ESG Reporting Challenges – What Awaits Us and How to Go About It
- 25 October 2024
- Category: News

ESG Reporting Challenges – What Awaits Us and How to Go About It
We are entering a new reality – ESG reporting has become a standard and a core obligation for companies in the EU. All thanks to CSRD (Corporate Sustainability Reporting Directive). This is guided by the noble goal of increasing transparency and enabling investors to make informed decisions, but from our perspective it is a technical and organizational challenge that we need to prepare for in partnership with our clients
Why do we even have to deal with this?
The short answer: because the directive requires it. The longer answer: because the world is changing, investors are increasingly looking at ESG when making decisions, and regulators are pushing for greater transparency in companies’ operations. From a practical point of view, good ESG reporting is not only about meeting legal requirements – it is also a way to build company value and attract investors who are increasingly paying attention to these important issues.
What exactly needs to be reported?
ESG is actually three different pillars:
Environmental (E)
This is the simplest part – we have specific, measurable indicators here. We are talking about CO2 emissions, energy consumption, waste management or water consumption. Here we basically know what and how to measure – the data is specific and relatively easy to obtain.
Social (S)
This is where it gets interesting. You need to report on employee relations, gender equality, diversity, human rights, and community engagement. This data is less obvious, but it can still be measured and reported in a meaningful way.
Governance (G)
This is the real challenge. How to measure the quality of management? How to present in numbers the transparency of decision-making processes or the effectiveness of anti-corruption policies? Here you really have to think about the methodology and the way of processing and presenting data.
Where to look for specifics?
The European Sustainability Reporting Standards (ESRS) are key. This is the “bible” of ESG reporting – it defines what and how to report. It is also worth taking a look at the GRI or TCFD guidelines, because ESRS is based on these standards.
The main challenges in practice
Data Problems
While environmental data is relatively easy to obtain (we have meters, invoices, hard numbers), it is much more difficult to obtain, for example, governance. How to measure “quality of governance” and how to define data sources? It is not always obvious.
Doubly Important
This is a key challenge. We need to show not only how ESG factors affect the company, but also how the company affects its environment. In practice, this means reviewing data and analysis, which can be quite a challenge and time consuming.
How to deal with this?
Advisors
Consider expert support, especially at the beginning. They will help build a methodology and key metrics, especially in more difficult areas like governance.
EAM and ERP Systems
Modern EAM systems such as IFS Ultimo and ERP systems such as IFS Cloud with ESG modules can:
- Automatically collect data
- Track indicators even from areas S and G
- Generate reports compliant with ESRS
Automation available in EAM and ERP systems is also important – the more processes that can be automated, the fewer problems there will be with collecting and analyzing data.
Summary
ESG reporting is not Mission Impossible, but it requires solid preparation and the right tools. It is worth starting by organizing what we often already have (especially in area E), and then building processes for more difficult areas (S and G). And one more thing – this is not a one-time project, but a process that will evolve with your organization.