Environmental, social, and governance (ESG) compliance is becoming a critical priority for businesses worldwide. With increasing regulatory scrutiny, investor expectations, and stakeholder demands, companies are under pressure from all angles to make sure their ESG reporting meets stringent requirements and high expectations. However, navigating multiple reporting frameworks, making sure your data is complete and accurate, and staying on top of seemingly ever-changing regulations can be overwhelming.
That’s where consultants come in. ESG consultants can be the linchpins in their clients’ sustainability journeys. They can help clients establish structured compliance processes, identify the gaps in their current disclosure as compared with regulatory expectations, and adopt best practices for their sustainability reporting. To support consultants in their efforts, we’ve created this go-to ESG compliance checklist. It’ll help simplify the compliance process and help your clients meet their obligations on time and with confidence.
Understanding ESG compliance
ESG compliance ensures that businesses adhere to regulatory requirements, sustainability frameworks, and industry best practices. Depending on their location, industry, and corporate structure, businesses may need to comply with multiple frameworks, such as:
- Corporate Sustainability Reporting Directive (CSRD) – A European Union (EU) regulation requiring large and listed companies to disclose their ESG impact and risks.
- International Financial Reporting Standards (IFRS S1 & S2) – New sustainability disclosure standards focusing on climate-related risks and financial materiality.
- Global Reporting Initiative (GRI) – A widely used framework for sustainability reporting.
- Sustainability Accounting Standards Board (SASB) – Industry-specific ESG reporting standards.
- Task Force on Climate-related Financial Disclosures (TCFD) – A framework for disclosing climate-related risks and opportunities.
Working out the interoperability between these frameworks is key to making ESG compliance simpler and smoother. Clients may have multiple standards to disclose against, but there is usually significant overlap between standards and frameworks. Figuring out what you’ve already covered off can make multi-standard compliance much easier.
ESG compliance checklist
1. Environmental compliance
Companies should assess their environmental impact by calculating their energy consumption, greenhouse gas (GHG) emissions, and resource management. Businesses should also consider developing emissions reduction strategies, implementing energy efficiency initiatives, and adopting sustainable resource management practices to start making progress towards decarbonization, which in many locations and industries is quickly becoming mandatory.
2. Social responsibility and ethical labor practices
Companies must ensure they follow fair labor laws, human rights standards, and diversity, equity, and inclusion (DEI) initiatives. Strong social responsibility practices might include developing ethical sourcing policies, establishing employee well-being programs, and implementing mental health support and workplace safety measures. Consultants can guide clients in helping them understand what is required versus what is considered ‘gold standard’, evaluating things like labor practices, and embedding responsible policies that contribute to a more sustainable and inclusive business environment.
3. Governance, ethics, and compliance
There is no lasting ESG success without strong corporate governance. Consultants can help companies take a 30-foot view of their governance structures, evaluate potential pitfalls with existing leadership setups, and help companies get transparency into their decision-making processes.
For example, oversight of ESG risks and opportunities should come directly from the board. Consultants can help get this set up. Perhaps clients also need better anti-corruption policies in place, or need to get serious about aligning executive compensation with sustainability goals. The particular actions and opportunities will depend on the client, but consultants can be a helpful outside sounding board for these discussions.
4. ESG risk management and due diligence
Identifying and mitigating ESG-related risks is crucial for long-term business resilience. Climate and sustainability aren’t just reputational risks; they represent real threats to a company’s assets, operations, and bottom line. Companies should assess potential risks associated with climate change, a changing market and regulatory developments, and especially how their supply chain is vulnerable to a changing climate. Consultants might also step in to conduct an additional layer of ESG-focused due diligence for investments, mergers, and acquisitions.
5. Data collection, monitoring, and reporting
Accurate ESG reporting requires strong data governance policies and reliable data collection and monitoring systems. Companies should establish clear processes for data collection and validation to ensure consistency across sustainability reports. Here, consultants can share learnings from other clients to help current clients avoid common pitfalls.
Consultants can also advise clients on leveraging ESG software tools to automate data collection, monitor key performance indicators, and align disclosures with reporting frameworks such as GRI, SASB, and CSRD. Regular audits can also help validate ESG data integrity and enhance credibility with stakeholders.
6. Supply chain sustainability and vendor accountability
A company’s sustainability efforts extend beyond its direct operations and into its supply chain. Businesses should work with suppliers to ensure ESG compliance, ethical sourcing, and responsible production practices. Conducting supplier ESG assessments and requiring sustainability disclosures from vendors can help mitigate environmental and social risks. Integrating ESG criteria into procurement decisions also helps mitigate ESG risks going forward.
7. Employee well-being, health, and safety
The ‘S’ in ESG starts at home. Supporting employee well-being is an essential component of ESG compliance. Companies should prioritize workplace safety, fair compensation, and career development opportunities to enhance workforce satisfaction. Promoting mental health programs, offering flexible work arrangements, and ensuring proper health and safety protocols can contribute to a more responsible and sustainable corporate culture.
8. Stakeholder engagement and investor relations
ESG success is built on honesty and transparency. Open lines of communication with investors, employees, and communities are key to building trust and demonstrating ESG commitment. Businesses need clear stakeholder engagement strategies and ESG goals that are informed by and aligned with stakeholder expectations. Strong investor relations can help companies attract responsible investment and maintain credibility in the marketplace.
9. ESG policy implementation and continuous improvement
Developing and enforcing ESG policies helps ensure that companies continue improving their sustainability performance over the long term. Consultants can help their clients stay informed about evolving regulations, conduct regular reviews of their ESG initiatives, and refine their policies as needed. Implementing continuous improvement strategies enables businesses to adapt to regulatory changes and remain at the forefront of ESG best practices.
How consultants can help clients implement ESG compliance
Performing an ESG gap analysis to identify reporting shortfalls
ESG consultants can play an important role right from the start of their clients’ sustainability journeys. They can help clients assess their existing ESG disclosures (if they have any at all) and identify areas for improvement. By conducting a thorough ESG gap analysis, consultants can pinpoint where a company falls short of regulatory expectations and provide actionable recommendations to close compliance gaps. Using advanced, AI-driven ESG tools like Manifest Climate, consultants can streamline their own processes, reducing the time and effort required for comprehensive compliance assessments.
For example, many of our consultant customers leverage Manifest’s AI to perform instant, first-pass gap analyses of their clients’ disclosure performance. This is up to 10X faster than the traditional gap analysis process and gives consultants a highly accurate (roughly 80-90%) overview of where their clients are and aren’t complying with particular ESG standards or regulations. From there, consultants can dig deeper into their clients’ weak spots and concerning areas, spending more of their time helping clients fix what’s broken rather than confirming that which is already working.
Using ESG software and benchmarking tools for better performance tracking
Manual ESG reporting is labor-intensive and prone to inconsistencies. Consultants can guide clients toward leveraging ESG reporting software to enhance data accuracy, monitor key performance indicators, and generate compliance-ready reports.
Consultants will also benefit from using benchmarking tools to help their customers understand how their performance measures up against that of their peers. Leadership teams and boards tend to find the results of benchmarking assessments highly persuasive, so we recommend looking for a tool (like Manifest Climate!) that offers flexible benchmarking against your choice of category. For example, Manifest Climate lets you benchmark progress against your entire industry, or select industry players such as direct competitors or industry leaders.
Guiding clients through regulatory changes and upcoming requirements
ESG regulations are constantly evolving, and it’s all some sustainability teams can do to simply keep on top of emerging compliance requirements. Consultants can be a shining light here, helping their clients navigate existing regulations, monitor emerging policies, and advising their clients on any necessary adjustments to their reporting processes or approach.
If you can help your clients get a handle on what’s required of them before crunch time comes, you can shift ESG disclosure from a compliance burden to the foundational work for discovering new opportunities and crafting long-lasting sustainability strategies. Of course, you’ll also help your clients avoid potentially hefty fines or reputational damage for non-compliance, keeping them in good standing with investors and stakeholders.
Developing ESG policies and action plans tailored to the company’s needs
Although addressing ESG is basically an industry-agnostic requirement these days, every industry and every company within it has its own particular goals, challenges, and requirements.
Consultants will resonate best with clients when they acknowledge their clients’ unique circumstances from the beginning, and explain how they have taken these circumstance into account in the tailored ESG roadmaps they provide, the policies and targets they help companies set, and the action plans they develop to guide clients along their sustainability journeys.
Training corporate teams on ESG best practices and compliance monitoring
Long-term ESG compliance requires cross-functional collaboration between departments, across countries, and at all levels of seniority. Consultants play a key role in training internal teams on the best ways to go about collecting and managing data from across the company, collaborating with other departments to meet regulatory expectations, and developing reporting methodologies that include all relevant teams and departments. By equipping employees with the knowledge and tools needed to manage ESG responsibilities, consultants help businesses integrate sustainability into everyday decision-making and foster a culture of continuous improvement.
Streamline ESG reporting for your clients with Manifest Climate
Helping clients achieve ESG compliance doesn’t have to be complicated. By following this checklist and leveraging AI-powered ESG compliance tools, consultants can streamline the process, reduce manual work, and improve reporting accuracy.
Manifest Climate simplifies ESG compliance with AI-driven audits, automated regulatory updates, and expert insights tailored to sustainability professionals. Book a demo today to see how Manifest Climate can help your consultancy guide clients to compliance effortlessly.
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