As environmental, social and governance (ESG) continues to become more prominent in regulations, firms will need to ensure they have the capability to effectively and efficiently complete ESG reporting processes.
While ESG reporting is a critical component for numerous regulations, including the EU’s CSRD, there can be several challenges that can make the process more complex than it should be. For instance, firms might struggle with their data collection, internal engagement and technical complexity. A report from KPMG US claimed that almost half of major firms are using outdated spreadsheets for ESG reporting. Despite this, 83% of firms believe they are ahead of their peers.
The best way for firms to improve their ESG reporting is through internal collaboration. Greenomy sustainability analyst Quentin Henneaux explained, “Collecting accurate, high-quality ESG data often requires cross-department collaboration, as the data spans environmental, social and governance metrics. This means active engagement between ESG teams and management to secure buy-in across the organisation, ensuring that all departments understand their role in meeting reporting standards.”
To ensure internal collaboration can flourish, firms need to build strong management support, Henneaux explained. By ensuring regular executive involvement, companies can ensure ESG priorities are understood and embraced across all facets of the business.
He added that while cross-functional collaboration is vital for a firm to have a cohesive approach, this can be difficult to achieve, particularly with the technicality of some sustainability issues like calculating emissions or assessing biodiversity impacts. “These factors demand expertise and a concerted effort from all parts of the organisation.”
By partnering with external experts, companies can integrate the required technical knowledge they need to tackle complex steps and improve reporting accuracy. This is particularly important during areas such as materiality assessment, value chain consideration and nature-related impacts.
Another way firms can improve their ESG reporting workflows is through the use of technology, which can enhance reporting by streamlining data collection and automate tasks across departments. Henneaux said, “These platforms centralise information, making it easier to manage and analyse complex sustainability topics. Additionally, ESG software often includes tools and AI capabilities that summarise complex topics and lengthy regulatory texts.”
Technology is quickly becoming a foundational aspect of ESG reporting. In fact, a recent study from Verdantix claimed that the global market for ESG reporting software is poised to reach over $5.6bn by 2029 from its current $1.3bn valuation. Given major ESG regulations, it is unsurprising that Europe is expected to lead this rise. The region has an estimated annual growth of 29% in ESG software expenditure.
There is no short supply of solutions being released to help companies with the increased pressure for ESG reporting. For instance, Thomson Reuters and SAP recently collaborated to simplify ESG reporting, KPMG launched its new Clear on Climate Reporting Hub and Deloitte enhanced its ESG reporting with new solutions for CSRD compliance. These are just a small handful of the recent developments in the space of ESG reporting. It is clear ESG reporting is becoming a vital part of business and firms need to be ready.
Keep up with all the latest FinTech news here.
Copyright © 2025 FinTech Global
Copyright © 2018 RegTech Analyst
