Introduction

In today’s dynamic business landscape, environmental, social and governance (ESG) factors are no longer peripheral concerns, they are central to how companies are evaluated by investors, regulators, customers and society. Transparent, credible ESG reporting has become a business imperative, driven by global sustainability challenges, rising regulatory expectations and the growing demand for accountability from all stakeholders.

However, ESG reporting is not merely about publishing data. It is a structured, disciplined process that requires integration with corporate strategy, robust data governance, alignment with internationally recognised standards and assurance mechanisms to build trust. Frameworks such as the International Financial Reporting Standards (IFRS) S1 and S2, the Sustainability Accounting Standards Board (SASB) Standards, the Global Reporting Initiative (GRI) Standards and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations provide a comprehensive foundation for organisations to report ESG performance in a meaningful and comparable manner.

This illustrative guide breaks down the ESG reporting journey into four clear steps: from setting up internal governance and data processes to compiling structured reports and achieving independent assurance. Whether your organisation is starting its ESG journey or aiming to mature its disclosures, this guide will help translate complex standards into actionable steps, ensuring ESG reporting becomes a value-creating, business-aligned capability. The table below outlines these key steps at a glance:
 

Step No.	Title	Key focus
1	Setting up your organisation for ESG	Governance, strategy alignment, materiality assessment, goal setting, frameworks, role assignment
2	Setting up processes and tools for data	Identify ESG data, standardise collection, central repository, data quality, tech enablement
3	ESG report compilation and finalisation	Apply reporting standards, connect ESG to financials, narrative building, internal reviews
4	ESG report assurance and improvement	Prepare documentation, define assurance scope, engage auditors, continuous improvement cycle

 

 

Step 1: Setting up your organisation for ESG reporting

The first step is about preparing your company internally to be ready for ESG reporting. This is not about collecting data - yet. It is about setting up leadership, strategy and identifying what you will report.

1.1 Establish ESG governance and leadership

• Define who is responsible for ESG reporting within your organisation
• At the top level, assign responsibility to a Board Committee or a senior executive sponsor: for example, the Chief Financial Officer or Chief Sustainability Officer
• Form an ESG Steering Committee with members from important departments like Sustainability, Finance, Human Resources, Risk Management, Operations, HSE, Quality Management, Compliance and Internal Audit.

This ensures everyone knows their role and brings different expertise to ESG reporting.

1.2 Align ESG strategy with corporate goals

A good ESG strategy is not something separate from your business strategy. It must support your company’s growth, profitability, risk management and reputation. To achieve this, you need to connect ESG goals directly to your business priorities.

• Clearly define why ESG matters to your business
• Connect ESG goals with business benefits such as attracting investors, reducing risks, improving reputation and achieving long-term growth
• For example:
  • A company might adopt a goal to reduce its energy consumption, which saves costs and reduces its environmental impact
  • A manufacturing company realises that reducing water usage not only lowers operational costs but also prepares them for stricter environmental regulations. This directly supports their business goal of cost efficiency and compliance.

1.3 Conduct a materiality assessment and engage stakeholders

• Materiality means identifying which ESG topics are most important to your business and stakeholders
• Stakeholders include investors, customers, employees, regulators, suppliers and the community
• Conduct surveys, interviews or workshops to understand which issues matter most
• Use a materiality matrix to map these issues, based on their importance to stakeholders and their impact on your business
• This ensures you focus your reporting on what is truly relevant.

1.4 Set ESG goals and key performance indicators (KPIs)

• For each important ESG topic, define clear goals and how you will measure progress. e.g. goals might be reducing greenhouse gas emissions by 20% in five years, or achieving gender equality in leadership roles
• KPIs are specific, measurable values that track progress toward these goals
• Use internationally recognised metrics, such as those provided by the Sustainability Accounting Standards Board (SASB) for your industry.

Below are a few examples of ESG KPIs, including Environmental, Social and Governance aspects, aligned with SASB Standards and connected to business goals:
 

ESG dimension	Industry	ESG goal	KPI (SASB Standard reference)	Business benefit
Environmental	Food & Beverage Manufacturing	Reduce water consumption by 20% by 2028	Total water withdrawn (cubic metres) per unit of product output (SASB: Processed Foods Standard)	Reduces operational costs, supports regulatory compliance, enhances resource efficiency
Social	Telecommunications	Increase women in technical roles to 35% by 2026	Percentage of gender and racial/ethnic group representation for technical positions (SASB: Telecommunications Services Standard)	Improves diversity, enhances innovation, strengthens employer brand
Governance	Commercial Banking	Ensure 100% employee completion of anti-corruption training annually	Monetary losses due to legal proceedings related to fraud, insider trading, anti-trust violations, etc. (SASB: Commercial Banks Standard)	Mitigates compliance risks, reinforces ethical culture, builds stakeholder trust

1.5 Select reporting frameworks and standards

• Decide which standards your ESG report will follow, e.g.:
  • Use IFRS S1 for general sustainability-related financial disclosures.
  • Use IFRS S2 specifically for climate-related disclosures
  • Use SASB Standards for industry-specific metrics
  • Use Global Reporting Initiative (GRI) Standards for broader social and environmental impact disclosures
  • Follow the Task Force on Climate-related Financial Disclosures (TCFD) recommendations for reporting on climate-related risks.
• Combining these frameworks helps you meet investor expectations and stakeholder transparency.

1.6 Assign roles and build capacity

• Clearly define who is responsible for collecting and reporting each piece of ESG data
• For example, facilities teams manage energy consumption data, while human resources tracks diversity metrics
• Train employees to understand what ESG data is, why it matters and how to collect it accurately
• Build ESG responsibilities into performance evaluations and job descriptions.

 
 

Function / Department	Department-related typical ESG data responsibility	ESG data ownership (illustrative) example metrics (KPI)	Relevant ESG dimension
Facilities Management	Tracks energy consumption, water usage and waste management across company sites	Total energy consumed (kWh); Water withdrawn per unit of output; Waste diverted from landfill (%)	Environmental
Human Resources (HR)	Manages diversity, equity, inclusion data, employee wellbeing, training & development records	% Women in leadership roles; Employee turnover rate; Average hours of training per employee	Social
Health, Safety & Environment (HSE)	Monitors workplace safety incidents, occupational health data and environmental compliance	Total recordable injury frequency rate (TRIFR); Number of environmental violations	Social & Environmental
Supply chain / Procurement	Collects supplier ESG data, manages ethical sourcing and monitors Scope 3 emissions	% Suppliers screened for ESG criteria; Scope 3 emissions (supply chain related)	Environmental & Governance
Risk Management	Identifies ESG-related risks (e.g. climate, reputational, compliance risks) and oversees mitigation measures	Climate-related transition risks assessed; Risk exposure to ESG regulatory fines	Governance
Finance & treasury	Integrates ESG into financial disclosures, tracks ESG-linked financial metrics (e.g. green bonds)	Sustainability-linked loan KPIs; ESG-related capital expenditure	Governance & Environmental
Operations	Tracks production efficiency, resource utilisation and operational environmental impacts	Energy intensity per unit of production; Water reuse rate in manufacturing	Environmental
Legal & compliance	Oversees anti-corruption, ethics training, legal proceedings and regulatory compliance reporting	% Employees completing ethics training; Monetary losses from ESG-related legal cases	Governance
Information Technology (IT)	Manages data privacy, cybersecurity and energy use of data centres	Number of data breaches; Data centre energy efficiency (PUE)	Governance & Environmental
Corporate Social Responsibility (CSR)	Tracks community engagement, social investment and philanthropy initiatives	Community investment (as % of revenue); Number of volunteer hours contributed	Social

  

 

Step 2: Setting up processes and tools for ESG data collection

Once governance and strategy are in place, the next step is to collect the right ESG data, from the right sources, with accuracy and consistency.

2.1 Identify data requirements and sources

• For each ESG metric, identify:
  • What data you need
  • Where it comes from (data source)
  • How often it needs to be collected
• Examples:
  • Energy consumption data from utility bills or facility management systems
  • Employee diversity data from Human Resources databases
  • Safety incident data from Operations / HSE logs
  • Supplier emissions data for Scope 3 reporting.

2.2 Establish standardised data collection processes

• Create documented procedures for collecting each data point
• Define:
  • Who collects the data
  • How it is collected
  • When it is collected (monthly, quarterly, annually)
• Integrate ESG data collection into existing business workflows to minimise additional effort.

2.3 Create a central data repository

• Set up a secure, central system to store all ESG data
• This can be a well-structured spreadsheet or a more advanced ESG software platform as the company grows
• Ensure there are controls to track changes, version history and limit unauthorised access
• This central repository becomes the ‘single source of truth’ for ESG reporting.

2.4 Ensure data quality and controls

• Apply checks to ensure the data is accurate, complete and consistent
• Examples of controls:
  • Automated formulas to detect unusual values
  • Review and approval of data by responsible managers
  • Clear documentation of how each data point is calculated
• Consider conducting a trial data collection to test your processes before the formal reporting cycle.

2.5 Leverage technology (tool-agnostic)

• Use available technology to automate data collection wherever possible
• For instance, link energy management systems directly to your ESG data repository to pull consumption data automatically
• Focus on building a robust process that can work with different tools.

2.6 Train and communicate

• Train all employees involved in data collection on ESG definitions, measurement methods and their role in the process
• Foster a culture where ESG data is treated with the same importance as financial data.

2.7 Integrate ESG into internal controls and risk management

• Extend your company’s internal control framework to cover ESG data
• Include ESG risks (e.g. climate transition risks, reputational risks) in your enterprise risk management systems
• This ensures ESG reporting is reliable and aligned with overall business governance.

 

Step 3: ESG report compilation and finalisation

With data collected and verified, the next step is to compile the ESG report in a structured, transparent and credible manner.

3.1 Follow reporting standards and structure

• Structure the report using globally accepted frameworks:
  • IFRS S1 for sustainability-related financial information
  • IFRS S2 for climate-related disclosures
  • SASB Standards for industry-specific metrics
  • GRI Standards for broader societal and environmental impacts
  • TCFD Recommendations for climate governance and risk reporting.

This ensures your report meets investor, regulatory and stakeholder expectations.

3.2 Connect ESG data to financial information

• Explain how ESG issues impact your company’s financial performance
• For example:
  • Increased energy consumption linked to higher operational costs
  • Climate-related regulations affecting product demand or asset values.

This ‘connectivity’ is essential to comply with IFRS S1 requirements.

3.3 Compile data with contextual narratives

• For each ESG topic:
  • Present the relevant data (KPIs, trends)
  • Provide explanations, context and action plans
  • Be transparent about challenges and areas for improvement
• GRI encourages balanced reporting of both positive and negative impacts.

3.4 Ensure accuracy, consistency, and internal review

• Cross-verify data with source documents
• Ensure consistency across all parts of the report
• Review by relevant departments and seek management and Board approval
• Finalise design and presentation for clarity and readability.

 

Step 4: ESG Report assurance (verification and improvement)

To enhance credibility, subject your ESG report to an assurance process, similar to financial audits.

4.1 Prepare for assurance

• Compile evidence for every reported ESG metric:
  • Raw data files
  • Calculation methods
  • Internal control records
• Conduct internal audits or ‘dry runs’ to identify and fix gaps before external assurance.

4.2 Define scope and level of assurance

• Decide if assurance will cover the entire report or specific metrics (e.g. greenhouse gas emissions)
• Choose between:
  • Limited assurance: Recommended for companies starting their ESG assurance journey, providing stakeholder confidence with less extensive procedures
  • Reasonable assurance: Suitable for mature ESG reporters seeking higher credibility and regulatory compliance.

4.3 Engage independent assurance providers

• Engage any accredited firms experienced in sustainability assurance
• Ensure they follow recognised standards such as:
  • International Standard on assurance engagements (ISAE) 3000 (Revised) – Assurance over non-financial information
  • International Standard on assurance engagements (ISAE) 3410 – Assurance on greenhouse gas emissions
  • AccountAbility AA1000 Assurance Standard (AA1000AS v3).

4.4 Use assurance feedback for continuous improvement

• Analyse assurance findings to improve data processes and controls
• Refine reporting based on recommendations
• Establish an annual ESG reporting cycle with continuous enhancements
• Treat ESG as an ongoing process, not a one-time report.

 

How BDO can help

For further information, insights and assistance with your ESG and IFRS reporting needs, please contact us. Our team of experts is ready to support you in this transition.

The material discussed in this article is meant to provide general information and should not be acted on without professional advice tailored to your organisation’s individual needs.
 

Authors Abdur R. Sharjeel Head of Advisory Mobile : +966 55 754 0579 a.sharjeel@bdoalamri.com

Syed Moin Ahmed Zaidi Senior Manager – Sustainability Services Mobile : +966 50 765 1071 s.zaidi@bdoalamri.com