Why ESG Reporting Should Matter to FP&A Leaders

Most finance and financial planning and analysis (FP&A) professionals are becoming familiar with terms like "net zero" and "carbon accounting." Yet environmental, social, and governance (ESG) reporting still feels like something that belongs to sustainability teams or legal compliance. The reality, however, is changing fast.

With global ESG regulations accelerating, investor expectations rising, and data requirements becoming more structured and auditable, ESG reporting is no longer just a sustainability concern. It’s a finance and planning concern, and FP&A teams play a critical role.

ESG Reporting Is Becoming Financial Reporting

The following ESG disclosure frameworks are taking center stage globally:

1. International Sustainability Standards Board (ISSB) International Financial Reporting Standards (IFRS) S1 and S2
2. Corporate Sustainability Reporting Directive (CSRD)
3. Task Force on Climate-Related Financial Disclosures (TCFD)

As a result, the focus is shifting from narrative reporting to data-driven, performance-linked reporting.

That means sustainability metrics such as emissions, labor practices, and governance structures are being treated with the same rigor as revenue, margin, or cash flow. With this shift, the Office of the Chief Financial Officer (CFO) is being pulled into the conversation.

In Singapore and the European Union (EU) markets, mandatory climate disclosures (Scope 1 and 2 emissions) are already required or will be within several years. Scope 3 — the most complex category of emissions — is next.

And that’s where things get interesting for FP&A.

Understanding Scope 1, 2, and 3: A Quick Primer

Before we go further, here’s a quick recap:

• Scope 1 emissions: Direct emissions from company-owned assets (e.g., factories, vehicles).
• Scope 2 emissions: Indirect emissions from purchased energy (e.g., electricity, heating).
• Scope 3 emissions: All other indirect emissions across the value chain from suppliers, logistics, product use, business travel, and employee commuting.

While Scope 1 and 2 are relatively measurable and manageable, Scope 3 is where both complexity and opportunity begin.

Scope 3: A Data Challenge and a Strategic Opportunity

Reporting Scope 3 emissions requires organizations to map their entire value chain and collect data from across business functions and external partners. The process is messy, manual, and resource-intensive. But it also unlocks a world of operational and financial insights often hidden in plain sight.

For FP&A leaders, the process isn’t just about compliance. The reporting of Scope 3 emissions adds a new data layer that, when aligned with financial planning, offers richer context for decision-making:

• Supply chain emissions can be analyzed alongside cost structures, helping evaluate sourcing decisions not just by price but also by environmental impact.
• Product-level emissions can be tied to profitability, helping model trade-offs between sustainability and margin.
• Business travel emissions can be integrated into travel and expense (T&E) budgets and used to model carbon intensity by departments or regions.
• Investment decisions can now include an internal carbon cost, aligning long-term planning with ESG goals.

In other words, Scope 3 isn’t just about emissions — it’s a catalyst for integrated business planning or enterprise-wide unified planning. FP&A is uniquely positioned to connect those dots.

The Role of FP&A in ESG: From Aggregator to Advisor

Traditionally, ESG reporting has been handled by sustainability or compliance teams, often operating in a silo. But as data gets more granular and assurance becomes mandatory, companies need the same level of rigor and structure they apply to financial data.

That’s where FP&A comes in — not just as a data aggregator but also as a strategic advisor.

Finance already brings discipline around processes, internal controls, and data governance. These same principles are essential for ESG reporting. More importantly, finance teams know how to connect data to business decisions through scenario modeling, forecasting, performance management, and board reporting.

With ESG metrics embedded directly into forecasts, companies can see emissions per product line, energy cost sensitivity, or employee turnover by ESG risk factors. The ability to link ESG targets to financial plans isn’t simply good reporting. It’s good management.

The Tools Are Catching Up

Until recently, ESG data lived in spreadsheets, PDFs, or niche systems. That’s changing fast, however. Modern platforms — particularly corporate performance management (CPM) solutions — are now being extended to house both financial and non-financial data, including ESG.

These platforms enable the following:

• Consolidation of ESG and financial key performance indicators (KPIs) in one system
• Workflows and audit trails for ESG data that resemble those used in the financial close
• Driver-based planning using emissions, diversity metrics, or compliance costs
• Scenario modeling that includes both financial and environmental outcomes

With the right tools, FP&A teams can shift from chasing ESG data to using it just like they do with sales, headcount, or capex inputs.

Why Now?

Global ESG disclosure requirements are tightening. Investors are asking tougher questions. Regulators are introducing assurance requirements that will raise the bar on data quality and controls. Collectively, these dynamics are exactly why now.

Finance leaders, especially those in planning and analysis, have a choice: stay on the sidelines, or step into a more strategic role.

The value of ESG reporting to FP&A isn’t just about staying compliant. The value also comes from unlocking better decisions with broader data and leading the organization toward more sustainable, financially sound outcomes.

If your company is preparing for ESG reporting, don’t treat it as someone else’s job. For FP&A, ESG reporting offers an opportunity to expand FP&A’s influence, deepen your analysis, and help shape the future of the business with sustainability and strategy walking hand in hand.

For more information on how to simplify your ESG reporting and planning, visit our ESG solution page.