Own ESG reporting: why the most advanced organizations in sustainability tend to have the least organized data

There is a paradox that often appears in organizations that have been working on sustainability for years. They are the ones who know the most about what it means to manage an ESG commitment well. They are the ones that have invested the most in communicating that commitment to their stakeholders. And they are often the ones who have the most difficulty consolidating their own sustainability data into a single repository, updated in real time and ready to be verified by an external auditor.

The paradox has a logical explanation: organizations that have been in sustainability the longest time built their ESG reporting systems before there were specific tools for this purpose. They did so with what they had available — spreadsheets, annual reports prepared manually, data extracted by hand from different systems with different formats — and these processes, although they work, do not scale well when the volume of data grows and when regulatory and interest group requirements intensify.

The entry into force of the CSRD Directive [1] has turned this operational problem into a strategic problem. What used to be a voluntary reporting practice is, since January 1, 2024 for large companies, an obligation with independent verification. And verification requires something that the manual process doesn't guarantee: traceability

The problem that no one mentions when talking about ESG

When a company announces its commitment to ESG objectives — reduction in emissions, gender equality in management positions, transparent corporate governance — the conversation usually focuses on objectives and strategy. What is rarely mentioned is the measurement process.

ESG data doesn't live in a single system [8].

Environmental metrics — energy consumption, Scope 1, 2 and 3 emissions, waste generation, water footprint — come from facility management systems, utility bills and logistics providers. Social metrics—workforce, training, accident rate, wage gap—come from the HR system. HH. and risk prevention platforms. And corporate governance metrics — board composition, approved policies, ethical issues, remuneration from senior management — come from the general secretariat and governing bodies.

Consolidating all of this into a coherent report, with the same calculation criteria applied in a consistent and verifiable way by an external audit, is a process that in most medium and large organizations is still done manually [7]. Far from being an exception, this situation reflects the starting point of most companies in their transition to more robust reporting models.

81% of IT leaders confirm that data silos are the main obstacle to their digital transformation initiatives [5]. ESG reporting is the use case where that silo becomes more visible and, with CSRD, more expensive.

Why ERP doesn't solve sustainability reporting

The instinctive response of many IT teams to a data problem is to look for the solution in the ERP. And it makes sense: if the ERP centralizes finance, supply chain and HR. HH., should contain the necessary data for ESG reporting.

The problem is that the ERP captures operational and financial data, not sustainability data in the sense that the CSRD requires [8].

The energy consumption of a building is not in Dynamics 365 Finance. The hours of training per employee can be in the RR module. HH., but not always in the format required by the ESRS E1 or S1 standard applicable to the company. And Scope 3 issues—those generated throughout the value chain, which the CSRD and the IFRS S2 standard require disclosure—are not in any ERP: they require data from suppliers, contracted logistics and the use of the products sold.

Data from Deloitte confirms this: only 15% of companies currently disclose Scope 3 [2] issues, not due to lack of will, but because the data infrastructure needed to calculate them in a reliable and traceable way does not exist in most organizations. The rest build their reporting by combining data from multiple sources with manual consolidation processes that are repeated, with increasing difficulty, every year.

How is the ESG report constructed today in most organizations

The most common process has a structure that is familiar to any team that has participated in it [7].

First, someone from the area of sustainability, communication or finance designs an Excel template with all the indicators to be collected. This template is distributed to those responsible for each area: operations, HR. HH., shopping, facilities and legal. Each person responsible fills in their part with the available data, which in turn they have had to extract from their own systems. Some of the data is in digital form. Others must be requested from suppliers or third parties.

When the templates return—with delays, with inconsistent formats, with data that is sometimes not comparable to each other—someone consolidates them into a master document, applies the calculation criteria of the reporting framework and generates the report.

This process is repeated every year. And every year, the team discovers that the data from the previous year are not directly comparable to that of this year because someone changed the calculation criteria, or because a supplier changed how it reports its emissions, or because the company reorganized a department and the workforce no longer captures the same thing.

The result is a report that may be correct as a whole, but whose internal traceability is difficult to defend against independent verification. And, starting with the CSRD, that verification is mandatory.

The real cost of the manual process: time, risk and credibility

The described process has three costs that are rarely quantified, but which are real and increasing.

Team time

Collecting, consolidating and verifying ESG data consumes weeks of work by people with senior profiles—area managers, sustainability managers, financial teams. 57% of managers cite data quality as their main ESG challenge, and 88% include it in the top three [2], precisely because the problem is not in the lack of willingness to report, but in the effort required to do it well.

That time has a direct opportunity cost that does not appear in the budget of the draft report.

Risk of error and inconsistency year-on-year

When data passes through multiple hands and multiple formats, the risk of cumulative error is significant. An undocumented change in the criteria for calculating one-year emissions invalidates the year-on-year comparison that investors and regulators use to evaluate the organization's real progress.

81% of managers point to the process of documenting and approving ESG data — the Sign-off— as one of its main challenges [2], because in a manual process this control is costly to maintain with rigor.

Credibility to verifiers and interest groups

The CSRD requires that sustainability reports be verified by an independent auditor [1]. 59% of European companies already obtain some form of verification of their sustainability information [4].

A manual process with limited traceability is more difficult to audit and more likely to generate limited observations or scopes in the verification report.

For organizations whose reputation is tied to trust—those that operate in the field of certification, auditing, regulatory advice or sustainable finances—such observations are no small problem: they are a direct business risk.

And from the capital market side, the data is unequivocal: 83% of institutional investors already incorporate sustainability information into their fundamental investment analyses [3]. When CEOs are ultimately responsible for ESG strategy in 32% of companies —almost twice as many as in 2023— [6], sustainability reporting has ceased to be a function of the communication department and has become a responsibility of senior management.

The most advanced organizations in sustainability tend to be the ones that most rigorously evaluate the ESG management systems of other companies. And they are also usually the ones that, internally, produce their own sustainability reporting using the same manual methods that they would recommend eliminating any of their clients.

It's not hypocrisy. It is a prioritization problem that has a technical solution.

What a working ESG reporting system needs

An ESG reporting system that solves the problems described has four characteristics that differentiate it from the manual process:

Single source of data

ESG indicators are always calculated from the same sources, with the same criteria, without manual intervention in consolidation. When the criteria change due to a regulatory update or a methodological change, the adjustment is applied consistently to all historical periods, preserving year-on-year comparability.

Full traceability

Each data has a verifiable source: what system generated it, what transformation was applied, who validated it and when. This traceability is what makes possible the independent verification required by the CSRD and what reduces the risk of observations in the auditor's report.

Automation of collection

Data that lives in existing systems —ERP, RR. HR, facility management systems, training platforms — are automatically extracted through integrations, without anyone having to manually export, transform and copy.

Data that comes from third parties — suppliers, logistics managers — is collected through structured forms that eliminate format inconsistency.

Real-time visibility

Instead of knowing ESG data once a year, when the report is closed, management has continuous visibility over key metrics. This makes it possible to detect deviations before they become reporting problems and to make informed operational decisions during the financial year, not just at the close.

Where to start without a twelve-month project

The most common mistake is to think of the ESG reporting system as a transformation project—with an RFP, a software selection, an implementation and a data migration that lasts for months before producing any visible results.

The alternative is to start with the most concrete problem and build from there [9].

In most organizations, 20% of ESG indicators account for 80% of the collection work and 80% of the risk of error. These are generally environmental metrics that require data from external suppliers or social indicators that live in systems disconnected from the ERP. Identifying that 20% and first automating that part produces visible results in weeks, not months.

With no-code and low-code technology, it is possible to design and implement integrations with existing systems, the structured supplier data collection system and the monitoring dashboard without a traditional software project. Without changing the ERP. Without hiring an ESG reporting platform with a high annual license. Without waiting for IT to be able to prioritize it.

The following year's ESG report may be the result of a designed process—traceable, repeatable and auditable—rather than a heroic effort that the sustainability team repeats with increasing difficulty each year.

Bibliographic references

Methodological note: all external statistics have been verified in their original sources before inclusion. The methodological notes [7] and [9] explicitly indicate data based on Yellow Glasses' own experience, distinguishing them from data with an external primary source.

[1]European Parliament and Council of the European Union. (2022). Directive 2022/2464 on corporate sustainability reporting (CSRD). Official Journal of the European Union, L 322, 15.12.2022. https://eur-lex.europa.eu/legal-content/ES/TXT/?uri=CELEX:32022L2464 — The CSRD came into force for large companies that were already subject to the NFRD as of January 1, 2024. The implementation is progressive: SMEs listed in 2026, subsidiaries of groups outside the EU starting in 2028. Verification by an independent auditor is mandatory under the CSRD.

[2]Deloitte. (2024). 2024 Sustainability Action Report. Deloitte US. https://www.deloitte.com/us/en/services/audit-assurance/articles/esg-survey.html — Survey of 300 senior managers of public companies with a minimum turnover of 500 million dollars, conducted in January 2024. 57% cite data quality as the main ESG challenge; 88% include it in the top three. 81% identify documentation and the data approval process (sign-off) as a key challenge. Only 15% of companies report Scope 3 emissions, although the CSRD and the IFRS S2 standard will require it.

[3]Deloitte & The Fletcher School at Tufts University. (2024). Investor trust sustainability data: An opportunity for corporate leaders.Deloitte Global. https://www.deloitte.com/global/en/issues/climate/earning-trust-with-investors-through-better-sustainability-data.html — Study of more than 1,000 asset managers, asset owners and investment advisors in North America, Europe and Asia, executed between January and December 2023. 83% of the institutional investors surveyed incorporate sustainability information into their fundamental investment analyses. 79% have sustainable investment policies, compared to 20% five years ago.

[4]KPMG International. (2024). KPMG Survey of Sustainability Reporting 2024:The move to mandatory reporting. KPMG International. https://kpmg.com/xx/en/home/insights/2023/11/kpmg-survey-of-sustainability-reporting-2023.html — Analysis of the sustainability reports of 5,800 companies in 58 countries. 59% of European companies obtain some form of independent verification of their sustainability information. The dual materiality — required by the CSRD — is already adopted by 42% of the 5,800 companies analyzed. ESRS standards require verifiable and traceable data.

[5]MuleSoft/ Deloitte Digital/Vanson Bourne. (2024). Connectivity Benchmark Report 2024. https://www.deloitte.com/za/en/services/consulting/perspectives/2024-connectivity-benchmark-report.html — 81% of global IT leaders say that data silos block their digital transformation initiatives. The average company manages more than 900 applications, of which only 28% are integrated. Sustainability data is especially vulnerable to this problem because it comes from multiple functional areas that rarely share systems.

[6]HarvardLaw School Forum on Corporate Governance. (2024). Stand by ESG? The State of 2024 U.S. Sustainability Reports. Analysis of 250 sustainability reports from S&P 500 companies. Harvard Law School. https://corpgov.law.harvard.edu/2024/09/20/stand-by-esg-the-state-of-2024-u-s-sustainability-reports/ — CEOs are declared ultimately responsible for ESG strategy in 32% of the companies analyzed, almost double that of 2023 (18%). The number of companies carrying out dual material evaluations tripled between 2023 and 2024 (from 9% to 27%).

[7]Methodological note YG. The manual consolidation process described—distributing templates to departments, receiving data with inconsistent formats, consolidating into a master spreadsheet—is consistent with the patterns observed by YellowGlasses in service sector organizations during diagnostics prior to automation projects. There is no single primary study that precisely quantifies the exact prevalence of this process in the Spanish market; this is why it is described as an observed pattern, not as a referenced statistic.

[8]SAVE. (2025). What is ESG data and how to use it? SAP Resources. https://www.sap.com/resources/esg-data — ESG data is fragmented into isolated systems and departments. ERP systems capture operational and financial data, but not sustainability data such as Scope 3 emissions, water footprint, or corporate governance indicators, which require external sources and specific collection processes.

[9]Methodological note YG. The referenced implementation times (weeks, not months) are based on Yellow Glasses' experience in projects to automate data collection and consolidation processes using no-code and low-code technology in medium-sized companies with heterogeneous technological architectures. The results vary depending on the complexity of the integrations and the number of data sources involved.

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