ESG and CSRD-compliant reporting – how to implement a sustainability strategy in your company

Introduction to ESG

Sustainability related issues today have just as significant an impact on businesses decisions as economic, political or technological factors. This is not only due to growing environmental awareness, consumer expectations and the corporate environment, but also from legal regulations.

The concept of sustainable development was defined in the 1980s by a UN report as a state that meets the needs of the present without limiting the ability of future generations to meet their needs. It assumes balancing economic development with environmental needs while simultaneously considering social needs. In practice, this means, among other things, striving to reduce greenhouse gas emissions, managing resources efficiently and promoting social justice and transparency in corporate decision-making processes.

The ESG (Environmental, Social, Governance) standards related to this concept are understood as a set of criteria for assessing the performance of companies and have been developed to support the measurement and comparison of the effectiveness in sustainability activities, including their environmental, social and governance impacts.

While ESG has become a key element of business strategies worldwide, the CSRD (Corporate Sustainability Reporting Directive) which applies to EU countries has given these regulations a new dimension. It concerns the requirement for large corporations (and, from 2026, listed small and medium-sized companies) to report non-financial sustainability-related data.

Implementing ESG reporting standards is not just an obligation but also an opportunity for numerous benefits. Companies that implement ESG reporting can expect greater investor trust, improved reputation or preferential financing terms. All this makes ESG an integral part of competitive advantage as well as a pillar of modern governance and building a more sustainable and responsible economy.

Implementation of ESG strategy

Effectively implementing an ESG strategy within an organisation is a multi-stage process that requires detailed planning, commitment and systematic implementation at every stage and across all levels of the organisation. While the specific elements may vary between companies, several key milestones should be considered in every ESG strategy:

• Assessment of the current state. It is advisable to start with a comprehensive ESG audit, examining the current state of affairs across various areas of the organisation. This will allow you to understand where the company currently stands in various dimensions and, in the next steps, identify areas for improvement and set priorities.
• Defining goals. Based on the conducted audit, the organisation should define its goals according to the SMART (Specific, Measurable, Attractive, Realistic, Timely) principle. Depending on the specifics of the company and the results of the audit, this could include, for example, a 20% reduction in water consumption in the production process over three years, a 10% reduction in the annual employee turnover rate, or a 15% reduction in packaging by 2030.
• Action plan. An effective ESG strategy should include a detailed action plan with a timetable and assigned responsibilities in specific areas. These actions must be easy to monitor, including through dedicated IT tools.
• Monitoring and reporting. ESG reports should be prepared and published annually, while metrics in specific areas can be internally monitored and analysed much more frequently. There are several recognised ESG reporting standards, such as GRI, SASB or ISO 26000. For companies operating in the EU, however, the key standard will be ESRS (European Sustainability Reporting Standards) which is mandatory for companies subject to the CSRD.

IT tools supporting ESG reporting

There are many IT tools that support ESG reporting. They support the processes of collection, analysis and presentation of sustainability-related data, implementing one or multiple reporting standards. These tools differ in their functionality, built-in workflows and user interface. Despite this, many organisations are choosing to build ESG reporting themselves, as additional functionality implemented by the corporate data warehouse, supported by appropriately selected reporting and analytical tools.

Regardless of the chosen approach, it is worth remembering that the quality of the resulting reports directly depends on the quality of the collected data. Therefore, when deciding to implement an ESG strategy in an organisation, it is worth considering the use of a data warehouse as a key element in the entire process.

Data warehouses, by integrating with the various IT systems in a company, such as ERP, BMS, production or environmental management systems, enable the centralisation of all collected data in one place. The data collected in the warehouse can then be cleaned, processed and enriched. Finally, reporting tools integrated into the data warehouse can generate reports that comply with international standards such as the ESRS. Such automation significantly improves the efficiency, quality and credibility of ESG reporting, compared to the traditional approach based on manual data entry into the system.

In addition to meeting regulatory requirements for ESG reporting, data warehouses can incorporate advanced analytical tools to enable comprehensive data analysis, trend identification and ongoing monitoring of progress towards defined goals. This enables the creation of an effective feedback loop, leading to the systematic improvement of sustainability performance.

ESG support – Microsoft’s offering

When choosing an IT tool to support ESG, it is worth considering Microsoft solutions. The first is Microsoft Sustainability Manager, which focuses primarily on environmental data management. It not only enables the collection and reporting of data for the required ESG reporting, but also, thanks to built-in analytical tools and AI functions, allows monitoring and making more informed decisions regarding, for example, reducing CO2 emissions or water consumption.

Sustainability Data Solutions in Fabric, on the other hand, is a set of tools that facilitate the integration and processing of ESG data from various sources. This solution enables the centralisation of ESG data into a single data lake, using a standard ESG-compliant data model. The calculated metrics can serve as the basis for generating reports in, for example, Power BI, or used to feed other systems supporting ESG reporting within the organisation.

ESG and CSRD-compliant reporting – the key to sustainability in business

Sustainability and ESG reporting are key challenges for companies operating in the European Union. New regulations, such as the CSRD, oblige companies to report transparently on their environmental, social and governance activities. Implementing an ESG strategy involves conducting an audit, defining goals, planning actions and monitoring results in accordance with international standards such as ESRS. Modern tools, such as Microsoft Sustainability Manager and Sustainability Data Solutions in Fabric, enable the automation of ESG reporting, improvement of data quality and more effective management of a company’s environmental impact.