Get ready for ESG reporting with increased data transparency

Every senior business leader knows that we can’t manage what we can’t measure. Better insights inform better decisions.

In 2024, organizations around the world will face new regulatory reporting requirements designed to increase the transparency of environmental, social, and governance (ESG) impact and progress. For many, it will entail gathering more granular data from across their operations and value chains. But rather than being seen as a burden, it should be embraced as an opportunity. Greater visibility into activities across the business will help decision-makers improve both ESG and business performance and boost long-term competitiveness.

Investors are increasingly factoring ESG into their strategies. At the same time, consumers are placing more weight on sustainability, creating a compelling case for every organization to show action and progress. It’s good for business, people, and the planet.

While many organizations voluntarily issue sustainability reports already—on their own timetable and against self-selected parameters—new policies will require public, audited, and robust ESG reporting that disclose their impact on the environment, communities, workers, and consumers and describe their corporate governance practices and performance. To generate reliable reports, organizations will need to reimagine how they are collecting and analyzing their data.

Expected new legislation based on the European Union’s Corporate Sustainability Reporting Directive (CSRD), adopted in December 2022, will require roughly 50,000 organizations to issue ESG reports to regulators, many for the first time. CSRD guidelines will compel companies to disclose factors about climate change mitigation and adaptation, water, circular economy, biodiversity, human rights, equal opportunity, and lobbying activities related to these topics.¹ In addition to CSRD, Sustainable Disclosure Requirements (SDR) in the United Kingdom designed to centralize ESG reporting for financial firms are expected to be finalized this year. Other countries and regions are also reviewing and proposing new ESG reporting requirements.

Like many of our customers and partners, we’re navigating these regulatory developments closely, but we’re not new to sustainability reporting. Microsoft has retained an A average rating in voluntary reporting like CDP and we publish an annual sustainability report that’s audited by a third party. As we examine how new rules impact the scope of our reporting, we’re helping our customers do the same, because our own experience has shown us that collecting and analyzing data at scale—that is, across entire operations and value chains—requires increasingly automated, data-driven digital technologies.

Driving and reporting ESG progress demands effective data management

No matter how mature an organization’s infrastructure may be, elevated standards for reporting ESG impact, risk, and opportunities will require refining and potentially reconstructing data management systems, processes, and controls. Reliance on historical or siloed data introduces problems of accuracy, relevancy, and consistency—all impeding cohesive reporting and informed decision-making.

With Microsoft Cloud for Sustainability, we can help standardize data from sources across operations and value chains and provide calculation against emissions factors across ESG criteria—delivering consolidated financial, operational, and sustainability intelligence. We’re rapidly expanding ESG capabilities within Microsoft Cloud for Sustainability and through our global partner ecosystem to help organizations track Scope 1, 2, and 3 emissions, water data, and more to improve reporting, governance, and accountability and drive sustainability performance.

Integrated data strategies propel ESG transformation

We believe organizations that will be best positioned for long-term success are those that modernize and scale their data platforms. Applying advanced digital solutions will allow these organizations to effectively manage the data required to track and report ESG risks and progress while also driving the organizational and digital transformation critical for lasting change.

Market-leading organizations are consolidating data in a modern sustainability data estate that’s platform-and system-agnostic and standardizes disparate data. They’re using a network of application programing interfaces (APIs) to provide connective tissue so they can retrieve the intelligence they need. By building a comprehensive ESG data estate in a data lake like Azure Data Lake, they’re able to aggregate environmental, financial, and operational data across business units and supply chains and stage data for advanced analytics through Azure Synapse Analytics.

This integration of databases, analytics, and governance:

• Enables near real-time reporting for timely insights, better risk management, and metrics-based decision making.  
• Lays the groundwork for AI.
• Equips organizations to manage their growth more sustainably.

With organized data estates, companies are empowering their people to invest less time making sense of fragmented data, and more time creating value.

Get your data in order with Microsoft

No matter where you are in your sustainability journey today, Microsoft can help you address new ESG reporting expectations and accelerate sustainability progress. Figuring out the data you need, ensuring you have access to the data, and gathering and organizing that data will take time. Like many organizations, while you may have already been actively working to bring together environmental insights about emissions or water data, you may just be starting to document social factors like working conditions and human rights, and governance factors like leadership accountability and decision-making.

Whether your organization is immediately affected by directives like CSRD or not, understanding the scope of new reporting guidelines will prepare you to be more competitive and responsive to market demands. We offer data-driven technologies and guidance to support you, whether your goals are to integrate a decentralized data strategy, improve governance, or drive impact reduction.

We believe in transparency and data choices so every person and organization can control their data and have choices on how it is used.

Microsoft and our partners stand ready to help you unlock data and modernize your data estate. We can help you build an integrated strategy that lends better visibility into data and generates meaningful insights that allow you to respond to changing regulations, reduce the impact of your organization on the planet and on society, and transform your business to thrive in a changing landscape.

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¹The scope of CSRD guidelines extends beyond the EU border and includes companies doing business with or within the EU, as well as compliance through value chains. Reporting requirements and timelines vary by company type and may start as early as January 2024 for large EU-listed companies. Companies subject to CSRD guidelines will have to report according to European Sustainability Reporting Standards (ESRS). The European Commission is expected to adopt detailed reporting standards by June 2023. Learn more.