ESG Reporting: Mastering Challenges, Unlocking Opportunities
Sustainability reporting has evolved rapidly over the past two decades. What once represented voluntary transparency has become an integral component of modern corporate governance. With the introduction of international standards such as the GRI, the era of structured ESG reporting began.¹ Today, global regulations continue to accelerate this development.²
Over the past 10 years, the number of ESG-related regulations worldwide has increased by more than 150%.³
For internationally operating companies, this means more requirements, more data, and significantly greater complexity. At the same time, digital solutions are opening up new ways to manage ESG topics more efficiently and strategically.
Key Challenges in Practical ESG Implementation
In practice, a clear picture emerges for multinational companies: the greatest hurdle in ESG reporting is not a lack of willingness, but operational execution. Complexity increases significantly where global requirements meet heterogeneous organizational structures.
International ESG reporting today is characterized by a high degree of regulatory fragmentation and constant change. Companies must simultaneously comply with numerous regional and national ESG regulations. These regulations differ not only in content but are also subject to continuous change. This volatile regulatory environment makes long-term planning difficult and creates uncertainty in both sustainability reporting and management.⁴
In addition, ESG reporting still suffers from a lack of standardization. Different reporting frameworks, inconsistently defined KPIs, and the absence of binding guidelines make it difficult to measure ESG performance consistently and to compare results across companies, industries, and regions. This lack of harmonization affects not only external stakeholders such as investors but also undermines internal steering and decision-making processes.⁵
38% of companies struggle with unreliable ESG data, while 42% cite the volume and heterogeneity of data sources as a key challenge.⁶
Another major challenge relates to data quality, transparency, and reliability. Many ESG data points are based on self-reported information and are collected from a wide range of isolated data sources. Inconsistent methodologies, manual processes, and missing standards significantly reduce traceability and increase the risk of inaccurate or non-auditable disclosures.⁷ Governance weaknesses and management controversies further exacerbate these issues and negatively impact the credibility of ESG ratings.⁸
Beyond data-related issues, resource constraints and organizational deficiencies pose additional barriers. Limited financial resources, a shortage of qualified professionals, and insufficient ESG-specific expertise hinder the implementation of effective ESG structures. Unclear responsibilities and interfaces between sustainability management, controlling, and internal audit further complicate efficient operational execution.⁹
The challenges in ESG reporting are multifaceted but clearly structured:
Regulatory complexity, lack of standards, insufficient data quality, and limited resources. Studies show that more than 90% of companies face at least one of these hurdles.¹⁰
Without integrated processes and technological support, ESG reporting remains for many international companies a balancing act between ambition and operational reality.
From Strategy to Execution: Recommendations for Effective ESG Reporting
International ESG requirements can only be met efficiently if global frameworks and local implementation are consistently aligned. Research and practical experience show that successful ESG reporting requires clear governance, standardized data processes, and strong organizational anchoring.¹¹
Group-Wide Recommendations: Creating Consistency
For multinational companies, establishing uniform group-wide structures is essential to implementing ESG requirements effectively and efficiently. The foundation is a centralized sustainability governance system. By building a group-wide sustainability organization with clearly defined roles and responsibilities within individual entities – companies create clear decision-making paths, accountability, and enhanced auditability. ESG thus becomes an integral part of corporate steering rather than an isolated function.¹²
Building on this, the implementation of a standardized data, reporting, and emissions management system is a critical success factor. A centralized ESG data and reporting system enables consistent data collection, systematic quality assurance, and improved comparability across countries and business units. Unified definitions through a data dictionary, standardized metric units, and globally defined methodologies eliminate differences in measurement logic and country-specific calculation approaches. In particular, centralized emissions management with clear GHG accounting rules for Scopes 1 to 3, standardized emission factors, and integrated supplier data management significantly reduces methodological inconsistencies and improves the quality and traceability of Scope 3 reporting.¹³
Another key pillar is the group-wide management of materiality and publication. A consolidated ESRS materiality assessment serves as a “single source of truth,” from which national specifics can be consistently derived. Combined with clearly defined publication processes, XBRL readiness, and the establishment of Internal Controls over Sustainability Reporting (ICSR), this strengthens the formal quality of reporting and lays the foundation for limited and, in the future, reasonable assurance.¹⁴
National & Local Recommendations: Ensuring Execution
Local sustainability managers or teams ensure compliance with national ESG requirements and act as the interface to the group level. Targeted training builds the necessary expertise and reduces compliance risks.¹⁵
In addition, clear data governance processes with defined deadlines, data owners, and local control mechanisms ensure data quality and timeliness. This prevents incomplete or delayed data from jeopardizing group consolidation.
Furthermore, the digitalization of data collection – for example through system interfaces, automated data capture, or standardized supplier surveys – reduces manual sources of error and increases transparency and consistency.¹⁶
Technology & Software as Enablers of Effective ESG Reporting
In practice, ESG reporting rarely fails due to a lack of strategic ambition, but rather because of operational execution. This is where technology becomes a decisive enabler. Different studies and analysis clearly show that high complexity, fragmented IT landscapes, and manual processes significantly hinder reporting efforts.¹⁷
38% of companies struggle with unreliable ESG data and 42% with too many data sources.¹⁸
The data-intensive “E” dimension, in particular, presents major technological challenges. Companies often operate multiple systems in parallel – ERP systems, Excel, BI tools, and isolated solutions – without a common standard. Integrated ESG software provides a centralized platform that consolidates, structures, and harmonizes data from diverse sources. At the same time, it automates data collection, consolidation, and validation, significantly improving data quality.¹⁹
Beyond data management, ESG software supports compliance with increasingly complex regulatory requirements. Frameworks such as CSRD, and other regulations can be systematically mapped, regulatory changes integrated early, and reports created in a consistent and audit-ready manner. Compliance thus evolves from a reactive obligation into a manageable process, including audit support.²⁰
The analysis of ESG KPIs and emissions also benefits significantly from digital solutions. Integrated functions for calculating Scope 1 to Scope 3 emissions, KPI analysis, and performance tracking reduce manual effort, enhance comparability, and improve the decision-making basis for management and stakeholders. In addition, structured analyses, clear responsibilities, and audit trails strengthen risk and governance management and support the establishment of effective internal control systems.²¹
Finally, ESG software enables the creation of standardized, machine-readable reports, for example in iXBRL format. This meets rising regulatory requirements for digital usability and lays the foundation for future-proof, transparent ESG reporting.²²
Outlook: Viewing ESG Reporting as an Opportunity
“Those who impress with good ESG reporting strengthen their brand, win new customers, and build trust among investors and business partners. It’s definitely worth it!”
ESG reporting should not be viewed as a risk or a mere compliance exercise, but as a strategic opportunity. High-quality, transparent ESG reporting strengthens trust, enhances reputation, and supports long-term competitiveness. When integrated into effective governance and control systems, ESG becomes a key management tool—enabling measurable progress, early risk identification, and informed decision-making. As a result, ESG reporting evolves from a regulatory requirement into a strategic lever for sustainable performance and sustainable growth.²⁴
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