ESG Reporting Frameworks: What Finance Professionals Need to Know in 2025

The Shifting ESG Landscape for Financial Professionals

Environmental, Social, and Governance (ESG) reporting has evolved from voluntary disclosure to a critical regulatory requirement. My research indicates that finance professionals now face a complex array of frameworks, standards, and expectations demanding technical understanding and strategic awareness. What began as primarily investor-driven voluntary disclosure has transformed into a structured reporting ecosystem with regulatory backing across major markets, necessitating systematic approaches.

Making Sense of the Framework Ecosystem

The ESG reporting ecosystem has consolidated around several key frameworks finance professionals must understand:

International Sustainability Standards Board (ISSB) Standards

The ISSB standards (IFRS S1 for general requirements and IFRS S2 for climate, aligned with TCFD) have emerged as the global baseline for sustainability disclosure, focusing on sustainability factors affecting enterprise value. For finance professionals, these require robust processes for identifying climate-related risks/opportunities, establishing metrics, and connecting sustainability to financial statements.

Corporate Sustainability Reporting Directive (CSRD)

The EU’s CSRD is a comprehensive mandatory requirement employing double materiality – reporting on how sustainability affects the company and how the company impacts society/environment. Finance professionals supporting organizations with EU operations need processes for cross-functional data collection (environmental, social, governance), metric calculation per European Sustainability Reporting Standards (ESRS), and mandatory limited assurance.

SEC Climate Disclosure Rule

For US-focused finance professionals, the SEC’s climate disclosure rule mandates reporting material climate risks, governance, and potentially GHG emissions. This includes climate-related risk disclosures in annual filings, quantitative emissions reporting (material scopes), and detailing climate risk governance processes.

Implementation Challenges for Finance Teams

My research has identified several operational challenges for ESG reporting:

Data availability and reliability: ESG data often resides in disparate systems or isn’t collected systematically. Finance must coordinate cross-departmental information flows and establish controls.

Technology limitations: Most financial systems weren’t designed for ESG metrics, often leading to manual processes and spreadsheets, creating control risks.

Technical complexity: Quantifying emissions, social impacts, and climate-related financial risks requires specialized knowledge.

Assurance readiness: Emerging mandatory assurance requires ESG reporting processes with rigor comparable to financial reporting.

Strategic Approaches for Finance Leaders

Forward-thinking finance professionals can adopt strategic approaches to ESG reporting:

Leverage existing frameworks: Adapt financial control environments (documentation, review, segregation of duties) to ESG reporting.

Systematic materiality assessments: Establish processes to identify financially material sustainability factors, incorporating stakeholder perspectives.

Integrated thinking: Connect sustainability factors to financial planning, risk management, and strategy, not as a separate workstream.

Technology enablement: Evaluate sustainability modules from ERP providers or specialized ESG solutions to reduce manual effort and improve control.

Looking Forward: Convergence and Integration

The ESG reporting landscape continues toward greater harmonization. Finance professionals should anticipate further alignment between major frameworks, a growing connection between sustainability and financial reporting, increased integration of sustainability metrics into management reporting, and evolving technology solutions.

Organizations systematically anticipating these developments will be better positioned for efficient compliance and extracting strategic value from their sustainability information.

Would you like to discuss your organization’s approach to integrating ESG reporting with financial processes? Connect with me on LinkedIn to continue the conversation.