How can you prepare your organization for ESG reporting compliance with an integrated FP&A solution?
Dresner’s ESG market report puts the writing on the wall and shows that, with mandatory environmental, social, and governance (ESG) reporting standards that came into more focus in 2025, the need to digitally transform to meet regulatory obligations more efficiently is more pressing than ever.
Organizations across the globe are aware of the need for ESG reporting with 64% of respondents in the Dresner study rating its importance as critical, very important, or important.
However, 56% of respondents admit that their approach to ESG reporting is yet undefined.
We are going to cover the main points of the report, the updates to reporting standards you should be aware of, and how an integrated FP&A system may provide a better solution for accurate and timely reporting capabilities.
What is ESG Reporting?
Environmental, social, and governance reporting provides governing and regulatory bodies an insight into the potential impacts of social and environmental factors on an organization’s finances.
These compliance standards also quantify the external impact of an organization on factors such as societal issues, the environment, and the economy.
This reporting of an organization’s environmental, social, and governance practices is increasingly being used by investors so that they know their investments are ethical and sustainable.
Even with prim and proper ESG practices, from January 2024, succinct reporting is required even for small to mid-sized enterprises.
How is ESG compliance changing?
While organizations of all sizes may have modern ESG practices, many do not currently generate ESG reports. As ESG reporting will become important for an organization very soon, the time has come to prepare a strategy to deal with it efficiently.
Both the International Financial Reporting Standards Foundation and the European Union announced formal ESG reporting standards.
US organizations are also implicated as the Securities and Exchange Commission declared rulings on climate disclosure.
What’s more, the International Sustainability Standards Board also announced that two ESG standards, IFRS S1 and S2, became effective from January 1st, 2024.
Large enterprises will not be the only ones affected. While small to mid-sized enterprises (SMEs) are usually exempt from the full complexity of reporting, they must also prepare full reporting capabilities.
For example, the EU’s Corporate Sustainability Reporting Directive will eventually apply to SMEs, albeit with additional time to comply, with reports on 2026 data to be expected in 2027.
It's clear that organizations of all sizes will soon be expected to have succinct and accurate ESG reporting capabilities, of which there is very little currently as reported by Dresner.
The pressing points from Dresner’s recent study on ESG reporting
Dresner Advisory Services conducted a recent survey to discover the current state of ESG reporting, among organizations of all sizes and geographies, as well as listing some of the impending changes to reporting compliance.
Their report lays out what’s to come, why many organizations may be under-prepared, and why this compliance needs action sooner rather than later.
Key findings from Dresner’s market study
- Currently, ESG reporting is highest in Europe, the Middle East, and Asia (EMEA) at 45%, while it remains at its lowest (23%) in North American (NA) organizations.
- But ESG reporting is only done by 32% of organizations, with an additional 18% considering it. This means that more than 50% of organizations, of varying sizes, are likely unprepared for coming reporting regulations.
- Additionally, 75% of respondents state they don’t even know what standards are in use or likely to be used.
- Responses suggest cross-functionality is paramount and enterprise performance management (EPM) capabilities are an enabler for ESG reporting, with the CFO and finance team taking most of the responsibility for ESG reporting.
What’s clear in the report is that many organizations are unprepared, and in the worst cases unaware, of the impending standards that will be put in place. Those without any plan of action could come under a lot of stress.
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Why an integrated FP&A solution is necessary
ESG reporting is challenging, with monitoring and tracking of non-financial data being paramount - It’s clear that an integrated financial solution is the key.
With a Cloud-based FP&A system, organizations can easily conform to ESG reporting requirements as they will occur in the future and benefit from reporting capabilities in other areas.
Alternately, a financial function that has siloed data from outdated legacy systems will struggle to meet the complex requirements for compliance standards to be satisfied.
Even those organizations with a digital financial function are still lagging with static reporting tools rather than the proactive management functionality that an ERP suite provides.
In other words, a cross-functional response from an organization is required to satisfy all elements of ESG reporting standards. This requires a financial function that is succinctly integrated with other non-finance departments to meet ESG reporting standards with confidence.
Why Unit4 is the vendor for you
Dresner ranked Unit4 as the 3rd highest vendor, out of 10 surveyed, due to its ERP cross-functionality and integrated FP&A solution. With Unit4 reporting can be much easier and more succinct by compiling data across all departments and offices.
Unit4 FP&A is a comprehensive software solution designed to assist organizations in collecting, analyzing, and reporting their Environmental, Social, and Governance (ESG) data.
With Unit4 reporting can be much easier and more succinct by compiling data across all departments and offices. Consult our website to learn more about how our FP&A for ESG product can help generate the cross-functional response required to satisfy ESG compliance for the future – or talk to sales today!
Disclaimer
ESG reporting requirements continue to evolve globally. The Unit4 FP&A solution is designed to assist organizations and reduce some of the administrative burden in analyzing and reporting their ESG data. It can support compliance but is not a full regulatory reporting solution. The model includes calculations and some pre-defined business logic (such as KWh, m3, kg CO2 and km conversions) but is not an out of the box solution including pre-populated standards data for ISSB (Including IFRS S1 and S2), CSRD, ESRS, GRI, SASB or TFCD. Full compliance requires the collection of data through a specialist vendor partnership, which we can support.
