure organizational performance and progress across sustainability initiatives and diversity and inclusion areas.

Common reporting areas include, but aren't limited to:

• Environmental: Refers to issues such as climate change and greenhouse gas emissions, biodiversity impacts, natural resource scarcity, water management, waste management, and energy usage.
• Social: Pertains to diversity, equity, inclusion, human rights, labor practices, supply chain management, culture, safety, training, product safety, and data privacy and security.
• Governance: Refers to how companies conduct their business, implement, and uphold policies, compensate executives, hold management accountable, govern their boards, and publicly disclose company information.

Government agencies around the world are regulating ESG reporting and instituting requirements to make this information public to stakeholders. While improving your ESG reporting strategy can help you remain compliant and meet regulatory and disclosure standards, an effective ESG strategy can also deliver business value for your organization.

These business benefits include — but aren't limited to — cost savings and efficiency, improved brand perception, increased capital access and market value, and a happier, more productive workforce.

By tracking and reporting on ESG metrics, organizations can identify opportunities to reduce energy, waste, and water usage, choose energy-efficient equipment, switch to renewable energy resources, and more. By becoming more efficient overall, companies see lower operating costs in the long term. A thorough ESG strategy also helps to predict potential risks and opportunities for improvement.

Organizations that are transparent about their ESG metrics and are working to optimize them can also see improved brand perception as a result. In fact, the majority of U.S. consumers say they'll pay more for sustainable products.

Additionally, allowing stakeholders an opportunity to weigh the pros and cons of their investment improves the organization’s perception in the marketplace. According to PwC’s 2024 Global Investors Survey, 71% of investors agree that companies should incorporate ESG risks and opportunities into their corporate strategy. KPMG reports that 76% of CEOs would be willing to divest a profitable part of the business if it was damaging their reputation, and that 24% agree that the main downside of not meeting ESG expectations is that it gives their competitors an edge.

Improving your ESG reporting and strategy can benefit your employees, too. A 2023 report by Bain & Company and EcoVadis found that companies with ESG activities focused on the workplace improve employee satisfaction, thus increasing workforce productivity and the ability to attract and retain top talent. A 2022 Salesforce survey found that 82% of the global workforce wants their company to be more sustainable, which means you could save on hiring, training, and other costs associated with employee turnover.

While ‌demand for ESG transparency grows, companies can use the metrics to monitor impacts, opportunities, and risks. For environmental performance, consider measures like greenhouse gas emissions, carbon footprint, energy consumption, water usage, and biodiversity impact. For social performance, diversity and inclusion are factored in along with employee engagement and human rights practices. For governance, considerations include board diversity, corporate ethics, and risk management.

By reporting on these metrics, companies can show they’re hitting their milestones. Shareholders want to know how their investments are impacting the world, making ESG transparency a business imperative. With stakeholders ratcheting up the pressure on companies to report more transparently, ESG metrics will increasingly influence businesses’ performance.

At Salesforce, business is‌ the greatest platform for change. Stakeholders want to make sure their investments align with their values, and an ESG strategy is a powerful way to show that a business is operating responsibly.

ESG regulation and disclosure requirements are rapidly increasing worldwide. Investors, customers, partners, and shareholders need to know that corporations are living up to their ESG reporting commitments and marketing claims.

Organizations of all sizes use ESG reporting standards to transparently disclose information about their business operations. There are hundreds of ESG frameworks, but only some apply to most companies.

In general, companies should ensure they’re aligned with three types of ESG metrics:

• Mandatory regulatory metrics: Companies, no matter their size or country of origin, should be measuring and reporting on topics such as governance, climate, and diversity. In California, two landmark climate-related disclosure bills require increased corporate transparency around greenhouse gas emissions and climate risks for more than 10,000 private and public companies. Alongside California’s bills, the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) impacts up to 50,000 entities both inside and outside the EU.
• Industry-specific benchmark metrics: Benchmark frameworks have a scoring element and include topics such as: climate change, data privacy, water use, and fair labor. These offer a standardized way for companies to rank themselves against their industry counterparts. The Sustainability Accounting Standards Board (SASB) Standards, which are tailored to almost 80 different sectors, are an example of a framework that is sector-specific.
• Voluntary, company-specific metrics: These are based on the topics most relevant to your specific business. Companies can make their ESG data available through frameworks like the Global Reporting Initiative (GRI), which was the first global standards and is the most widely used for sustainability reporting. There are other notable frameworks that companies may use, including the UN Sustainable Development Goals (SDGs), which is a collection of 17 objectives that address global challenges from eradicating poverty to sustainability and social justice. Of course, as far as company-specific reporting is concerned, there are always things unique to your company that organizations should choose to report voluntarily.

There are many agencies with proprietary methodologies to calculate and score ESG performance. An ESG score attempts to objectively measure how well a company performs on sustainability, social, and governance issues. It’s important to set guiding principles as you work to build a successful ESG reporting strategy at your company. Like understanding different reporting frameworks, the first step is to understand which topics are most important to your company and its stakeholders, and assess what data you're already tracking. Once you know your starting point, you can identify key gaps in your ESG reporting and prioritize how to address them.

Global systemic issues — such as poverty, human rights, and climate change — can’t be solved overnight. The most important step is to set targets and make an improvement plan over time. Don’t just look for a quick fix. It might take a few years to publish a comprehensive ESG report. Start small. Break it down, put what you believe in out there, listen to your stakeholders, and stay consistent.

Corporate social responsibility (CSR) is a voluntary business model that focuses on a business’s responsibility to society, and the strategies it uses to uphold that responsibility. Its initiatives generally include charitable donations, volunteer work, and philanthropy, along with efforts to maintain ethical labor practices.

ESG, on the other hand, tends to be driven by external requirements, standards, and frameworks. While ESG reporting used to be voluntary, we are moving toward an increasingly mandatory ESG reporting landscape. Businesses use this model to integrate environmental and social values into the core of their business plans, then report on them in a transparent way that investors can use to hold companies accountable. Because ESG reporting speaks to the company’s operations, it can improve a business’s valuation.

As climate change and social consciousness become more relevant in society and can present risks and opportunities for businesses, more companies are shifting away from CSR to a more transparent and accountable ESG reporting model.

ESG reporting and disclosure requirements will continue to grow and evolve. Organizations need to set goals, start tracking against those goals, and report out to stakeholders. Artificial intelligence (AI) will begin to play a bigger role as ESG AI becomes more mainstream.

In the ever-changing landscape of ESG disclosures, it’s key for your ESG technology to keep up. The Disclosure & Compliance Hub in Net Zero Cloud gives companies access to framework-specific report builders for CSRD, SASB, GRI, and CDP. As global disclosure and reporting requirements continue to grow, the platform will adapt to help organizations remain compliant. Also, Agentforce for Net Zero Cloud understands a company's ESG data model, reporting frameworks, and emissions factors. It streamlines ESG management and reporting by providing accurate insights, automating reporting tasks, and enhancing stakeholder trust.

You don’t need to do it all at once; the key is to get started. We can’t sit back waiting for the future to arrive. Together, we can shape the future today.