ESG performance is now expected to be investor-grade — and the data quality needs to match.
Sustainability reporting has reached an inflection point. ESG information was once treated as a marketing tool or CSR update is now being held to the same standard as financial reporting.
Investors, regulators, and stakeholders expect investor-grade ESG data: Transparent, comparable, and assured to a level that withstands external audit.
ESG disclosure quality now influences investment decisions, access to capital, supply chain contracts, reputation with customers, trust from employees and communities, and other key aspects of a company’s performance.
Weak reporting can create skepticism and financial risk, while strong, auditable disclosures are becoming a strategic differentiator.
This article explores what investors and stakeholders expect in 2025: Assurance, auditability, and clear engagement through ESG reporting. It also looks at how companies can align disclosure practices with these rising expectations to strengthen trust and enterprise value.
Investor expectations for ESG reporting
Institutional investors now view ESG disclosures as integral to risk analysis and capital allocation.
They want information that is consistent across companies and industries, tied directly to financial performance, and presented in ways that are comparable year over year.
What this means for enterprises is that things like vague commitments to mitigating climate change or selective highlights no longer satisfy the market. Investors expect companies to disclose:
- How climate risks, regulatory changes, and supply chain disruptions may affect revenue and operations
- Progress against lowering carbon emissions or net-zero GHG commitments using science-based targets
- Governance structures that show accountability at the board and executive level
- Workforce, diversity, and human rights disclosures that affect social license to operate
This data feeds directly into investment strategies. Credit rating agencies and index providers are embedding ESG scores into their methodologies, while banks and lenders are offering preferential financing to companies with credible climate transition plans.
Investor-grade ESG reporting is therefore not just about compliance — it has a direct impact on capital flows and cost of capital.
Why assurance and auditability are critical
Just as financial reporting credibility depends on external audit, ESG reporting is moving toward mandatory assurance benchmarks.
For example, under the EU’s Corporate Sustainability Reporting Directive (CSRD), limited assurance on sustainability data is already required, and by 2028 the bar will rise to reasonable assurance (the same level applied to financial statements).
Other jurisdictions in the global market, from Australia to the UK, are aligning with similar requirements.
For enterprises, assurance is more than a regulatory checkbox. It demonstrates to the market that data is reliable, that internal processes can withstand scrutiny, and that sustainability reporting is deeply embedded in corporate governance.
Assurance also strengthens investor confidence, allowing ESG strategies to be used directly in capital allocation and due diligence.
To prepare for this, companies are investing in ESG data platforms, internal controls, and standardized methodologies that mirror financial reporting practices.
By treating ESG disclosures as part of the broader enterprise risk management system, businesses can streamline external audits and use the same data internally for strategic decision-making.
Stakeholder engagement through ESG reporting
While investors are a primary audience, ESG reports serve a much wider group of stakeholders.
Employees want to see their ESG strategies backed up by data. Customers — especially large corporate buyers — demand verified disclosures from suppliers as part of procurement.
Communities look for transparency around social issues and environmental impact, and regulators increasingly require standardized reporting across industries.
Engagement requires relevance. A retail investor might focus on governance risk; a regulator might prioritize emissions data; a community group might care about local biodiversity.
Enterprises need ESG metrics that respond to double materiality: disclosing both financial materiality (how sustainability issues affect the business) and impact materiality (how the business affects society and the environment).
High-quality data management for ESG disclosure is, therefore, a tool for credibility and trust. It demonstrates that the company listens, prioritizes material issues, and communicates with transparency. It also provides a foundation for ongoing stakeholder dialogue, rather than treating ESG reporting as a one-time annual publication.
How ESG data collection builds trust and enterprise value
Strong ESG reporting is not simply about checking compliance boxes—it strengthens relationships across the value chain. Investors are more likely to engage with companies whose data is consistent and comparable. Customers trust suppliers that provide verifiable emissions and social disclosures. Employees are attracted to companies that transparently communicate their ESG commitments and progress.
Conversely, weak disclosure creates skepticism. Reports filled with promotional narratives or cherry-picked data erode confidence. Inconsistent methodologies undermine comparability. Lack of assurance signals potential greenwashing. In today’s market, the reputational risk of poor reporting is as high as the compliance risk.
Trust in ESG disclosures directly supports long-term enterprise value. Companies that publish robust, auditable ESG data are better positioned to secure financing, win contracts, attract top talent, and build durable stakeholder relationships.
Technology’s role in meeting stakeholder expectations
Meeting these expectations requires more than manual spreadsheets and fragmented data collection.
Enterprises are increasingly adopting sustainability software platforms that aggregate and centralize ESG data points, align reporting to global frameworks, and embed audit trails.
The right solution allows sustainability teams to:
- Map disclosures against mandatory frameworks like CSRD or ISSB IFRS S1/S2
- Collect datasets across business units, supply chains, and other data providers with verifiable traceability
- Generate investor-grade reports with built-in assurance readiness and validation
- Support double materiality assessments to engage stakeholders more effectively
Software platforms don’t replace human judgment, but they provide the data governance and transparency needed for assurance and investor confidence. As reporting on ESG issues becomes more regulated and investor-driven, technology has moved from a “nice to have” to an essential enabler.
Reporting frameworks and ESG investing
From an investor’s perspective, not all ESG disclosures carry the same weight.
They want information tied to reporting requirements, especially those that create comparability across companies and industries and that can be integrated into financial decision-making.
As of 2025, several frameworks dominate the investor landscape:
CSRD and ESRS (European Union)
The Corporate Sustainability Reporting Directive (CSRD) requires over 50,000 companies operating in the EU to disclose against the European Sustainability Reporting Standards (ESRS). These standards are built on the principle of double materiality, requiring disclosure both on financial risk and corporate impacts. For investors, this means ESG data is detailed, comparable, and audited.
ISSB: IFRS S1 and S2 (with SASB integration)
The International Sustainability Standards Board (ISSB) issued IFRS S1 (general sustainability disclosures) and IFRS S2 (climate disclosures), which are rapidly becoming the global baseline. Unlike CSRD, ISSB focuses on financial materiality — what is decision-useful for sustainable investing.
As of 2025, ISSB also incorporates the SASB Standards (Sustainability Accounting Standards Board), which provide sector-specific metrics for 77 industries. This integration gives investors a more granular view of ESG risks and opportunities across sectors, helping them compare peers within the same industry and integrate ESG factors directly into valuation models.
GRI Standards
The Global Reporting Initiative (GRI) remains the most widely adopted voluntary standard worldwide, and while it emphasizes impact materiality more than financial materiality, its sector-specific standards provide investors with consistent information on industry-specific risks. Many asset managers expect GRI-aligned disclosures in addition to ISSB or CSRD to ensure a holistic picture of both impacts and risks.
SFDR (Sustainable Finance Disclosure Regulation)
For funds operating in the EU, the SFDR requires asset managers to disclose how ESG factors are integrated into investment decisions and product labeling. For enterprises, this means investors are increasingly requesting data aligned with Principal Adverse Impact (PAI) indicators to fulfill their own obligations. Even though SFDR is under review in 2025, companies should expect investor requests for PAI-aligned disclosures to grow.
CDP (Carbon Disclosure Project)
The CDP is not a regulatory framework but a disclosure system widely used by investors to assess climate and environmental performance. Thousands of companies disclose through CDP on climate, water, and forests. For investors, CDP data provides insights into how well companies are measuring, managing, and reducing their environmental impact, particularly emissions and climate risk management. With CDP aligning its questionnaires to both CSRD and ISSB, it has become a crucial investor tool for cross-checking reported performance.
MSCI ESG Ratings
MSCI ESG Ratings evaluate how well companies manage industry-specific ESG risks relative to peers. These scores are used extensively by institutional investors to screen portfolios, identify leaders and laggards, and guide stewardship priorities. While companies don’t “report” directly into MSCI, their disclosures in CSRD, ISSB, GRI, or CDP feed directly into how they are scored. For enterprises, this means the quality of ESG disclosures directly impacts investor perceptions and access to capital.
Other regional mandates
- California’s Climate Corporate Data Accountability Act (SB 253): Requires large companies doing business in California to disclose Scope 1, 2, and 3 emissions.
- Australia’s mandatory climate disclosure rules (2025): Aligned with ISSB, requiring large companies to report climate risks and opportunities.
- UK SDR (Sustainability Disclosure Requirements): Rolling out requirements aligned with ISSB and TCFD, with direct implications for investor-focused climate reporting.
Why this matters for investors
Investors don’t simply want more data; they want decision-useful data. That means disclosures aligned to recognized standards, comparable across regions, and subject to assurance.
The frameworks above shape investor expectations by dictating what information companies must provide—and therefore what data investors have access to when evaluating risk, allocating capital, and pricing long-term enterprise value.
Investor-grade ESG disclosure quality makes for sustainable business
The shift toward investor-grade ESG reporting is more than a compliance requirement—it’s a transformation in how enterprises demonstrate accountability and build trust. Investors expect disclosures that are auditable and aligned to global frameworks. Stakeholders want reports that reflect double materiality and speak directly to their concerns.
By investing in assurance, embedding ESG into governance, and adopting technology to centralize and standardize disclosures, enterprises can move beyond compliance to strategic value creation.
ESG reporting then becomes not just a regulatory obligation but a competitive advantage — one that builds trust, enhances access to capital, and strengthens long-term enterprise resilience.
FAQ: What stakeholders need to know about ESG disclosure quality
Q: What makes ESG data “investor-grade”?
A: Investor-grade ESG data is reliable, comparable, and auditable. It meets the same quality standards as financial reporting, including consistency across reporting periods, clear methodologies, and external assurance.
Q: Why does assurance matter for ESG reporting?
A: Assurance provides credibility. Just as audited financials give investors confidence in financial statements, assured ESG disclosures signal that data is accurate, reliable, and aligned to mandatory frameworks.
Q: What role does double materiality play in stakeholder engagement?
A: Double materiality means companies must disclose both how ESG risks impact financial performance and how their activities impact society and the environment. This ensures ESG reports are useful not just for investors but also for employees, customers, communities, and regulators.
Q: How can enterprises use ESG reports to strengthen stakeholder trust?
A: By publishing transparent disclosures backed by data and assurance, enterprises demonstrate accountability. This builds confidence among investors, resilience with customers, and credibility with regulators and the public.
