Common ESG Reporting Challenges and Solutions

ESG reports are now a must for UK firms. Yet, they come with tough parts. Here's what you should know:

Main Hard Parts:

• Right Data: Many firms use old ways like spreadsheets, which leads to mistakes and not matching facts.

• Tough Rules: Getting through plans like ISSB, CSRD, and more, can be too much, and they all want different things.

• Fast Changes: ESG laws change all the time, making it hard to keep up.

• Ready for Checks: Getting ESG info ready for others to see and check is new and hard for many firms.

Ways to Fix:

• Use ESG Tools: Tools like neoeco's FiSM put ESG facts right in money records, making them more right and saving time.

• Put Data Together: Bring ESG info from different parts of the firm into one spot for easier use and sharing.

• Make Processes Fast: Use software for quick data gathering, checking, and meeting all rules.

By using good tools and plans, UK firms can make ESG reports simpler, be right with rules, and use care for nature to help their business.

Big ESG Reporting Problems

UK groups are under big push to get right ESG reports while working through a lot of rules. Let’s look at the top problems and how they spread.

Problems with Data Being Right and Followed

It's hard to always have good data for ESG tasks. Places pull data from many spots that don't talk well to each other. This makes things not match, wrong work by people, and data that may not check out right.

Chris Shaw, who leads on ESG & Reporting, points out the problem:

"Many companies captured in new reporting requirements, such as ISSB and CSRD, won't have gone through an assurance process before, engaged with an audit firm to scrutinise their data or have robust data-collection processes in place. For these regulations, Excel simply won't work."

A lot rides on this: almost 80% of UK money groups now care a lot about ESG talks in where they put their cash. But, many still use simple sheets and hand work, making it hard to show solid proof of being green. This gets even tougher when you need info from many suppliers who all use different ways of sharing. Without new tools like Digital Product Passports or material records, checking if big items are truly green is very hard. These lacks make it tougher to keep up with many report rules.

Juggling Lots of Report Rules

UK companies have to handle many rules, like ISSB, CSRD, and B Corp laws. Each rule asks for its own kinds of data, which adds more hard bits.

Think of a UK maker with buyers in Europe. They might need ISSB reports to keep investors happy and hit CSRD rules to stay in the market. The hard bit? ISSB looks at how green issues touch a firm’s worth. On the other hand, B Corp checks how a firm changes the world and nature around it. To line up data with all these rules often means needing more advanced stuff, which many firms don’t yet have.

For firms trying to fold these rules into their money plans, seeing how ISSB reports link to bigger money ways is key. Plus, rules keep changing, making things more complex.

Staying Up To Date With Rule Changes

ESG rules shift quicker than many firms can keep up. In 2022, UK's money rule keepers made TCFD reports a must for over 1,300 big firms. Each new rule makes firms have to shift fast.

Paul Crewe, main green boss at Anthesis, says:

"The first challenge for many businesses is knowing which metrics to report on; that understanding comes before scrutinising data and recognising their impact on the environment…Ultimately, the businesses that see regulation requirements as an opportunity for innovation and act as early as possible to embed a sustainable mindset within the company, will be best positioned to future-proof businesses for long-term success."

Rules change from one work area to the next, making things more complex as firms try to understand new rules. The task gets even harder when checks are done.

How to Meet Check Needs

Outside surety is a must now. A 2021 EY Global Investor Study showed that 90% of backers think ESG reports are key to looking at long term risks and chances. This has made the need for check-ready files go up, needing clear data paths and strong in-house checks.

For many UK firms, ESG checks are new ground. Unlike money reports, which follow set rules, ESG reports don’t have fixed marks to match. This makes it unclear what checkers want and how to get ready.

There is a lot of work to do. Firms need to keep track of data roots, write down numbers, and save proof for each ESG point. The cost of not meeting these marks can be high: under the EU’s Green Claims Rule, the fee for false green claims starts at 4% of yearly sales.

Broken ESG data adds to the task. With info all over - in sections, systems, and with suppliers, checkers often can't track facts like carbon marks back to their start. Without joined systems, this job turns into a big mess.

The UK Finance Watchdog has mixed ESG into its rules, market watch, and rule use. This means that the hit from check fails goes past fees, risking names and money safety too.

How to Make ESG Reporting Easier

Dealing with data issues, sticking to the rules, and using many formats can seem hard. But UK firms do not have to handle it alone. By using tech and good systems, these hard jobs can get simpler. Here's how to make some of the big problems easier.

Using ESG Reporting Tools

New ESG tools fix data mistakes and line up with formats. Instead of working with many files, one software brings data together.

Look at neoeco's FiS Ledger system, for instance. This tool uses over 90 ESG points right in the money records using double-entry ways. Say, when a money team notes a £50,000 payment to supplier, the setup keeps track of the linked carbon impact and social data too. This stops the data from being all over the place and needing to be fixed by hand.

In 2023, Unilever used ESG tools to get better at saying how green they are, cutting carbon by 15% and doing well in waste handling. In 2022, Microsoft also saw a 30% cut in carbon while meeting many format needs early.

For UK firms facing many report formats, the right tool can match ESG data to parts of main standards on its own. Whether it's ISSB reports for those who invest or B Corp papers for brand looks, the tool changes and sets up the data, saving time and cutting mistakes.

Alanna Saunders, who leads on staying green at The Artisan Drinks Company, talks about the good things these tools bring:

"Zevero has been instrumental in streamlining our Scope 1, 2 and 3 emissions reporting by seamlessly integrating with our existing platforms. The tangible data it provides has given Artisan Drinks clear insights to guide and accelerate our sustainability journey."

To get the most from it, pick tools that link up with your current accounting stuff, like Xero, QuickBooks, or other ERP tools. This lets data move on its own, no need for you to put it in by hand. For more on tying ESG reports to money plans, look at this guide on ISSB reporting.

Using Auto Help and Ready-Made Forms

Auto help cuts down on human mistakes. By pulling data from what's already there and checking it with old records, auto systems make things smoother.

For instance, one building group saved 4.5 work days for its loan team in a month by using tech for value reports, all while getting better at rules.

Ready-made forms for IFRS S1/S2 keep things right by using clear forms that grab just the needed data.

Being ready for checks is a big plus. Auto systems check over and confirm data with other standards, making a solid track for checkers. With steady methods set, every number can be traced back. This matters a lot as 70% of big firms sharing ESG info in 2022 checked some data.

For UK groups getting ready for their first ESG check, auto help brings order and trust that hands-on ways can't. Putting all ESG data in one place makes this even better.

Putting ESG Data in One Place

Data split-ups are big blocks to good ESG reports. When green info is all over - HR, upkeep teams, and law teams - making sense of it all is tough.

PepsiCo shows how putting it all in one place can help. They use a five-step check to keep data even, answerable, and right across their global work. This planned way lets data from different areas mix well.

Getting all ESG info into a neat, easy-to-get system is key. For example, details from smart meters tracking power use, HR systems watching how varied their people are, and how green their suppliers are can all go to one main place.

Handling master data gets key with tangled supply webs. A one-spot hub for supplier data helps with smart buying and makes ESG reports easier. This cuts out running after details from different parts.

For UK groups, putting it all together also means making formats the same from the start. Using pounds for money, meters for green stuff, and DD/MM/YYYY for dates stops mix-ups in global reports. This one-way way is great for managing tangled Scope 3 gas stuff across supply lines, where keeping things the same with suppliers matters a lot. Mixing all data in one place with auto help makes a smooth, check-ready report system.

Manual vs Automatic ESG Reports

Choosing between manual and automatic ESG reports is more than a tech pick - it shapes your rule-following plan. With ESG rules jumping from 100 points in 2020 to over 500 by 2025, using old spreadsheets won't work well.

Manual reporting has big risks. Per a KPMG study, 47% of groups still use spreadsheets for gathering data, even though 83% think they are leading in sustainability reports. Yet, manual ways have a normal wrong rate of 30–40% in tracking emissions. It's worrying, only 9% of firms with manual steps track all their emissions well, while 81% miss some they make, and 66% don’t tell on emissions from outside. These are not just about being right - they are about big rule risks.

"The potential consequences of unreliable sustainability data include reputational damage to a company, and possibly to the directors responsible for the disclosures, along with legal ramifications tied to inaccurate reporting or perceived greenwashing." – KPMG International

On the flip side, machines offer clear gains. Firms that use ESG tech work 2 to nearly 3 times faster than those who do it by hand. These tools slash admin time by half, boost the data's trust by at least 45%, and let people report right away.

In the UK, where firms must meet tough ISSB rules, quick and right reports are a must. They need exact, checkable info.

Table: Old way vs New way of ESG Reporting

Let's see how the old and new ways of ESG reporting compare:

The move to use robots more is very clear. About 94% of top bosses feel they must focus on ESG (which is about keeping our world safe and fair) and the money put into ESG by big money groups is set to reach £26 trillion by 2026. The chance of making mistakes by hand is just too big.

New tools like neoeco's FiS Ledger push robots even more. They put ESG details right into money records, making a track that cannot be changed. This links every pound spent to how it helps or harms our world, making it easy to check if rules are followed.

Real Example: How FiSM Works in Practice

Based on past tries and fixes, neoeco's FiSM tool is now a big win for ESG reports in the UK. It puts more than 90 ESG marks right into money moves, using rules from old-style book-keeping, to link money facts and green scores.

Here's how it does it: when a firm buys stuff, the tool not only gets the price, but also sees the green effect. Like, a £5,000 order for office things will work out its own bad air amount, water use, and more green facts. This way makes a track record that fits with ISSA 5000 rules right from the start. It keeps things by the rules from the get-go, with no need for more hands-on work.

A real case at Kreston Reeves shows how well FiSM does its job. In June 2025, the group joined with neoeco to help clients with ESG tips. Dan Firmager, ESG guy at Kreston Reeves and ICAEW Climate Hero, gave his thoughts:

"neoeco stood out by going beyond traditional carbon accounting. Their use of Life Cycle Assessment gave us the granularity we needed for accurate, future-proof ESG reporting".

FiSM boosts the detail of emissions data, making it ten times clearer than old ways. It makes following rules easier by lining up data for many standards like ISSB (IFRS S1 & S2), CSRD, and GHGP. With just one data input, groups can make reports for all these standards, cutting out the need to keep different systems for varied needs.

The real-time feature changes the game for UK groups who must meet tight rule times. Finance teams can see their ISSB reporting status right as deals are made, dodging the last-minute rush to fix any gaps in compliance.

Stephen Pell, the boss and co-maker of neoeco, puts it just right:

"FiSM is the missing link between finance and sustainability - a new category that makes ESG measurable, verifiable, and financially actionable".

Another key point is how well FiSM works with systems we already use, like Xero, QuickBooks, energy meters, and HR platforms. This makes sure each green claim matches up with money spent or made, making checks easy and trusty. Checkers can follow the money and green data just as they do with money reports. This link moves ESG from just a rule-following task to a main part of doing business.

Conclusion: What's Next for UK ESG Reporting

"Get it right today, not tomorrow. This is when we must act."

The UK is stepping into a new phase of ESG reporting with strong tools and top tech. Firms that start now will better handle the new rules. Sure, there are hard spots like the right data, many reporting forms, and ready for checks. Yet, new tech is making these less hard to deal with.

A big 74% of public firms plan to put money into this tech soon. This shows a move past just doing what rules say to a full mix way. Managing money facts with sustainability is key for smooth checks and to meet rule needs.

See FiSM, for instance - its win shows how tech like AI, blockchain, and cloud setups are changing ESG reporting. AI and blockchain make the ESG facts more right and easy to follow, while cloud help meets not the same report needs. The want for ESG report tech is thought to go above $1 billion in sales by 2024.

With ESG money expected to be over 20% of all managed funds by 2026 and about 80% of UK money groups making ESG facts key, firms that use these new ways can make rule work into a big plus. Top ESG reports not only make getting money easy but also make those with a stake more sure.

Now is the time to set up a full ESG system. By picking tools that meet many frames, list facts on their own, and work with money setups, firms can stay on top. Paul Crewe, Chief at Anthesis, says it right:

"The businesses that see regulation requirements as an opportunity for innovation and act as early as possible to embed a sustainable mindset within the company, will be best positioned to future-proof businesses for long-term success."

As tech grows, the way to a full ESG plan gets easier. For UK groups set to go ahead, looking into ISSB reporting with money systems shows a clear and doable way. The future is for those who turn ESG rules into a win.

FAQs

How can UK firms keep up with new ESG rules and reports?

To keep up with the fast-changing ESG rules and reports, UK firms need to know about updates from big groups like the Financial Conduct Authority (FCA) and the UK government's green report plans. It's key to watch big shifts, like the soon UK Green Report Rules that match with ISSB, set to form by 2025.

Asking for help from trusted business guides and law pros can help firms get the hard rules and ongoing mix efforts right. It’s also good to join in business meet-ups, sign up to future-watch reports, and use ESG report tools to stay right by the law and make work simple. By planning early and staying aware, groups can better move through these rule changes.

How do ESG reporting tools mix eco scores with money data and make reports better?

ESG Reporting Tools: Linking Green Scores and Money Facts

ESG reporting tools are key in mixing eco scores with money data on one single stage. By putting this info in one spot, groups can make reports that are not just right but also simple to handle. These tools handle jobs like gathering info, breaking it down, and making reports on their own, cutting down on human mistakes and making things more sure.

Also, they let us track ESG scores with money results at the same time, giving more clear views. This helps companies keep up with rules while keeping clear about what they do. By making work flows easy and less mixed up, these tools help make better choices and make sure groups stay in line with new rules.

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