ESG Reporting Caught Between Regulation and Strategic Potential
ESG reporting has become a defining challenge for organizations in 2025. The latest BARC study, “The State of ESG and Sustainability Reporting 2025 – Laying Out the Roadmap for 2025” , shows how companies are responding to tightening regulatory demands, growing stakeholder expectations and rising complexity in sustainability reporting.
Regulation remains the primary driver – but simplification has limits
The study finds that regulation is now the strongest motivator for ESG initiatives, slightly ahead of reputation among customers. The Corporate Sustainability Reporting Directive (CSRD) continues to shape the European reporting landscape. The first draft of the European Commission’s Omnibus package, published in February 2025, aims to ease the reporting burden by raising thresholds and reducing required data points. However, larger and more complex organizations are likely to see only limited relief.
“Despite the promise of simplification, ESG reporting remains a strategic and operational challenge,” said Chris Gerber, senior analyst at BARC and co-author of the study. “But those organizations that invest in robust ESG data management and the right technologies are turning regulation into opportunity.”
Best-in-class organizations lead with structure, tools and governance
The study reveals significant differences in ESG reporting maturity. Leading companies are embedding ESG into their core management systems, ensuring cross-functional collaboration and board-level accountability. These organizations use specialized ESG software and analytics platforms to enhance data quality, automate processes and meet rising assurance requirements.
In contrast, 30 percent of organizations still rely on Excel as their primary reporting tool. Integration issues, fragmented data sources and lack of internal expertise continue to hold many companies back.
From compliance to strategic value
Beyond compliance, the study highlights a growing ambition to turn ESG reporting into a source of strategic value. By aligning ESG and financial reporting, standardizing data and workflows and engaging stakeholders more actively, organizations are beginning to embed sustainability into decision-making and performance management.
BARC’s report is based on in-depth research into ESG reporting practices, technology usage and organizational approaches. It provides clear recommendations for companies aiming to keep pace with regulatory developments while improving the effectiveness and value of their sustainability reporting to ensure long-term business success and resiliency.
Download the full study for free here: https://barc.com/research/esg-sustainability-reporting/
