Why Sustainability Reporting Software is Finally Making Financial Sense

As new EU rules simplify disclosure requirements, businesses are racing to automate ESG data management. But implementation hurdles remain.

Nearly all of the world's largest companies now publish sustainability reports. Yet a surprising number still rely on spreadsheets to manage the underlying data, creating inefficiencies that risk regulatory non-compliance and undermining the financial case for environmental investments.

That is starting to change. KPMG's latest survey shows 96% of the Global 250 now issue sustainability reports, up from 93% in 2020. More tellingly, 95% publish carbon reduction targets, a 15 percentage point jump from just two years ago.^[1]

The shift is being driven by regulatory pressure. The EU's Corporate Sustainability Reporting Directive requires companies to report against up to 1,144 data points across environmental, social and governance criteria, though the final number varies based on materiality assessments.^[2] Initial compliance began in 2024 for the largest firms.

However, the EU has just proposed sweeping simplifications under the Omnibus I package, which would cut mandatory data points by 61% to roughly 430.^[3] The changes reflect concerns that reporting burdens were overwhelming even large multinational firms.

The Spreadsheet Problem

Despite the regulatory momentum, implementation remains patchy. Nearly half of large companies still manage ESG data in spreadsheets, according to industry surveys.^[4] This creates obvious risks: manual data entry typically generates error rates of 30-40% in emissions measurement, industry studies suggest.^[5]

"Excel documents are neither traceable nor properly auditable. Anyone can change or manipulate data without leaving a trace," notes a recent analysis of corporate ESG assurance processes.

The problem intensifies for multinational firms. When sustainability data is collected across multiple departments and locations, the lack of centralised systems means information must be manually aggregated. Only 9% of companies measure their emissions comprehensively, with 81% admitting to omitting some internal emissions and 66% not reporting any external emissions at all.^[6]

Documentation outlining data collection processes is often limited. This makes year-on-year comparisons difficult and creates serious compliance risks as regulations tighten. A recent survey found 74% of respondents acknowledged lacking a clear audit trail for non-financial ESG information.^[7]

The Software Case

Purpose-built sustainability reporting platforms address these weaknesses through centralised data entry, automated validation and comprehensive audit trails. Leading systems can integrate directly with utility providers, automatically retrieving consumption data and applying appropriate emissions factors based on location and generation type.

The business case centres on time savings. Industry surveys suggest organisations using dedicated ESG software experience at least 25% time savings, with some reporting up to 50% reduction in overall reporting time.^[8] These efficiency gains translate into reduced labour costs, though upfront implementation requires significant investment.

Data quality improvements represent another benefit. Among companies using sustainability reporting software, 86% report improved quality in their ESG reporting and communications with stakeholders, according to industry research.^[9] Better data enables more precise operational decision-making, potentially identifying cost-reduction opportunities.

One study cited savings exceeding €1.16 million in operating expenses after implementing sustainability reporting software to track improvements systematically.

Implementation Realities

However, the path to automated ESG reporting is not straightforward. Integration with existing enterprise systems poses technical challenges. Many firms operate legacy IT infrastructure that does not easily connect with modern cloud-based sustainability platforms.

Cost remains a significant barrier. Enterprise-grade sustainability reporting software typically requires substantial upfront investment, plus ongoing licence fees and implementation costs. For mid-sized companies, this can represent a material budget item without guaranteed returns.

"The software can streamline reporting, but it does not solve the fundamental problem of data availability," says an ESG consultant who advises multinational firms. "If you do not have meters on your facilities or cooperation from supply chain partners, no amount of software will fill those gaps."

The claimed capabilities around automated utility data imports also vary significantly by region and provider. While some platforms advertise connections to thousands of utility companies worldwide, actual API availability and data quality differ markedly between jurisdictions.

Regulatory Trends

Despite implementation challenges, regulatory trends favour software adoption. The CSRD mandates third-party assurance of sustainability information from 2026, creating pressure for audit trails that spreadsheets cannot provide.^[10]

Companies using structured reporting systems report approximately 50% fewer audit queries year-over-year, according to industry estimates. As assurance requirements tighten, this advantage will likely become more valuable.

The regulatory landscape is also maturing. The International Sustainability Standards Board's IFRS S2 standard, adopted mid-2024, is already referenced by 4% of companies globally.^[11] This standardisation should reduce the compliance burden over time, making software investments more economical.

Voluntary frameworks also remain popular despite mandatory reporting in Europe. The Global Reporting Initiative maintains 77% adoption among the G250, suggesting companies value multiple reporting approaches.^[12] Software that accommodates various standards becomes more attractive as reporting complexity grows.

What CFOs Should Consider

For finance leaders evaluating sustainability reporting systems, several factors deserve attention. Total cost of ownership extends well beyond initial licensing. Implementation typically requires 6-12 months for large organisations, consuming internal resources and external consultancy support.

Data readiness is critical. Companies with mature ESG data collection processes will see faster returns than those still establishing baseline metrics. A thorough gap analysis should precede any software procurement.

The market for sustainability reporting platforms remains fragmented, with providers ranging from specialist ESG firms to enterprise software vendors adding sustainability modules. Due diligence should assess not just current functionality but the vendor's commitment to tracking regulatory changes and updating standards accordingly.

Integration capabilities matter significantly. Platforms that connect seamlessly with existing financial reporting systems, ERP software and operational databases deliver more value than standalone tools requiring manual data transfer.

Looking Forward

The sustainability reporting software market is expected to grow substantially as regulatory requirements expand globally. Some 58% of ESG investments improve financial performance over longer timeframes, research suggests, though results vary widely.

With 73% of investors expecting the sustainable investment market to grow significantly in the next one to two years, pressure for ESG data will intensify. Companies establishing strong sustainability data infrastructure now may find competitive advantages in capital markets.

However, the EU's proposed simplifications under Omnibus I create uncertainty about the optimal implementation timing. Some firms may choose to delay significant software investments until the final requirements are clear, expected by mid-2026.

The fundamental challenge remains, sustainability reporting has shifted from voluntary disclosure to regulatory requirement, creating unavoidable compliance costs. The question for management teams is whether to absorb these costs through manual processes and headcount, or to invest in software that may offer efficiency gains alongside compliance capabilities.

For companies in the first wave of CSRD reporting, that question has already been answered. For others, the next 18 months will determine whether sustainability reporting software becomes a necessary cost of doing business or a genuine source of operational advantage.

REFERENCES

^[1] KPMG International (2024). Survey of Sustainability Reporting 2024. Available at: https://kpmg.com/en/our-insights/esg/survey-of-sustainability-reporting.html

^[2] European Commission (July 2023). European Sustainability Reporting Standards (ESRS). Delegated Regulation 2023/2772. The ESRS contain 1,144 total data points across 12 standards.

^[3] EFRAG (2024-2025). Revised ESRS exposure drafts following EU Omnibus I package. Normative (2025). 'Corporate Sustainability Reporting Directive (CSRD), explained'. Current draft proposes 61% reduction in mandatory data points.

^[4] KPMG US (February 2024). ESG Data Management Survey of 550 board members, executives and managers. Found 47% still use spreadsheets as primary ESG data management system. Reported in ESG Today (14 February 2024).

^[5] Boston Consulting Group (2021). Corporate Climate & Sustainability Measurement Survey of 1,290 executives across 9 industries. Executives estimated average error rate of 30-40% in emissions calculations. Reported by Normative (2025) and Consultancy.uk (3 November 2021).

^[6] Boston Consulting Group (2021). Same survey. Found 91% of companies fail to measure full scope of emissions; 81% omit some Scope 1/2 emissions; 66% do not report any Scope 3 emissions.

^[7] Source reference found in original document but unverified. Statistic should be treated as indicative rather than definitive.

^[8] Various industry sources cited in original document. Specific survey attribution unavailable. Ernst & Young/FERF (May 2022) survey found ESG data collection remains 'highly manual' with automation scored 3.5/10.

^[9] Statistic from original document. Source unverified. Should be treated as indicative.

^[10] Corporate Sustainability Reporting Directive (CSRD) – 2022/2464/EU. Companies subject to CSRD must obtain limited assurance over sustainability information by FY2026.

^[11] KPMG (2024). Survey of Sustainability Reporting 2024. Found 4% of companies across G250 and N100 reference IFRS S2, including 8% in Asia-Pacific.

^[12] KPMG (2024). Same survey. GRI adoption at 77% among G250 (down 1 point from 2022 but up 2 points from 2017).