Your ESG reporting obligations still root in well defined processes

By the end of 2026, 80% of large EU companies will be required to comply with Corporate Sustainability Reporting Directive (CSRD) and prepare an Environmental, Social and Governance (ESG) report for the year 2025. Starting in 2027, listed SMEs will also face ESG reporting obligations.

Environmental, Social and Governance reporting remains a yearly struggle for many organizations. The primary challenge lies in ad-hoc and non-systematic processes that lack structure and consistency.

At its core, ESG reporting is not just a data problem, it is a process problem.

Key takeaways: ESG reporting and sustainability management are no longer optional or nice-to-have for companies. They are a legal, competitive and ethical necessity for bigger companies - exceeding two of three criteria (250+ employees, €25M+ balance sheet, or €50M+ turnover), which are more than 50 000 of them in the EU. This obligation creates a ripple effect extending to their whole supply chain - including smaller suppliers.

There are two main prerequisites for successful management of sustainability and ESG reporting in companies:

• IT tools for ESG (which are often inadequate or insufficient on their own) and
• well-managed processes (and supporting tools for their modeling, documenting, simulating, executing).

Excellent and less painful ESG reporting starts with process modeling and documenting. A yearly ESG report is merely a byproduct of well-defined and executed processes.

Why does it matter? Because all of us - especially large companies - are responsible for preservation of the environment and society.
Finally, this article includes four (reusable) examples of ESG related BPMN models to illustrate these concepts.

Audience: People in charge of processes related to sustainability management and ESG reporting in companies.
Even if you’re not directly related to the ESG reporting, it is worth knowing about it. Some of ESG processes probably touch your position too.

Introduction

Lately I’ve been involved in several ESG related projects and what struck me most is that strange feeling I’ve got - it seems that we haven’t learned anything in previous decades.

Let me explain.

It seems to me as we're resetting all management knowledge with every new standard and requirement that comes along. Many times I see the same old attitude: it seems that implementing new reporting obligations for companies is something separate from what companies are already doing.

The first reflex I see in companies is that they are usually trying ad-hoc to satisfy the requirements of new(ish) reporting standards. This means hastily buying new shiny IT tools to support ESG reporting, assigning people to newly invented positions, performing artificial and unnecessary steps. Over and over again.

I saw a similar story when IT security standards (ISO27000) became popular. Also, when SRM (Social Responsibility Standard, ISO26000) were released. And many others.

It’s always the same story: consultants with specialised IT tools come to the company, make a shiny presentation, convince the management into buying. Suddenly, we have yet another isolated tool and a bunch of employees who copy-paste data between various spreadsheets and databases.

ESG reporting + process modeling?

I know ranting doesn’t solve anything, so I’ll rather resort to the approach that worked in the past and which will most probably work in the future.

This is, doing it in a boring, systematic, ‘process way’.

What do ESG reporting (and sustainability management in general) have to do with process management and specifically, modeling?
Even before ESG reporting every company had such processes in place. Especially for financial reporting.

The ESG report is just one of the outputs of many prior processes that deal with capturing and analysing data related to the environment, social and governance aspects of the company.

With ESG reporting obligations, those processes need to be adjusted and expanded. Some of the logic is the same: capturing data, analysing, writing reports, approving it, publishing it.

If a company already has processes defined and in place, the adjustment shouldn’t be a big issue.
But if not, it is high time to define and model them.

Companies that already optimize their processes with sustainability (such as resource efficiency, decarbonisation, circularity) and social responsibility aspects in mind have a lot less work also to satisfy ESG reporting requirements.

And another, more personal reference - last year I was working with ESG professionals in the finance sector. What immediately turned me off when discussing ESG reporting were walls of text, lengthy documents and almost no visual incentives.

I thought: “Present me your data collection process, ESG reporting process as a graphical (BPMN) model and I’ll be engaged and motivated immediately to discuss it. Show me only a wall of text and I’ll have a difficult time engaging."

A question for you: in what shape is your process management system and process documentation / models? If it’s outdated, maybe it is now a good time to refresh it.

ESG reporting is not only a data problem, it is a process problem.

Why is it a process problem?

The data and reports should be consistent (and comparable) across the years. This is the only way to answer the question: Is our company improving? Is our CO2 footprint bigger or lower than last year? Is a gender pay gap closing or widening? And similar.
The way how a company captures, stores, analyzes and interprets the data has the same importance as the data itself.

Data by itself doesn’t mean a lot. For example, the electricity consumption of a plant is 1MWh. What does this mean? Is it per day or year? How often do we capture it? How reliable is this data? Is this a direct measurement, calculated/derived, or estimated? What exactly does this measurement measure? Who and when checks it? What does it represent? A total consumption of a plant, only electricity, maybe heating and cooling too?

Adding all these details converts raw data into usable information. We are adding context to it.

And we should have a process(es) for that.

Not necessarily new or separate processes, sometimes existing processes with slight modifications that incorporate regulatory requirements is enough. Sometimes only an additional check activity or approval activity within an existing process is enough.

For example, if regulatory requirements state that resources such as energy, water, materials should be minimised, what do you do? Do you just order: ‘consume less water!’ and wait for it to happen or optimize the process?

Imagine now you need to check, track and calculate scope 1, 2 and 3 emissions.

Scope 2 emissions of GHG (green house gases) are those that are directly produced by the company and their activities (facilities and transport). These need to be tackled first. Usually it is the easiest to prepare a report about scope 2 emissions, because we’re dealing with internal processes here.

Scope 1 are emissions of upstream activities (everything that comes in the company).

Scope 3 are emissions of downstream activities (the effect of a company's product or services).

Bad (ad-hoc) process would be:

Fill in the excel spreadsheet once a year with GHG emissions with input data manually gathered from various internal and external sources. Hastily chase various people around the company (and beyond) to gather data.

What would a better data management process look like?

I would approach the facilities emissions by defining the following outline before process modeling:

• Define data structure that will support emissions reporting (locations, units, time interval)
• Set measuring points/locations
• Define/modify processes that require energy to track consumption
  • Acquire/dedicate sensors/people to enter data
  • Define when the data will be collected
  • Define where it will be stored
  • Automate data gathering, acquire new IoT (Iternet of Things) sensors

I would separate transport emission and approach it like this:

• Modify existing process, e. g. company’s business travels process to include recording of travel length (usually already tracked) with consumption/per km → calculate total consumption/travel → convert to kWh per travel, consolidate across business units

As you see, it’s getting more complicated than simple data gathering and calculation. As soon as we start to talk about the context of the reported information, a system and a tool to manage processes is helpful.

The most important question is…

How process modeling tools help sustainability managers to excel (or, suffer less) when the yearly ESG reporting comes around?

There are two most important ways process models and modeling tools can directly help sustainability managers:

1. Visualize processes during internal whiteboarding sessions
2. Show off some of the processes to the public in the ESG report.

Let’s expand these two advantages:

• First advantage of a process modeling tool: obviously, it helps visualizing the workflow and consequentially, improving internal processes. Process diagrams become an anchor that improves communication about internal processes. Process diagrams reduce ambiguities related to process definition (who, what, when).

One of the most important effects of the whiteboarding sessions - or called differently, process modeling in a team - is to really understand and own the discussion matter.
With ESG related processes defined, understood and performed, yearly ESG reporting won’t be an ad-hoc activity. It will be interwoven with the rest of the processes.

Cardanit process modeling tool can help with that. I especially like that it can show the list of all ESG related processes I designed in one organised hierarchical view:

It’s nice to have an overview of multiple processes in one place, right? At least to me, such hierarchical view reduces the cognitive burden of dealing with multiple files with process models.

• Second advantage of BPMN process modeling tool: It can be used to disclose some processes pictures in the public ESG report

The second example of ‘what-can-you-do-with-process-pictures’ is a public disclosure.
Show your stakeholders how you treat waste, for example, in a form of a process diagram. Use a simplified set of BPMN elements. Everyone understands boxes and arrows. Everyone will appreciate a nice picture, that will spare them some reading.

Usually, plain process models can be boring. Cardanit process modeler can break such monotony by colouring the process elements, adding stick notes and other visual clues to it.

Four example processes every ESG team needs: Overall ESG process, Establishing ESG system, Data gathering and analysis process, ESG reporting process

The following examples (with process templates) show how the most crucial ESG related processes might look like. They can give you an idea about the overall ESG requirements, or you can reuse them to build specific ESG processes for your company.

Example 1: an overview of ESG related processes

Setting up an ESG system is a task for an ESG manager and also, for the process manager. They need to work hand-in-hand, review existing processes and fit the new ESG related processes (or modified existing ones). This could also mean modeling new processes such as setting-up an ESG system, materiality assessment process, KPI defining process, creating ESG report, validating and publishing an ESG report.

Before inventing new processes, I suggest a more sensible approach: review, find touching points and modify existing processes. Examples of existing processes that ESG usually touches are: facilities management processes (for gathering relevant energy consumption and emissions data), purchase processes (for gathering data related to suppliers), HRM processes (for gathering data about hiring diversity, turnover rates, pay equity, inclusion, training policies etc.).

Also, general management and leadership processes (for gathering data related to vision, strategy, policies, shareholder composition, investments, anti-corruption measures, transparency on renumeration etc.) are interwoven with the G (governance) aspect of ESG.

How to approach reviewing existing processes? If you already have their visual models at hand, for example in a tool such as Cardanit process modeler, it’s quick - just browse through worksheets of visual process models, from one single entry point.
If you have to dig through a lot of documentation, it can take more time and effort.

But first, what the overall ESG process diagram might look like?
For the organizations, that deal with ESG for the first time, it might look like this:

The process contains 5 major steps: set-up an ESG reporting system, materiality assessment, defining KPIs, adjusting existing processes and data collection, and reporting.

After the first year of reporting, the process might look a bit different, something like this:

This process includes four major steps: reviewing lessons learned from previous year and planning for the current year, data collection, data consolidation and lastly, preparing and publishing the ESG report.

This is a conceptual model, consisting of ‘subprocess’ elements, that presents only a broader picture. The (+) sign signifies something more is happening in the background.

You can take these processes as a starting point or a guide, but I strongly urge you to design your own. Don’t just reuse it as they are, use your company’s usual terminology and specifics and adapt them.

In the following chapter, I’ll present three subprocesses from the above: a process for setting up an ESG system, data collection process and reporting process.

Example 2: setting up ESG system

If we model further and drill down the first subprocess from Image 3, we could add detailed subprocesses and responsible roles.

The following process is performed by the team of ESG / sustainability leader, process leader / process manager, ESG data / reporting leader, technology leader / CIO and training manager. Those roles are modeled as horizontal ‘lanes’ in the process model:

Example 3: gathering data related to ‘E’ (Environment)

The next subprocess - data gathering/collection should include return energy consumption, water consumption, waste produced, GHG produced among other measures.

Let’s focus on an example of energy consumption / production data collection subprocess. It should capture data from different sources such as electricity supplier, from various IoT (Internet of things) sensors, machinery and devices that run in the company, and from means of transport.

If the company has a solar plant or uses co-generation, the process should also capture electricity production data.

The energy consumption data should be consolidated, converted to the same unit (kWh) and stored in a central database that will be used later as a source for the reporting.

The process of gathering data related to ‘S’ (social aspect of ESG) should include touchpoints with HRM (Human Resource Management) processes (such as hiring, training), accounting processes (salary calculations) and similar.

I’m inviting the reader to think about which departments / roles / processes produce data related to social and governance aspects and try to model a similar process as above.

Example 4: ESG data consolidation and reporting

When the data is collected, preparation of the ESG report (a document) can finally start.
After collection/consolidation of data related to the environmental, social and governance aspects of the company, its analysis and interpretation should follow.

ESG leader should prepare quantitative and qualitative disclosures based on previously mentioned data, cross-check with persons responsible for controlling and legal and general management aspects.

After the approval process, the document should be sent to regulatory bodies (for example, national authorities for CSRD reports), then published (in machine readable format and human readable format), and the public, investors, shareholders should be informed about it.

An overview of this process is captured on the following process model:

What is missing from the process model above? Many details: outputs, inputs and most importantly, detailed subprocesses.
Again, I’m inviting readers to contemplate these details - and try to model detailed processes.

As we saw in the examples above, an ESG report is merely a result of a non-trivial reporting process which touches various ‘hidden’ sub-processes.

As we demonstrated using the example process models, an ESG report of non-financial indicators is only a public face, a result that touches many hidden processes.

In the end, you might ask yourself, what can you do with all these nice pictures? You can:
Use them as a central point for discussions of the management board, process owners and performers.
Tailor them for your organization, turn them into organizational policies, rules.
Use them as a starting point for the design / acquiring the supporting system for ESG reporting, which will be tailored for the needs of your organization.

Conclusions

This year I reviewed around 30 ESG strategies from various organizations that are preparing for the ESG reporting. I haven’t detected a single process model or process architecture in the first iteration of their documents. Which is understandable - sustainability managers often don’t have skills from the business analysis area.
That encouraged me to start gently pushing them into the process-way-of-thinking direction. This post is an attempt to fill this gap.

To conclude, I’m inviting you to learn to communicate in a common language (graphical process models and BPMN 2.0).

Your new skills will build bridges between sustainability managers, business analysts and IT specialists.

Also, learn how to use tools that support process visualisation, like Cardanit BPMN modeler, it’s getting better each year, with each new release. I suggest you try it, even if you never designed a process before. Don’t wait for the person that designs processes, because you already know the basic concepts from your professional life: roles, departments, activities, decisions, documents.
Start with one of the examples in the ESG processes template, play around and make an ESG process model fit for your organization.

I’m sure you will not be sorry and your ESG related efforts will be less painful in the long term.

And that is called ‘good governance’.