ESG Data Integration: ERP System Setup Guide

Want to simplify ESG reporting? Integrating ESG data into your ERP system is the answer. By embedding sustainability metrics like carbon emissions, energy use, and governance practices directly into your ERP, you can streamline compliance, improve data accuracy, and align sustainability with business goals.

Key Takeaways:

• Why It Matters: ESG integration is now critical for compliance, investor confidence, and staying competitive. Regulations like the FCA's oversight of ESG rating providers (2025) and the Corporate Sustainability Reporting Directive (CSRD) demand detailed reporting.

• How ERP Systems Help: Modern ERP platforms centralise ESG data, automate reporting, and link sustainability metrics to core functions like procurement and supply chains.

• Steps to Get Started:

  1. Map ESG data requirements based on regulations and materiality assessments.

  2. Ensure data quality with automated checks and UK-specific standards (e.g., GBP, metric units, dd/mm/yyyy format).

  3. Integrate internal (HR, finance) and external (supplier, IoT) data sources.

  4. Configure dashboards and automate report generation for compliance and decision-making.

• Tools to Consider: Platforms like neoeco's FiSM integrate ESG metrics with financial systems, reducing manual effort by 60% and ensuring audit-ready reports.

Take control of ESG reporting with ERP integration - save time, ensure compliance, and align sustainability with profitability.

Key Requirements for ESG Data Integration

Integrating ESG data into ERP systems isn't just about plugging in numbers. It demands thoughtful planning, a clear grasp of the data you need, its origins, and how to ensure its accuracy. The success of this process hinges on aligning your goals with regulatory standards, maintaining high-quality data, and identifying all relevant data sources within your organisation.

Mapping ESG Data Requirements

Start by conducting a double materiality assessment to pinpoint the ESG issues that matter most to your industry, company, investors, and stakeholders. Without this groundwork, you risk wasting time on irrelevant data while overlooking the metrics that regulators and investors prioritise.

Modern ERP systems are designed to track sustainability efforts, translating ESG commitments into measurable results. The challenge lies in identifying the specific data points that align with the regulatory frameworks relevant to your business.

In the UK, frameworks like the SDS and the upcoming ISSB standards require businesses to gather core ESG data across environmental, social, and governance categories. The UK government plans to consult on adopting the ISSB standard by mid-2025, with the FCA following suit for UK-listed companies later that year.

Your ERP system should be configured to capture the following core ESG metrics across three main areas:

• Environmental metrics: These form the bulk of ESG data collection. They include carbon emissions across Scopes 1, 2, and 3, energy consumption patterns, waste management, water usage, and resource consumption. Collecting this data often involves integrating IoT sensors, utility systems, and supply chain data.

• Social metrics: Drawn largely from HR systems, these include employee diversity statistics, health and safety records, training hours, employee satisfaction rates, and community investment figures. Supply chain labour practices and human rights assessments also fall into this category.

• Governance metrics: This covers board diversity, executive pay ratios, audit committee performance, data privacy compliance, and ethical business practices.

By mapping these ESG metrics to financial accounts, you create a unified reporting source that meets both sustainability and financial reporting standards. This approach ensures data integrity and compliance with localisation requirements.

Data Quality and UK Localisation

ESG reporting demands a wide variety of data from multiple sources. Yet, 60% of business leaders cite data availability and quality as the biggest hurdle in meeting the Corporate Sustainability Reporting Directive (CSRD). This makes implementing rigorous data quality protocols essential from the very beginning.

For UK-specific requirements, ensure your ERP system formats all financial ESG metrics in GBP, uses the dd/mm/yyyy date format, and applies metric units. For example:

• Energy: kWh/MWh

• Carbon emissions: tCO2e

• Water: m³

• Waste: tonnes

• Temperature: °C

British English spelling should also be standard across interfaces, reports, and labels - e.g., "realise" instead of "realize" and "organisation" instead of "organization."

Unlike traditional financial data, ESG metrics often rely on estimates, calculations, and third-party inputs. To ensure reliability, your ERP system should include automated checks to flag anomalies, missing data, or inconsistencies. For instance, if electricity consumption spikes by 50% in a month without a corresponding change in business activity, the system should trigger an alert for review.

Currently, 80% of UK respondents rely on spreadsheets for sustainability reporting. Moving away from this fragmented approach requires setting strict data quality standards to ensure accuracy, reliability, and timeliness while maintaining full traceability of data sources. Once quality controls are in place, it's time to assess your internal and external data sources.

Assessing Internal and External Data Sources

With data quality standards established, the next step is identifying internal and external sources to complete your ESG data repository. A gap analysis can help determine what data you already have, what’s missing, and what requires new collection methods.

Internal sources are generally reliable and include:

• HR systems for employee diversity, training, and health and safety data.

• Accounting systems for energy costs, waste disposal expenses, and sustainability investments.

• Manufacturing systems for resource usage, production efficiency, and waste generation.

However, internal systems may need upgrades to capture ESG-specific metrics. For example, a procurement module might track supplier costs but not their sustainability certifications or carbon footprints. Similarly, a facilities management system might monitor energy usage but not differentiate between renewable and non-renewable sources.

External sources are crucial for filling gaps, especially for Scope 3 emissions and supply chain metrics. These include:

• Supplier questionnaires

• Third-party sustainability assessments

• Industry databases

• IoT sensors and smart meters for real-time environmental tracking

External data is often updated more frequently than internal data. For example, IoT sensors can provide real-time updates, while company-reported ESG data may lag by 6–12 months due to annual reporting cycles.

Centralising HR, environmental, operational, and financial data into a single ESG repository eliminates silos and ensures a complete audit trail. Start with the most critical ESG metrics - such as energy usage, Scope 1, 2, and 3 emissions, and employee diversity - to build a strong foundation before expanding to additional indicators.

Step-by-Step ERP System Configuration for ESG Data

Once you've mapped out your data requirements and identified sources, the next step is configuring your ERP system to handle ESG data. This process demands careful planning to ensure the system accurately captures, processes, and reports ESG metrics while staying in line with UK standards.

Preparing the ERP System

Start by evaluating your ERP system's current capabilities to determine its readiness for ESG integration. Modern ERP solutions often come equipped with dashboards and AI-driven insights to provide an overarching view of operations and supply chains.

Review your business processes to pinpoint where ESG metrics, such as carbon emissions or energy use, can be captured. Check if your existing ERP modules can accommodate these requirements or if you need additional features.

Define the project's scope and objectives. Identify the ESG tasks your ERP system will manage, the data it will integrate, and the KPIs you’ll track. For UK businesses, this typically includes key metrics like carbon emissions (tCO2e), energy consumption (kWh), water usage (m³), and waste generation (tonnes).

When selecting or upgrading your ERP system, focus on functionality, integration capabilities, reporting tools, scalability, vendor reputation, and overall cost. Systems that support automated data collection and analysis are particularly useful, as they streamline data management and help unify information for a more efficient IT infrastructure.

Next, configure the ERP system to reflect your ESG reporting structure. Align the software with your business processes, define user access controls for ESG roles, and integrate it with your existing systems. Permissions should be carefully set across departments like finance, procurement, HR, and operations to ensure consistent and collaborative data handling.

Finally, establish ETL (Extract, Transform, Load) processes to integrate your ESG data sources effectively.

Connecting ESG Data Sources

Integrating ESG data requires robust ETL processes that handle the complexity and variety of sustainability data. According to research, 79% of data leaders rely on more than 100 data sources.

Begin by mapping all systems and databases containing ESG information. Consolidate this data into a central repository or data lake. Ensure consistency by standardising formats, including dates (dd/mm/yyyy), currency (£), and metric measurements, to comply with UK standards.

Incorporate ETL protocols that verify data lineage and ownership. Use data cleaning methods to guarantee accuracy and ensure that anomalies, missing values, or inconsistencies are flagged before they reach your central repository. For example, if a supplier reports carbon emissions in inconsistent units, the system should standardise them to tCO2e and notify administrators of any discrepancies.

"You need to have the right metadata to ensure consistency, and to enable efficient searching and retrieval of that data." - Meenakshi Narayanan, senior analyst at Everest Group

Assign clear roles for data ownership, validation, and stewardship. Determine who is responsible for each data source, how frequently updates are needed, and what validation checks are required. Maintain detailed documentation of data lineage to support audits.

Lastly, use reporting software to compile the consolidated data into the required formats for analysis and communication. This approach ensures that your reports are both flexible and audit-ready.

Setting Up Reporting and Dashboards

With your data standardised, it's time to configure dashboards and reporting tools to present ESG insights effectively.

Define an ESG framework that outlines what you’ll report and how it will be measured. Base your metrics and KPIs on a materiality assessment, ensuring they meet UK regulatory standards and stakeholder expectations.

Set up dashboards to display real-time data whenever possible. Use visualisation tools to make complex ESG metrics more accessible. Tailor dashboard views to specific audiences: executives may prefer high-level summaries, while operational managers might need detailed performance data. Ensure that ESG metrics are visible across all organisational levels to promote accountability and engagement.

Automate report generation for regulatory compliance. Configure templates to pull data from integrated sources, apply calculations, and format outputs according to UK requirements. Include custom reporting options for ad-hoc analyses and stakeholder-specific needs. This flexibility is vital as ESG reporting evolves.

Testing and Validation

Thorough testing is essential to ensure your ERP system operates smoothly. Test every aspect of the system, from data integration to final reporting, to confirm that information flows correctly through ETL processes and into reports.

Validate the system’s performance by comparing ERP-generated reports with manual calculations. For example, check that carbon emissions align with recognised methodologies, financial metrics are displayed in pounds (£), and all measurements use the correct metric units.

Simulate errors or anomalies to test automated quality checks. Ensure the system flags inconsistencies, missing data, or values outside expected ranges. This process should cover both technical issues, like data format errors, and business logic concerns.

Run parallel reporting for at least one full cycle to compare outputs from your new system with existing processes. This step can highlight discrepancies and build confidence before fully transitioning to the new setup.

Finally, train your team on how to use the ERP system and interpret dashboards. Tailor training sessions to user roles - for instance, detailed instructions for data entry staff and high-level guidance for executives.

"ERP implementation refers to the process of installing and configuring an ERP software system within an organisation...The goal of ERP implementation is to improve the efficiency and effectiveness of an organisation's business processes and to provide real-time data and reporting capabilities." - Katherine Haan, Staff Writer, Forbes Advisor

Establish procedures for ongoing maintenance and support. Develop standard operating procedures (SOPs) for regular system checks, software updates, and troubleshooting. Regular reviews will help ensure the system stays aligned with changing ESG requirements.

Tools and Modules for ESG Data Integration

When integrating ESG data into your ERP system, it's essential to choose tools that work effortlessly with your existing setup. Today’s platforms streamline the entire process - automating data collection, processing, and reporting - while offering advanced analytics and seamless system compatibility.

neoeco Features for ESG Data Integration

neoeco takes ESG integration to the next level with its Financially-integrated Sustainability Management (FiSM) platform. This system embeds sustainability metrics directly into financial systems, creating a unified source of truth. It connects with major ERP systems like SAP, Dynamics 365, and Oracle, as well as popular accounting software such as Xero, QuickBooks, and Intacct.

At the heart of the platform is the Financially-integrated Sustainability Ledger, which merges sustainability data with financial transactions. This approach eliminates the traditional gap between financial and sustainability reporting, ensuring that ESG becomes an intrinsic part of your business processes.

"With FiSM, we've rebuilt ESG reporting from the ledger up. It's a financial-grade layer that brings ESG into the ledger, not as a bolt-on, but as part of how your business already runs. FiSM isn't another system to manage - it's the connective tissue between your finance and sustainability tools, embedding ESG into the processes you already trust. What used to take consultants months, FiSM does in minutes. That's the power of automating ESG at the source." - Stephen Pell, CEO & Co-founder of neoeco

AI-powered automation significantly enhances efficiency, increasing the granularity of emissions data tenfold and reducing manual workload by 60%. Transactions are automatically matched with relevant impact factors, eliminating the need for time-consuming manual categorisation.

The platform also supports compliance frameworks for CSRD, ISSB (IFRS S1 & S2), and GHGP standards. This reduces data gaps by 80% and generates audit-ready reports with a single click, aligning your reporting with global regulations.

For businesses requiring advanced analysis, the platform’s Life Cycle Assessment tools offer detailed insights for ESG reporting. Dan Firmager BFP ACA, ESG Advisor at Kreston Reeves & ICAEW Climate Champion, highlighted:

"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".

In addition, dashboard and reporting modules provide real-time ESG insights. Custom dashboards allow stakeholders to monitor progress, set targets, and access actionable insights for reducing environmental impact.

Getting started is simple: businesses can create an account and connect their accounting software, granting read-only access to transaction data. To complement neoeco, additional ETL, BI, and API tools can further enhance your ESG data ecosystem.

Additional Supporting Technologies

To maximise the potential of neoeco, consider integrating these additional tools into your IT framework:

• ETL Software: Tools like Informatica PowerCenter are ideal for large enterprises managing extensive ESG datasets, while Talend Data Integration offers flexibility for businesses with unique data sources.

• Business Intelligence: Microsoft Power BI integrates seamlessly with Microsoft ecosystems, providing interactive ESG dashboards. Tableau excels in creating sophisticated visualisations for complex ESG data.

• Database Technologies: Microsoft SQL Server delivers enterprise-grade reliability for large-scale ESG data storage, while PostgreSQL offers a scalable, cost-effective solution for growing organisations.

• API Management: Solutions like MuleSoft and Azure API Management ensure secure and efficient data exchange between ESG tools and ERP systems, maintaining performance and reliability.

When choosing supporting technologies, it’s important to assess your current IT setup, data needs, and integration challenges. The goal is to create a well-orchestrated system where ESG data flows smoothly from collection to reporting, enabling better decision-making and ensuring compliance with regulatory standards.

Best Practices for ESG Reporting Workflows

Once your system configuration and ETL setup are complete, the next step in creating effective ESG reporting workflows within your ERP system is centralising your ESG data. This process is critical for ensuring that sustainability reporting is accurate, secure, and keeps pace with evolving regulations. These practices build on earlier ERP setup steps to integrate ESG reporting smoothly.

Creating a Single Source of Truth

A single source of truth (SSOT) within your ERP system eliminates inconsistencies and ensures transparency across sustainability metrics.

"By centralising data from various departments, an SSOT ensures you always work with the most accurate and up-to-date information."

The challenge is real - 75% of data leaders lack end-to-end data management, and 79% rely on over 100 data sources. This level of fragmentation can severely impact the credibility of ESG reporting. For instance, PepsiCo employs a five-level ESG data governance review to maintain consistency, accountability, and compliance across its global operations.

To establish an SSOT, you can implement data validation rules and use a master data management system to consolidate supplier data and maintain consistency . Standardising definitions and data collection methods across departments ensures that teams like procurement, operations, and finance use consistent metrics and terminology. This approach makes your ESG reports more reliable and ready for audits.

Data Security and Audit Requirements

Once your ESG data is centralised, securing it becomes a top priority. ESG data demands the same level of protection as financial information.

"Given the centralisation of critical business data and functions, every business should consider ERP system security a major legal and financial concern." - Christina Morrison, Author

Start with a risk assessment to identify vulnerabilities in your ESG data flows. Implement Role-Based Access Control (RBAC) based on the principle of least privilege, and maintain detailed audit trails.

Technical measures should include regular security patch updates, secure system configurations, and ongoing monitoring. Encrypt sensitive ESG data both during transfer and at rest, especially when sharing information with external reporting platforms.

To comply with UK GDPR, test and evaluate your security measures regularly. The Information Commissioner’s Office (ICO) considers your technical and organisational safeguards when assessing administrative penalties. Establish clear backup procedures to protect data integrity, and provide staff training on password management and recognising phishing attempts.

Improving Integration Processes Over Time

Protecting and securing your data is just the beginning. To maintain robust ESG reporting workflows, you’ll need to review and optimise your processes regularly.

Monitor system performance to identify bottlenecks in data processing or report generation. Gather feedback from end users to understand workflow efficiency and reporting accuracy. Schedule quarterly reviews of data quality and validation rules to ensure they align with your business needs and regulatory changes.

UK Compliance Requirements

As ESG regulations in the UK continue to evolve, compliance is becoming increasingly important. The Financial Conduct Authority (FCA) will begin regulating ESG rating providers in early 2025.

The UK government is also developing UK Sustainability Reporting Standards (SRS) based on IFRS S1 and S2, with consultations expected in Q1 2025. This initiative aims to integrate SECR, TCFD, and ESOS reporting into a unified annual sustainability framework .

To stay ahead, configure your ERP system to handle multiple reporting frameworks simultaneously. With the upcoming UK Sustainability Disclosure Requirements (SDR) set to streamline climate, sustainability, and ESG reporting, align your reporting schedules with UK regulatory deadlines. Additionally, establish clear communication channels with UK-based auditors and regulatory bodies to meet local expectations effectively.

Conclusion

Bringing ESG data into your ERP system turns sustainability reporting from a scattered, inefficient process into a smooth, data-driven operation. This approach not only simplifies tracking but also ensures compliance with evolving UK regulations and empowers decisions that balance environmental goals with financial success.

Integrating ESG data with ERP systems strengthens resilience and improves risk management by combining sustainability insights with business intelligence. As Sophie Graham, Chief Sustainability Officer at IFS, explains:

"Sustainability is at a tipping point. It's becoming part of financial materiality, talent strategy, and long-term risk management".

The growing importance of sustainability is evident in the numbers - the global ESG technology market is expected to surpass £45 billion by 2030.

This integration doesn't just improve decision-making; it also brings technical benefits. Consolidating ESG data sources reduces inefficiencies and speeds up reporting. AI-powered tools take this a step further, enabling faster and more accurate data analysis. With 83% of investors now factoring sustainability into their core decisions, accurate ESG reporting has shifted from being a regulatory formality to a competitive must-have. These advancements pave the way for cutting-edge solutions such as neoeco's integrated platform.

neoeco's FiSM platform connects real-time ESG data with financial systems, automating compliance and audit trails. It also boosts decision-making with AI-powered data mapping and seamless integrations with tools like Xero and ERP systems.

Looking ahead, it's crucial to view sustainability as a strategic advantage rather than just a compliance task. With the right ERP integration and platforms, ESG reporting can evolve into a tool for resilience, improved funding opportunities, and a competitive edge. By leveraging these systems, organisations can turn ESG efforts into a driver of long-term value and success.

FAQs

How does integrating ESG data into an ERP system improve compliance and enhance reporting accuracy?

Integrating ESG data into an ERP system offers a smarter way to handle compliance and reporting. By automating data management, it reduces the risk of manual errors and ensures updates are captured in real time. This means organisations can meet regulatory requirements more efficiently while producing sustainability reports that are both reliable and transparent.

Bringing ESG data into one unified platform simplifies workflows, improves data accuracy, and provides actionable insights. This makes reporting easier and supports strategic decisions, helping organisations stay on track with their sustainability goals and show accountability to stakeholders.

How can ESG data requirements be mapped for seamless ERP integration?

Mapping ESG data requirements for ERP integration involves several essential steps to align with sustainability goals and ensure accurate reporting.

Start by defining your ESG data strategy. This means pinpointing the specific sustainability metrics and compliance standards your organisation needs to meet. Next, assess and choose reliable ESG data sources or vendors that can supply the necessary information.

With your data sources in place, develop an ESG data framework. This framework should detail the critical attributes to track, such as carbon emissions, energy consumption, or supply chain performance. Use it as a blueprint to build a secure, efficient data pipeline that integrates smoothly with your ERP system.

Finally, set up an ESG analytics platform within your ERP. This platform will be crucial for monitoring, analysing, and reporting on your sustainability performance. By following these steps, your ERP system can play a vital role in supporting compliance and driving strategic sustainability efforts.

What are the best tools and technologies for integrating ESG data into ERP systems?

Integrating ESG data into ERP systems becomes much more manageable with the right tools and technologies. For instance, data collection tools simplify the process of gathering information from multiple sources, while integration platforms facilitate seamless data transfer between different systems. Once the data is in place, business intelligence tools can step in to analyse and present it in a way that's easy to understand.

On top of that, AI and machine learning technologies are game-changers. They can automate tasks like ESG reporting and data analysis, significantly improving both accuracy and efficiency. These technologies not only help meet sustainability requirements but also offer insights that can shape smarter, more strategic business decisions.

Related posts

• ESG Data Collection Checklist for Enterprises

• 8 Best Practices for GHG Protocol Compliance

• ESG Software Integration: FAQ for CFOs

• How Prebuilt Reports Simplify CSRD Disclosures