Modern Finance
Everything You Need To Know About ESG Reporting
What is ESG reporting, why do you need it and how do you introduce it into your organization?
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Environmental, social, and governance (ESG) factors are now a fundamental aspect of successful business strategy for companies of all sizes. In fact, 75% of business leaders consider ESG criteria to be important or very important to their business strategy.
ESG encompasses a company's impact on the environment, its social responsibility practices and its corporate governance framework. Reflecting market trends, consumers, investors and regulators alike are placing increasing importance on a company's ESG performance.
Forward-thinking companies are leveraging strong ESG practices to achieve various benefits—from mitigating environmental risks and attracting top talent to enhancing brand reputation and securing investments.
Prioritizing robust ESG policies not only strengthens your business’s financial performance and brand image but also contributes directly to risk reduction.
A financial planning and analysis (FP&A) team is a crucial element for navigating and executing the details that ESG entails. From data collection and analysis to scenario planning and reporting, an FP&A team can be a driving force in translating ESG aspirations into measurable actions and impactful outcomes.
In this post, we’ll walk you through 38 insightful ESG statistics that demonstrate the positive impact ESG can have on your bottom line.
The sustainability movement is gaining momentum around the world, crucially, in how businesses are held to account.
This section delves into the trends that go along with that shift, exploring not only consumer and investor views on ESG and corporate responsibility, but also the rising tide of ESG adoption across industries.
Both B2B and B2C consumers are increasingly choosing brands based on ESG standards and pressuring businesses to address environmental and social issues.
Companies are rapidly recognizing the strategic value of ESG initiatives, as evidenced by rising adoption rates of sustainability reporting and leadership commitment to the concept as a whole.
6. Sustainability reporting is on the rise, with 86% of large companies globally disclosing some information (22% of all companies).3
7. Europe dominates ESG adoption, with 93% of organizations self-identifying as users, compared to 79% in North America and 88% in Asia-Pacific.4
8. Companies with CEOs focused on ESG see greater value from their ESG investments.5
9. As shown in these 2024 banking trends, over half (54%) of the world’s banks include climate-related data in their financial statements.6
10. Corporate net-zero emissions pledges, which are commitments made by companies to eliminate their greenhouse gas emissions over a set timeframe, have increased by over 30% in the past year.7
Companies that prioritize ESG efforts and demonstrate strong performance in these areas are increasingly seen as attractive investment opportunities. This trend illustrates the need for businesses to prioritize ESG efforts not just for reputation, but also to secure capital.
As investor demand for responsible business practices rises, companies must consider not only their environmental and social impact but also the potential for stricter regulatory reporting requirements around ESG metrics.
The demand for ESG-based investing isn't uniform across the globe. Europe stands out with a concentration of assets in sustainable funds and a higher emphasis on ESG within investment decisions.
11. Nearly $74 billion of global ESG Exchange-Traded Fund (ETF) assets target climate action.8
12. Investor demand for ESG is on the rise around the world, with 42% of global investors prioritizing client expectations and reputation when making ESG decisions (up from 37% in 2021).4
13. European investors prioritize ESG more than any other continent, at 31% compared to 18% in North America and 22% in Asia-Pacific.4
14. With 87% of the globe’s assets under management (AUM) in sustainable funds, Europe dwarfs the Americas (10%) and all other regions (3%) combined.9
While Europe has traditionally been a leader in ESG investing, the U.S. market has experienced its own surge of interest in recent years (although slower).
15. Vena’s Industry Benchmark Report reveals less than one-third (28%) of business leaders say they apply ESG best practices to influence their investment decisions.
16. Among a survey about American investors’ ESG beliefs, 45% see no reason to invest in ESG, 25% cite ethical considerations as their main reason for investing, 22% hope to hedge climate risks and 7% are motivated by the payoff from anticipated return expectations.10
17. Twenty-nine percent of CEOs are committed to making climate-friendly investments regardless of the fact that those investments typically offer lower returns.11
18. Almost all (99%) of the investors surveyed in one Ernst and Young study use companies’ ESG disclosures as a part of their investment decision-making.12
19. Confidence in sustainable investing is rising, with fewer investors (48%) finding greenwashing—misleading sustainability claims — to be a major concern in the asset management industry compared to 2021 (57%).4
Beyond the ethical and environmental benefits, strong ESG practices can deliver tangible advantages for companies. While the full financial impact of ESG is still unfolding, evidence suggests a positive connection to the bottom line.
A visible commitment to ESG can also help companies attract and retain top talent, supporting workforce management and overall business performance.
Evidence suggests that strong ESG practices can translate to higher customer satisfaction and workforce engagement, potentially leading to increased revenue and operational efficiency.
20. Forty-three percent of businesses see financial benefits from ESG, but the full impact may take time to measure.5
21. Seventy-two percent of executives see ESG as a revenue driver, not just a cost burden.13
22. Studies show that purpose-driven brands grow their value over twice as fast as those focused solely on profit.14
Amazon co-founded The Climate Pledge in 2020, which aims to gather commitments from global businesses to work together to reach net-zero carbon emissions by 2040. Currently, almost 500 signatories are participating in the pledge.
Individual products can also receive a Climate Pledge Friendly badge on Amazon’s site. U.S. sales of products with the badge experienced an average increase of 8.4% in weekly sales versus their prior levels.
Strong ESG performance goes beyond just the bottom line. Companies with strong ESG practices are fostering not only loyal customers through improved brand image but also a more engaged workforce.
23. One-third of business leaders say ESG efforts improve their company’s internal brand through employee commitment and retention.5
24. Improving brand reputation (59%) outweighs stakeholder pressure (46%) and long-term returns (45%) as the top reason for ESG investment.15
25. Seventy-four percent of executives worry that failing to improve ESG performance will negatively impact their brand's standing in the market.16
26. The Society of Human Resource Management found that 75% of American business leaders attribute improved employee engagement to ESG initiatives.17
Patagonia is a vocal advocate for environmental causes, donating 1% of sales to grassroots environmental activists every year for almost 40 years. This social responsibility aligns with the values of environmentally conscious consumers, further strengthening their brand image.
Comparably found that Patagonia enjoys some of the highest customer loyalty rates in the apparel industry, currently holding at 82% customer loyalty. This dedication can be attributed, in part, to the brand's commitment to ESG principles.
Transparency is critical in the ESG landscape. A lack of clear reporting can hinder a company's ability to attract investors, build trust with stakeholders and fully demonstrate its commitment to ESG. Having a strong FP&A team on hand creates a foundation for gathering, analyzing and presenting ESG data.
27. Only 21% of finance teams are currently reporting on ESG metrics, according to Vena’s findings.
28. A study of businesses' corporate research initiatives found that 49% of companies are studying how sustainability practices impact financial performance, highlighting the importance of ESG reporting for stakeholders.18
29. The current landscape of over 600 ESG reporting standards is expected to evolve in the near future, with regulators paving the way for a more unified reporting framework.19
With implementing a more robust ESG program comes both challenges and opportunities. While companies grapple with issues around data standardization and transparency, solutions and tools are emerging to bridge these gaps.
Clear and reliable data is a must for successful ESG practices. The lack of uniform data standards and varying rating methodologies can create roadblocks. This inconsistency can further erode public trust with both consumers and investors.
Businesses can rebuild trust with key stakeholders, however, by prioritizing data transparency and clear communication.
30. Fragmented ESG data, scattered across various software and spreadsheets, creates a major roadblock for 60% of finance leaders struggling with data quality and access for reporting.19
31. Inconsistent data (30%), limited quantitative data (29%), and varying rating methods (24%) pose challenges for ESG ETF asset managers.20
32. Nearly half (45%) of employees and (41%) consumers want companies to reveal their environmental efforts such as net zero goals, but only 36% of businesses actually disclose this info.21
33. Ninety-four percent of all investors suspect companies of exaggerating sustainability efforts in reports.22
34. Only 37% of Americans are familiar with ESG, highlighting the need for clearer communication and education.23
Solutions and tools that address common ESG challenges in service of clear, comprehensive and transparent ESG reporting, continue to evolve.
35. Executives prioritize advanced analytics (64%) for ESG insights and automation (57%) for efficiency and impact.24
36. A significant portion (33%) of investors report a desire for more ESG education and training, suggesting a potential skills gap in the market.4
37. Recognizing the potential of neurodiversity, one in four Fortune 500 companies are projected to actively recruit neurodivergent talent by 2027, with the mindset of leveraging their unique strengths for improved business performance.25
38. Faced with stricter regulations like new ESG laws in California and the EU's Corporate Sustainability Reporting Directive, alongside rising stakeholder expectations, companies are prioritizing ethical sourcing, fair labor practices, and broader supply chain sustainability efforts.26
Strategic ESG policies are now recognized as fundamental drivers of long-term success. Let’s review some of the key reasons why your company should prioritize ESG efforts.
Strong ESG practices not only mitigate risk and enhance brand reputation, but can also position your company to attract top talent, cultivate loyal customers and secure vital investments.
Your business already faces risks from multiple sources, and a well-thought-out ESG policy can help minimize or even eliminate some of your concerns.
A solid ESG plan can be a game-changer in today's competitive talent market.
Demonstrating a commitment to ESG can unlock significant benefits in terms of customer loyalty and brand perception.
In the age of ESG investing, a strong sustainability and social responsibility profile is becoming increasingly important for attracting investors.
As this collection of ESG statistics shows us, ESG is not a passing fad. It’s a strategic necessity for the long-term success of businesses of every size.
Navigating the complexities of ESG reporting can be a challenge, but you don’t have to do it alone.
Vena can help you translate your ESG strategy into clear and impactful reporting through centralized data collection and streamlined FP&A workflows.
Learn more about Vena's financial reporting software featuring a native Excel interface.
Sources:
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