ESG Data Collection Checklist for Enterprises

Collecting ESG data is no longer optional. With regulatory requirements like the EU’s CSRD and the UK’s SECR, organisations must now gather and report environmental, social, and governance (ESG) metrics accurately. This is critical not just for compliance but also for financial performance and stakeholder trust.

Key Takeaways:

• Mandatory: Nearly 49,000 EU companies must comply with CSRD, while the UK transitions to ISSB standards.

• Scope 1, 2, and 3 Emissions: Scope 3 emissions often account for 75% of a company’s carbon footprint.

• Audit-Ready Systems: Ensure data is traceable, validated, and aligned with global frameworks like ISSB and GHGP.

• Technology Integration: Automate data capture and link ESG metrics with ERP, HR, and financial systems to streamline reporting.

• Regular Reviews: Conduct quarterly data checks, mock audits, and system updates to maintain accuracy.

Why it matters: ESG Compliance is a strategic necessity, not just a regulatory obligation. By embedding ESG data into financial systems and adopting robust governance, businesses can turn sustainability reporting into a competitive advantage.

Collecting better ESG data - Challenges and best practices from the industry

Key Requirements for ESG Data Collection

To effectively gather ESG (Environmental, Social, and Governance) data, businesses need to focus on three key areas that underpin regulatory compliance and stakeholder reporting. Addressing these areas enables organisations to build systems that not only meet current obligations but are also prepared for future regulatory changes.

ESG Data Categories

ESG data is grouped into three main categories, each reflecting a different dimension of organisational performance. Among these, environmental data is the most intricate, with greenhouse gas (GHG) emissions being a central challenge. The Greenhouse Gas Protocol highlights this complexity:

"Developing a full [greenhouse gas] emissions inventory – incorporating Scope 1, Scope 2 and Scope 3 emissions – enables companies to understand their full value chain emissions and focus their efforts on the greatest reduction opportunities."

Here’s a quick breakdown of the three emission scopes:

• Scope 1: Covers direct emissions from sources owned or controlled by the company, such as factory operations, company vehicles, and on-site fuel usage.

• Scope 2: Includes indirect emissions from purchased energy like electricity, heating, cooling, or steam.

• Scope 3: The most extensive category, covering all other indirect emissions across the value chain, from supplier activities to product lifecycle impacts and business travel.

For many organisations, Scope 3 emissions represent the largest share of their carbon footprint. The World Resources Institute notes that these emissions often account for around 75% of a company’s total GHG emissions.

In addition to environmental metrics, social data encompasses areas like labour standards, human rights, employee diversity, health and safety, and community engagement. Meanwhile, governance data focuses on factors such as board structure, executive pay, ethics policies, anti-corruption measures, and cybersecurity protocols. Different industries prioritise these categories differently; for example, manufacturing firms often zero in on environmental metrics, while financial services may emphasise governance and social indicators.

With these data categories in mind, the next step is ensuring the information collected is reliable and traceable.

Data Auditability and Traceability

In the UK and EU, regulations demand that ESG data be both audit-ready and traceable across all business functions. This reflects the increasing role ESG metrics play in investment decisions and regulatory scrutiny.

The regulatory environment has tightened considerably. For instance, in 2022, the UK introduced mandatory disclosure requirements in Annual Reports, incorporating the UK Green Taxonomy and standards issued by the International Sustainability Standards Board (ISSB). Similarly, the EU’s Corporate Sustainability Reporting Directive has set more stringent rules for tracking emissions, social impact, and data traceability, affecting multinational firms operating in the UK.

To comply, organisations must document the entire data lifecycle. This includes tracking sources, recording collection methods, detailing calculation assumptions, and validating processes. This level of transparency is particularly critical for emissions data and Scope 3 reporting, where supply chain information often involves multiple stakeholders.

Given the complexity, many companies are turning to automated solutions. AI-driven ESG platforms can handle up to 90% of the data capture process, enhancing accuracy and compliance. However, automation alone isn’t enough - clear audit trails and robust data governance remain essential.

Strong audit protocols are also crucial for aligning with global reporting frameworks.

Global Framework Alignment

Once audit trails are in place, businesses must adapt their ESG data collection to meet the requirements of various global frameworks. In the UK, this has added complexity as the Financial Conduct Authority (FCA) transitions listed companies from reporting under the Task Force on Climate-related Financial Disclosures (TCFD) to ISSB standards. By Q1 2025, the FCA aims to strengthen corporate climate reporting in line with ISSB guidelines.

One challenge is the difference in focus between frameworks. For example, the US and ISSB adopt a single materiality approach, concentrating on financial impacts. In contrast, the UK and EU require double materiality, which considers both financial and environmental or societal impacts. This distinction influences not only the scope of data collection but also the reporting process.

The UK’s Sustainability Disclosure Standards, expected to be based on IFRS S1 and IFRS S2, are set for consultation in Q1 2025. Companies should prepare by aligning their data collection with ISSB requirements while ensuring compatibility with existing TCFD frameworks.

Despite the challenges, the financial incentive is clear: ESG-focused investments are on track to reach £26.7 trillion by 2026, accounting for 21.5% of assets under management.

To succeed, businesses need standardised data collection processes, clear definitions of metrics, and adaptable reporting systems. For companies operating across multiple jurisdictions, ensuring consistency while meeting local requirements is especially important.

ESG Data Collection Checklist

To build a robust ESG (Environmental, Social, and Governance) data collection system, focus on governance, source mapping, automation, quality control, and regular maintenance. This checklist outlines practical steps to create audit-ready processes that comply with UK regulations and align with global standards.

Data Governance and Ownership

Define roles and responsibilities clearly across your organisation. Assign ESG data stewards to key departments like finance, operations, HR, and supply chain to ensure accountability for data contributions.

Standardise data definitions to avoid inconsistencies. As Maria Bautista, Global Head of Internal Control at Philips, notes:

"Rushing data collection for CSRD deadlines without clear definitions risks inconsistent interpretations and unreliable information. Even simple terms need careful, shared definitions to ensure data integrity".

PepsiCo exemplifies effective governance with its five-level verification process for ESG data, ensuring consistency and compliance at every stage.

Document ownership hierarchies to establish clear escalation paths. ESG metrics should be integrated into daily business operations, not treated as standalone requirements. Each data point should have a designated owner, validator, and approver. Connect sustainability data directly to procurement, product development, and financial performance metrics to meet UK regulatory standards.

Once governance is in place, focus on mapping data sources and integrating automation tools.

Data Source Mapping and Automation

Systematically map all data sources, both internal and external. Start with internal systems like ERP platforms, accounting software, energy management tools, and HR databases.

Identify external data needs early. This might include supplier emissions data, third-party certifications, industry benchmarks, or regulatory databases. Create a detailed inventory specifying data frequency, format, and reliability.

Automate data capture to reduce manual input and improve accuracy. For organisations aiming to integrate sustainability into financial management, platforms that embed ESG metrics into financial transactions can provide audit-grade precision while eliminating silos.

Connect ESG systems to existing platforms like SAP, Dynamics 365, Oracle, Xero, QuickBooks, or Intacct. This integration boosts data granularity and reduces manual work by up to 60%.

Prioritise Scope 3 emissions tracking, which often involves the most complexity. Supply chain emissions, business travel, waste, and product lifecycle impacts require structured protocols. Engage suppliers and establish strong data validation methods to manage this effectively.

Data Quality and Validation

Use multi-step validation processes to maintain data integrity. Wim Bartels, European Sustainability Senior Partner, highlights the importance of high-quality data:

"CSRD once more calls for a good dialogue with the auditor. One should be aware that the regime of limited assurance does not mean that companies can lower the standards for the information quality for now and invest in this quality later when reasonable assurance is required. In both cases, quality and reliability of the information must be in order".

Set benchmarks for accuracy tailored to different types of data. Environmental metrics may require distinct validation methods compared to social or governance data. Use automated alerts to flag anomalies when data falls outside expected ranges.

Maintain detailed audit trails for every data point, tracking its journey from collection to final reporting. Include collection methods, assumptions, validation steps, and approvals to support both internal and external audits.

Compare data with external benchmarks like industry averages or regulatory databases to identify inconsistencies.

Document calculation methods thoroughly, especially for complex metrics like carbon intensity or social impact. Transparency in assumptions and methodologies strengthens both internal reviews and external audits.

After validation, schedule regular updates to ensure data remains reliable.

Regular Updates and Review

Synchronise data collection cycles with reporting deadlines and business planning. For UK companies preparing for ISSB reporting, quarterly data collection cycles are ideal for supporting interim reviews and annual disclosures.

Conduct quarterly reviews of data quality, with more frequent checks for volatile metrics. Evaluate completeness, accuracy, and consistency over time.

Stay updated on regulatory changes and adjust processes as needed to comply with UK and global standards.

Perform annual system audits to review the entire data framework. Use these audits to identify areas for automation and refine processes to meet stakeholder expectations.

Benchmark against industry peers annually to identify strengths and areas needing improvement. Such comparisons can validate the effectiveness of your data collection methods.

Run mock audits regularly to test readiness. These internal reviews help uncover potential issues before external audits and ensure team members understand their roles in the assurance process.

Tools and Technologies for ESG Data Collection

Once your data processes are in place, the next step is to select the right technology platform to simplify ESG data collection. A well-chosen ESG platform can turn manual processes into an automated, audit-ready system. With the ESG reporting software market projected to hit £451 million by 2028, businesses have a range of tools to choose from to streamline sustainability reporting while meeting UK and EU regulatory demands.

ESG Platform Features

Modern ESG platforms should integrate smoothly with your current financial systems, offering a unified view of sustainability performance. With 87% of CEOs advocating for the inclusion of ESG metrics in corporate reporting, it's clear that such integration is becoming a priority. Look for platforms that leverage AI automation and support multiple ESG frameworks, such as ISSB and CSRD, to keep pace with evolving standards. The most efficient systems embed ESG metrics directly into financial transactions, aligning with financially-integrated sustainability management, where environmental and social impacts are tracked alongside financial outcomes.

Key features like customisable dashboards and analytics empower finance and sustainability teams to create tailored reports for diverse stakeholders. Prebuilt templates that can be adjusted to meet specific needs ensure your reporting process remains efficient as requirements shift.

It's also essential to evaluate how well the platform connects with your existing enterprise systems to allow for a seamless flow of data.

Enterprise System Integration

The integration capabilities of an ESG platform are crucial for ensuring it works harmoniously with your business systems. Top-tier platforms connect with ERP, HRIS, CRM software, and data warehouses, enabling centralised workflows.

"Centralize all your ESG data from diverse business systems. Flexible imports, integrations, and validation rules ensure full control over your data at all stages." - Prophix One

For example, platforms like Microsoft Cloud for Sustainability demonstrate strong integration capabilities.

ERP system integration is especially important, as it links finance, operations, and supply chain management into a unified system. This allows for seamless data sharing and analysis. When selecting ESG software, ensure it can connect with leading accounting platforms.

Integration is even more critical for thorough Scope 3 emissions tracking. Data from supply chains, business travel, and procurement must flow automatically into your ESG platform to ensure accurate and comprehensive reporting.

Audit-Ready and Custom Reporting

To build on integrated data flows, your ESG platform should deliver audit-ready reports. This means it must centralise ESG data, ensure accuracy through validation, and generate reports that are ready for external review. With ESG-related regulations increasing by 155% over the past decade, these features are vital for compliance and investor confidence.

Data assurance tools should include robust systems for collecting, processing, and validating data automatically. Platforms that maintain clear audit trails from data collection to reporting provide transparency for both internal reviews and external audits.

Customisable templates are another key feature, allowing businesses to meet specific reporting requirements while maintaining consistency. Look for platforms that offer prebuilt templates for common frameworks like ISSB, CSRD, GRI, and SASB, along with the flexibility to create bespoke reports for unique stakeholder needs.

Real-time reporting capabilities are also essential. Rather than relying on quarterly updates, continuous monitoring ensures data accuracy and supports proactive decision-making throughout the reporting cycle.

For UK businesses preparing for ISSB reporting requirements, choose platforms designed to support IFRS S1 and S2 standards. The platform should handle both quantitative metrics and qualitative disclosures to ensure full compliance with emerging UK sustainability standards.

Lastly, export flexibility is critical for audit preparation. Your platform should allow reports to be generated in various formats, support data exports for external verification, and maintain version control for regulatory submissions. This ensures professional audit standards are met while enabling clear communication with stakeholders.

Practical Tips for Audit-Ready ESG Disclosures

Creating audit-ready ESG disclosures requires a structured approach to ensure all data can withstand external examination. With 94% of executives feeling the pressure to emphasise ESG initiatives and ESG-focused institutional investments expected to reach $33.9 trillion by 2026, the need for precise and reliable reporting has never been greater.

Verifiable ESG Records

From the start, establish clear documentation standards for all incoming data. Every data point should have a traceable origin - whether it’s from utility bills, supplier declarations, or internal measurements. This means keeping detailed records of who collected the data, when it was gathered, and how it was measured.

One key strategy is data lineage tracking, which ensures you can trace the journey of raw data through to the final reported figures. For example, linking utility data directly to emission factors creates a clear chain of evidence that auditors can easily follow.

A great example of this approach is Nutresa, a global food company. They automated data collection across 52 production plants, 32 companies, and 8 business units, reducing errors and enabling more frequent, detailed ESG reporting. This not only streamlined their processes but also boosted investor confidence through greater transparency.

Version control is equally important, especially as data evolves. Use timestamped reports to track changes and maintain clarity. Additionally, consider introducing data validation rules to catch anomalies before they become part of your reporting. For instance, if energy usage spikes by 50% in a single month, automated systems should flag it for review.

By setting up these robust systems, you create a foundation for seamless collaboration across departments, which is essential for effective ESG reporting.

Cross-Team Collaboration

Breaking down departmental silos is crucial for accurate ESG disclosures. Finance teams bring expertise in numbers, sustainability teams understand environmental metrics, and legal teams ensure compliance with regulations. Combining these perspectives leads to more reliable reporting.

Start by defining clear roles and responsibilities. Finance teams can focus on validating data and assessing financial materiality, while sustainability teams handle environmental targets. Legal teams, meanwhile, ensure alignment with regulatory frameworks like ISSB reporting.

CIBC offers a strong example of cross-functional collaboration. Under the leadership of Bindu Dhaliwal, their ESG team worked with risk management, compliance, and finance departments to align their ESG strategy with stakeholder expectations and regulatory requirements. They also conducted education initiatives across the bank to build awareness around ESG concepts and maintained robust data governance processes.

Regular cross-departmental meetings are essential. Use these sessions to review data quality, discuss emerging risks, and address regulatory updates. For complex issues like Scope 3 emissions, sustainability teams should work closely with procurement to ensure consistent and accurate supplier data collection.

To support collaboration, implement shared documentation systems. These allow all teams to access the same information, reducing the risk of conflicting data and ensuring everyone is aligned. Regular internal reviews, like mock audits, further strengthen your audit-readiness.

Mock Audits and Reviews

Internal mock audits act as a safeguard against potential audit findings. By simulating the rigour of external audits, you can identify and address gaps before they become formal issues.

Conduct mock audits quarterly rather than waiting for the annual reporting cycle. This proactive approach allows you to address problems while they’re still manageable. For example, one quarter could focus on data collection processes, while another examines calculation methods.

Global Financial Corporation (GFC) provides a compelling case study. After facing several regulatory findings in 2019, GFC revamped its audit processes. They formed an IT Risk and Compliance Committee chaired by the CEO, established an Audit Management Office, and adopted technology for continuous evidence gathering. Within two years, they cut audit activity time by 35%, reduced significant findings by 78%, and slashed the average time to resolve issues from 145 days to 47 days.

Bring in external consultants for an impartial review of your mock audits. They can identify issues that internal teams might overlook and provide insights into best practices and regulatory trends.

During mock audits, document everything - questions, evidence, and gaps. This creates a knowledge base for future audits and tracks improvements over time. Also, test your data retrieval processes to ensure you can quickly locate supporting documentation and that calculation methods are clearly documented and consistently applied.

Focus your efforts on high-risk areas like Scope 3 emissions, materiality assessments, and forward-looking statements. These areas often require more judgement and tend to draw closer scrutiny from auditors. By addressing these challenges head-on, you can significantly improve your audit readiness.

Conclusion

ESG data collection has evolved from merely ticking regulatory boxes to becoming a strategic necessity that underpins both compliance and business growth. In today’s landscape, fragmented or unreliable sustainability data is no longer an option, especially as stakeholders demand greater transparency and accountability.

The checklist provided outlines a clear framework for creating audit-ready ESG disclosures. It emphasises key steps like setting up strong data governance structures and implementing thorough validation processes. Together, these elements build a resilient data ecosystem capable of withstanding external scrutiny. By integrating governance practices with advanced technological solutions, this approach elevates ESG reporting into a tool for competitive differentiation.

Modern ESG platforms take this framework a step further by improving data integration and reporting precision. These platforms merge ESG metrics with financial systems, aligning sustainability efforts with core business operations. This integration reflects the article’s central idea: turning ESG compliance into a strategic advantage. Instead of treating ESG as a standalone task, these tools allow organisations to embed sustainability into their everyday processes.

That said, technology is only part of the equation. Collaboration and ongoing reviews remain critical. As Dennis McGowan from the Center for Audit Quality aptly points out:

"Establish really good governance over the reporting of that information".

A strong governance foundation, paired with advanced technology, creates a robust path to ESG excellence.

For finance professionals navigating the complexities of ESG compliance, the way forward is clear: adopt structured data processes, invest in integrated technologies, and uphold rigorous audit standards. By doing so, organisations can shift ESG reporting from being a compliance chore to a strategic asset that delivers long-term value.

FAQs

How can enterprises in the UK and EU ensure their ESG data collection meets regulatory requirements?

To meet UK and EU regulations for ESG data collection, businesses need to align with key legal and reporting frameworks. In the UK, this includes the Companies Act 2006, the Modern Slavery Act 2015, and FCA requirements such as the SECR (Streamlined Energy and Carbon Reporting) framework. SECR requires organisations to report on energy consumption, emissions, and efficiency measures. Meanwhile, EU regulations focus heavily on the Corporate Sustainability Reporting Directive (CSRD), which mandates detailed ESG disclosures for qualifying companies.

Having traceable and well-organised data collection processes is essential. ESG reporting software can simplify the process of tracking Scope 1, 2, and 3 emissions, sustainability metrics, and governance data. Staying informed about regulatory updates and maintaining audit-ready systems will strengthen transparency and ensure compliance in both regions.

What are the key challenges in tracking Scope 3 emissions, and how can businesses overcome them?

Tracking Scope 3 emissions isn’t exactly straightforward. Companies often face hurdles like patchy or incomplete data, depending on third-party sources, or relying on industry averages that can compromise precision. On top of that, getting suppliers to share detailed and reliable information can be a tough ask.

To tackle these issues, businesses should focus on creating clear, standardised processes for data collection. Building strong relationships with suppliers to encourage better data sharing is another key step. While proxies or benchmarks can be helpful, they need to be used carefully to avoid inaccuracies. Technology can also play a big role here - ESG reporting tools, for instance, can simplify data validation and help produce disclosures that are traceable and ready for audits.

How does technology improve the accuracy and efficiency of ESG data reporting for enterprises?

Technology plays a powerful role in improving the precision and speed of ESG data reporting. By automating tasks like data collection, analysis, and reporting, it minimises human error, boosts data reliability, and promotes greater transparency.

Cutting-edge tools such as IoT devices, cloud-based platforms, artificial intelligence, and blockchain are transforming how data is gathered and shared in real time. These technologies enable companies to deliver audit-ready, easily traceable, and well-organised disclosures that align with compliance requirements and aid in strategic planning.

By adopting these advancements, organisations can streamline ESG reporting, lighten administrative workloads, and dedicate more energy to meeting their sustainability objectives efficiently.