Corporate ESG Reporting: Companies Race to Meet Evolving Disclosure Standards
Lahore, 13 November 2025 — As expectations around Environmental, Social and Governance (ESG) disclosures intensify worldwide, companies are mobilising to adapt to new reporting requirements and evolving stakeholder demands. A growing number of organisations are facing the twin pressures of regulatory change and investor scrutiny — and many are finding the journey far from straightforward.
The Shift in ESG Disclosure Landscape
Historically, ESG reporting was largely voluntary: a corporate‑responsibility gesture rather than a core financial disclosure line. However, that is changing at pace. According to research by Harvard Business School, the proportion of S&P 500 firms publishing standalone ESG reports rose from around 35% in 2010 to 86% in 2020.
More importantly, the nature of the disclosures is shifting: once peripheral, ESG issues are now being recognised as financially material — meaning they must be managed and reported with the same rigour as traditional financial risks. As one industry commentary notes, “environmental and social concerns that might formerly have been viewed as fringe issues … increasingly are recognised as financially material, mainstream business concerns.
This shift is causing companies to move beyond mere sustainability‑narrative reports to integrating ESG into core business strategy, risk management, and reporting systems.
Regulatory Surge: Standards Raising the Bar
Globally, regulatory frameworks are being strengthened to ensure consistency, comparability and reliability of ESG disclosures. For example, the International Sustainability Standards Board (ISSB), under the International Financial Reporting Standards Foundation (IFRS) umbrella, issued two key standards in June 2023: IFRS S1 – General Requirements for Sustainability‑related Disclosures, Corporate ESG Reporting: Companies Race to Meet Evolving Disclosure Standards and IFRS S2 – Climate‑related Disclosures. These set a global baseline for reporting sustainability‑related financial information.
Closer to home, in some markets regional rules such as the Corporate Sustainability Reporting Directive (CSRD) in the European Union are now active and require firms to report on a wide range of ESG issues with audit assurance and disclosure of both how companies are impacted by ESG issues and how they impact society.
The upshot? Many companies are no longer asking whether to report ESG‑metrics; they are asking how to do it effectively and credibly.
The Corporate Race: Why the Urgency?
Investor expectations: Institutional investors increasingly treat ESG credentials as part of corporate valuation. High‐quality ESG disclosures can attract capital, lower risk premiums, and strengthen investor trust.
Regulatory compliance: Non‑compliance may lead to legal and reputational risk. As disclosures become mandatory, sloppy or inconsistent reporting may bring penalties or audit scrutiny.
Peer momentum: As more companies publish more advanced ESG reports, laggards risk being left behind in the “ESG race”.
Operational insight: Robust ESG reporting also helps firms internalise sustainability risks — from carbon emissions to governance failures — linking them to financial outcomes.
A recent survey by KPMG International found that nearly three‑quarters of companies globally indicate they are not yet fully prepared for ESG assessments. Investopedia This highlights the pressure many firms feel: the standard has moved, and a gap remains.
Key Challenges in the Reporting Journey
Data complexity & systems readiness: Companies are grappling with how to capture and validate ESG data, often across global operations, supply chains and value chains. As one audit‑firm report put it: “The learning curve has been steep … both companies and auditors are navigating new standards, qualitative disclosures, and evolving systems for capturing data.”
Standardisation & comparability: With multiple frameworks (e.g., Global Reporting Initiative – GRI, Sustainability Accounting Standards Board – SASB, TCFD, ISSB) in circulation, companies face ambiguity on which metrics to use and how to benchmark their performance. For instance, materiality definitions may vary by industry.
Assurance & credibility: Stakeholders are demanding more than narrative disclosure — they want verifiable, auditable ESG data. Assurance practices are still emerging.
Resource & capability constraints: Especially in smaller companies or emerging markets, ESG reporting may stretch existing finance/ESG teams, requiring investment in systems, training and external expertise.
Greenwashing risk: With pressure high and disclosures evolving, companies risk allegations of “greenwashing” — overstating ESG credentials without underlying substance.
Strategic Responses: How Companies Are Reacting
Embedding ESG into core governance: Firms are aligning ESG oversight with board governance, integrating ESG metrics into executive KPIs, risk management, and strategy.
Aligning with global frameworks: Many are beginning to map their reporting against ISSB’s IFRS S1/S2 and SASB industry standards to boost comparability. For example, companies previously following voluntary SASB guidelines saw growth in material‑disclosure focus. Harvard Business School
Investing in data & assurance infrastructure: Organisations are upgrading internal systems for data collection, implementing digital tools (AI, analytics) to support ESG disclosures. Falcony Blog+1
Linking ESG to financial performance: Leading firms are moving beyond compliance to show how ESG initiatives drive value — whether cost savings from lower emissions, talent retention through social policies, or risk mitigation through governance.
Transparent stakeholder communication: Companies are enhancing narrative disclosures, giving context to their metrics, challenges and future goals — enabling stakeholders to understand both the “what” and “why”.
What This Means for Stakeholders
Investors will need to look beyond headline ESG ratings and assess companies’ readiness for new disclosure regimes, quality of data and alignment to standards.
Regulators and auditors will increasingly scrutinise how firms map ESG to financial reporting and whether the data is reliable and auditable.
Companies (especially in emerging markets) must recognise that ESG reporting is no longer a nice‑to‑have; it is rapidly becoming a business imperative—influencing investor access, cost of capital and reputational standing.
Supply chain partners and service providers will face more demanding data requests as companies upstream look to ensure completeness and credibility of disclosures.
Closing Comment
The era of optional ESG narrative is giving way to mandatory, structured disclosures. For companies, the question is no longer if they will report ESG matters, but how well they will report them. As regulation tightens and investor scrutiny rises, the speed and quality of ESG reporting will increasingly separate industry leaders from the rest.
In this race, companies that act early—aligning strategy, building robust systems, and embracing transparency—stand to gain: stronger investor confidence, lower risk exposures and enhanced business resilience.
Those who wait risk being left behind.
