ESG reporting was once a topic only large public companies worried about. Today, due to supply chain pressure and regulatory changes, it's becoming increasingly unavoidable for SMEs too. This guide offers a practical roadmap for a business starting ESG reporting from scratch.
E — Environmental: Environmental performance indicators such as carbon emissions, water consumption, waste management, and biodiversity impact.
S — Social: Employee rights, occupational health and safety, diversity and inclusion, and human rights practices in the supply chain.
G — Governance: Board structure, ethics policies, transparency, and anti-corruption practices.
ESG reporting is the practice of presenting performance in these three areas with measurable, comparable data — and the "E" (Environmental) component is usually the most concrete and easiest starting point, since indicators like carbon and water footprint can be calculated with clear formulas.
Supply chain pressure: Large companies need to request data from their suppliers in order to complete their own ESG reporting (particularly Scope 3 emissions). If an SME is part of a large customer's supply chain, that customer may request emissions/water/waste data from the SME to complete its own ESG report — suppliers unable to provide this data may face a competitive disadvantage.
The indirect effect of the EU CSRD: While the EU's Corporate Sustainability Reporting Directive (CSRD) directly covers only large companies, those companies are expected to request data from SMEs within their value chain too — meaning CSRD's impact "ripples out" even to businesses not directly covered.
Financing and investor expectations: Banks and investors are increasingly factoring ESG performance into credit/investment decisions — a strong ESG profile can make financing easier to access.
1. Data collection: Collect the minimum data set above for the past 12 months — it can be compiled from bills and records.
2. Calculation: Convert the collected data into concrete kg CO2e and water footprint figures by multiplying it with emission/water coefficients (see our Carbon Footprint guide and Water Footprint guide).
3. Reporting: Document the results in a clear format (such as an ISO 14064-compliant report) — this can be used both for internal decision-making and for sharing with external stakeholders.
4. Verification: If possible, have the report verified by a third party, or at least make it verifiable via a QR code — this increases the credibility of the report.
"ESG is only for large companies" — as explained above, supply chain effects are increasingly proving this wrong.
"ESG is a one-time task" — ESG reporting is a recurring process (usually annual); producing your first report is only the beginning.
"ESG has to be a costly, complex process" — with the right tools (automated calculation, a ready-made coefficient database), your first ESG report can be produced far faster and more accurately than a manual estimate.
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