Recent ESG headlines are not pointing in one simple direction.
In the U.S., the political environment has become less supportive of climate-related regulation under the current administration, but investor pressure has not disappeared. In the past week alone, investors pressed Amazon, Microsoft, and Google for sharper disclosure on the water and power demands of their U.S. data centers, while in the UK BP faced a growing shareholder backlash over climate transparency. At the same time, standard setters are still tightening the technical debate around reporting quality, including proposed changes to Scope 3 disclosure.
Global ESG expectations are diverging, but the reporting burden remains
It seems that the real issue of the moment is now not whether ESG reporting survives politically in every market. Instead, it is whether global companies can govern ESG reporting across diverging expectations. Reuters reported in February that investors warned the current US administration that a greenhouse gas rollback would create uncertainty and potentially add costs, while multinational companies would still need to meet tougher standards elsewhere. In other words, even where some domestic momentum softens, the reporting burden does not disappear for companies with cross-border investors, operations, or supply chains.
The U.S. data center story is a good example of why this still matters. Reuters reported on April 6 that investors are pushing Amazon, Microsoft, and Google for more site-specific disclosure on water, power use, pollution, and land impacts after community opposition helped derail several multibillion-dollar projects. And this is not a broad ideological ESG debate. It is a practical disclosure issue tied to local resource use, operational risk, and decision-useful reporting. It also shows that even in a politically cooler U.S. environment, sectors with fast-growing infrastructure footprints are still being asked harder environmental questions.
The pressure looks different in the UK and Europe, but it is still very much alive. It was reported on April 9 that the Local Authority Pension Fund Forum, which represents more than £425 billion in assets and about 1.34% of BP’s shares, joined proxy advisers and major investors in urging votes against BP’s chair and board-backed resolutions over transparency concerns. Meanwhile, ESG Today reported last week that Switzerland has proposed a new sustainability reporting and due diligence law, with reporting aligned to ESRS or an equivalent standard for around 100 of the country’s largest companies. The message is not that Europe is demanding more disclosure at any cost. It is that reporting expectations are still being actively shaped, revised, and defended.
The next phase is better-governed ESG reporting
That is why the stronger framing for this moment is not “more ESG reporting” but “better governed ESG reporting.”
On April 9 that the GHG Protocol’s latest Scope 3 proposals would require companies to disaggregate emissions by data type and aim to improve transparency, consistency, relevance, and comparability. Even where regulators are simplifying parts of the rulebook, the technical expectation behind useful reporting is not going away. If anything, the market is becoming less tolerant of disclosure that is too high-level to be trusted or compared.
Looking at the research: the ESG reporting gap is now about quality, not coverage
Longer-form research backs that up. The OECD’s Global Corporate Sustainability Report 2025 found that 91% of companies by market capitalization disclosed sustainability-related information in 2024, up from 86% in 2022. Europe led at 98%, while the U.S. was also high at 93%. The same OECD report found that companies representing 88% of market capitalization disclosed Scope 1 and 2 emissions, but only 63% disclosed Scope 3.
That gap matters because it suggests the next problem is not whether reporting exists, but whether it is complete, comparable, and decision-useful where the hardest data still sits.
In practical terms, that can mean the difference between publishing a single rolled-up emissions figure and disclosing enough detail for investors to understand what sits behind it. The GHG Protocol’s latest proposed Scope 3 changes, for example, would require companies to report at least 95% of total required Scope 3 emissions to remain in conformance, which points to a much stricter expectation around completeness.
The same shift is showing up outside carbon too. Recent pressure on major U.S. tech firms over data center water and power use points to the same demand: sharper, more decision-useful reporting that helps investors and boards judge local exposure and operational risk That is also where the commercial value sits. Better reporting does more than satisfy expectations on paper. It helps investors, boards, and leadership teams understand performance more clearly and make better-informed decisions.[1] The businesses that stand out will not just be the ones that disclose more. They will be the ones that disclose better, in a way that is connected to accountability, decision-making, and business strategy.
Put simply, sustainability reporting is moving into a new phase. Coverage has improved. Now the pressure is on usefulness, comparability, and trust. [2]
Why ESG reporting is becoming a governance and control issue
Diverging ESG expectations create a control problem inside the business. Someone has to own definitions, boundaries, methodologies, assumptions, and materiality judgments. Someone has to decide what is board-ready, what still depends on estimates, and what differs across regions. Someone has to maintain an audit trail behind disclosures that may be challenged by investors, regulators, auditors, or civil society groups.
Once you look at ESG through that lens, it stops being just a sustainability communications issue and starts looking much more like governance, risk, and compliance (GRC) work.
That also changes what boards need from management. The board-level question is no longer just whether an ESG metric exists. It is whether management can explain how the number was produced, what assumptions sit behind it, where regional differences affect comparability, and which disclosures carry the greatest legal, operational, or reputational risk.
That is especially true in a period when the U.S. may be signaling rollback in some areas while European frameworks continue to shape market expectations for globally exposed firms.
What GRC teams should take from the next phase of ESG reporting
For GRC teams, the practical takeaway is clear.
ESG reporting is becoming less of a standalone disclosure exercise and more of a cross-functional governance discipline. The organizations best placed for the next phase will not necessarily be the ones publishing the longest sustainability reports. They will be the ones that can coordinate data ownership, apply consistent methodologies, connect reporting to real controls, and explain the whole process clearly to the board. In a more fragmented reporting landscape, defensibility may matter just as much as ambition.
That matters because the pressure is no longer only to disclose. It is to show how disclosures were built, who owns them, and how confidently leadership can stand behind them when expectations shift across markets. For boards and GRC teams alike, the real test in the next phase of ESG reporting may be less about saying more and more about proving that what is said can withstand scrutiny.
If this question of proof, ownership, and defensibility feels familiar, it is because the same pattern is showing up across adjacent risk areas too.
And if the bigger issue is turning disclosure pressure into something operational, not just narrative, we have some helpful resources for you.
FAQ on ESG reporting
ESG reporting is increasingly becoming a governance issue, not just a disclosure exercise. As companies face different expectations across the US and Europe, GRC software helps teams manage ownership, evidence, reporting workflows, and oversight in one place. That makes it easier to connect ESG data to real controls, accountability, and board reporting.
Compliance teams are being pulled more directly into ESG because disclosure is now tied to methodology, comparability, audit trail, and internal challenge. In practice, that means ESG reporting is starting to overlap with the kind of work normally handled through compliance management software and broader governance processes. The issue is no longer just what is reported, but how confidently the business can stand behind it.
Risk and compliance software can help organizations manage ESG reporting in a more structured way by linking disclosures to risks, controls, ownership, and review steps. That is especially useful when expectations differ across markets and boards need clearer visibility into how numbers were produced, validated, and approved.
The pressure is shifting from disclosure volume to disclosure quality. Investors, regulators, and standard setters increasingly want reporting that is more complete, more comparable, and more decision-useful. That means companies need stronger internal governance over definitions, assumptions, data sources, and evidence, which is where governance risk compliance software becomes more valuable.
Boards should ask more than whether an ESG metric exists. They should also ask who owns the data, how the metric was produced, what assumptions sit behind it, what varies across regions, and whether the reporting can withstand scrutiny. Good governance risk and compliance tools help management answer those questions with more confidence and consistency.
ESG reporting increasingly touches operational risk, regulatory risk, reputational risk, and third-party risk. That makes it relevant to enterprise risk management software, not just sustainability reporting tools. For many organizations, the real challenge is making sure ESG information is connected to the wider risk picture rather than sitting in a separate reporting stream.
The main benefit is control. Governance risk compliance software can help teams coordinate data ownership, apply consistent methodologies, keep an audit trail, and support clearer board reporting. In a fragmented reporting environment, that makes ESG disclosures easier to govern and easier to defend.
For many businesses, yes. As ESG expectations diverge across regions, the need for better GRC tools is growing. Companies need systems that help them manage evidence, workflows, controls, approvals, and reporting logic across teams. The businesses that handle ESG reporting best are likely to be the ones with stronger governance behind the process, not just more content in the final report.
References and further reading
[1] He, Hongbo and Guo, Ruiqi and Chen, Yiqing and Jiang, Chunxia and Wan, Hong, Doing Good and Speaking Well: The Effect of ESG Performance and Disclosure Quality on Stock Price Informativeness (August 07, 2025). Available at SSRN: https://ssrn.com/abstract=5385279 or http://dx.doi.org/10.2139/ssrn.5385279
[2] Barker, R. (2025) ‘Corporate sustainability reporting’, Journal of Accounting and Public Policy, 49, p. 107280. Available at: https://doi.org/10.1016/j.jaccpubpol.2024.107280.
