Future of ESG reporting: The need for real-time social data insights

Written by Thabo Mofokeng, Head of Data at DataEQ

Environmental, Social, and Governance (ESG) metrics now sit at the heart of assessing corporate responsibility and impact. As ESG reporting has grown in prominence, so too have its flaws. Despite its potential to drive meaningful change, today’s ESG frameworks are plagued by persistent issues, ranging from unreliable data to a lack of standardisation and transparency. These limitations distort the true picture of corporate sustainability and undermine the trust of investors, regulators, and the public. As businesses and stakeholders search for more accurate ways to assess corporate behaviour, one solution is emerging with increasing clarity: using real-time, unfiltered social data to close the public feedback gaps in ESG reporting.

The rising importance of ESG

Regulatory bodies worldwide are responding to the increasing importance of ESG by implementing more stringent disclosure requirements. Initiatives such as the European Union's Corporate Sustainability Reporting Directive (CSRD) and potential regulatory changes in the United States signal a global movement towards greater transparency and accountability in corporate sustainability reporting. These evolving regulations require that companies disclose detailed information about their environmental impact, social responsibility initiatives, and governance practices. As a result, clear and consistent communication of ESG efforts has become essential—not only for regulatory compliance but also to mitigate the risk of greenwashing allegations.

The shortcomings of traditional ESG reporting

At its core, ESG reporting aims to hold companies accountable for their environmental, social, and governance footprints. But a closer look at current practices reveals several potential shortcomings that hinder their effectiveness. Traditional methods of reporting, such as annual sustainability reports, often fall short in engaging the broader consumer audience dynamically and immediately as the digital age demands. While these reports provide detailed disclosure for investors and analysts, they may not effectively reach or resonate with the average consumer who increasingly relies on digital channels for information and brand interaction.

Specific issues include:

• Only one side of the story: Traditional ESG reporting generally focuses on internal disclosures while overlooking the external unfiltered lens of public sentiment, which is critical to truly understanding stakeholder perception and reputational risk.

• Lack of standardisation and consistency: With no universal framework, ESG ratings often vary dramatically between agencies. The same company can receive vastly different scores depending on who is evaluating them, leaving stakeholders confused and uncertain about which assessments to trust.
  

• Poor data quality and greenwashing risks: Much of the data that feeds ESG reports is self-reported, unaudited, and lacks external validation. This opens the door to greenwashing—where companies overstate their environmental efforts, compromising the credibility of ESG ratings.
• Gaps in coverage: Smaller companies, especially those in developing markets, frequently escape ESG scrutiny altogether. The result is a dataset skewed towards large corporations in wealthier countries, ignoring a major portion of the global economy.
• Static and outdated information: Most ESG data is reported annually, offering only a retrospective glimpse into company practices. In today’s fast-moving business landscape, this leaves investors blind to emerging risks and shifting corporate behaviours. The static nature of these reports also limits their capacity to convey the continuous evolution of a company's ESG journey or to facilitate timely conversations with stakeholders.
• Subjective and geographic biases: Many ESG methodologies are heavily focused on companies from developed nations, using subjective criteria that may not reflect global realities. This distorts comparisons and ignores vital local contexts.
• Opacity and accessibility issues: ESG data is often wrapped in complex, opaque methodologies that are difficult for even seasoned analysts to unpack. This lack of transparency undermines confidence in the results.
• Concerns about data quality: Concerns persist regarding the quality, consistency, and comparability of ESG data presented in traditional reports, raising questions about potential greenwashing and hindering consumer trust in sustainability claims.

In a world that demands greater corporate accountability and transparency, these flaws make clear that traditional ESG data is no longer enough.

The power of real-time social data

To overcome these challenges – reporting must incorporate more dynamic forms of data. Social media insights, in particular, offer a powerful antidote, reflecting evolving sentiment, stakeholder expectations, and reputational risk.

Social media platforms have become a dominant force in today's communication landscape, especially for younger demographics who actively use these channels to consume information, interact with brands, and form opinions. Social media offers companies an invaluable opportunity to connect directly with their target audiences and share their ESG stories authentically.

Unlike the backward-looking nature of most ESG data, social data provides a living, breathing pulse check on how a company is perceived. It captures not only the voices of investors and regulators but also those of ordinary people—customers, employees, and communities—who are directly affected by corporate actions.

One of the core limitations of current ESG reporting is that it is overwhelmingly inward-focused, relying heavily on company self-disclosures, sustainability reports, and curated datasets. While these sources provide valuable insights, they also present a narrow and potentially biased view, shaped by what companies choose to reveal. This internal lens often misses genuine stakeholder perceptions and external impacts, creating blind spots in understanding how a company’s actions are truly received. 

Realising this gap, there is a growing shift toward integrating outward-facing data sources—such as social media sentiment and public discourse—which offer a candid, up to the minute reflection of societal expectations and reactions. By combining both internal and external data, ESG assessments become far more balanced, transparent, and responsive to the evolving concerns of investors, consumers, employees, and communities.

This dynamic view is critical for understanding:

• Emerging social risks, such as backlash to controversial decisions or poor labour practices.
• Environmental missteps, like public responses to pollution or deforestation.
• Governance failures, including allegations of corruption or discrimination.

By integrating social data, companies gain visibility into their reputational standing, allowing them to act quickly and align more authentically with ESG principles. It also gives investors a sharper lens to assess whether companies are living up to their sustainability claims—or merely paying lip service.

Benefits of social media for ESG communication

Social media significantly enhances the value proposition of ESG reporting while also serving as a platform to educate and inform its stakeholders of their efforts.

This offers several key benefits for organisations

• Stronger brand reputation and image: Consumers are increasingly discerning and tend to gravitate towards brands whose core values resonate with their own, particularly in the critical areas of environmental and social responsibility. By proactively communicating their ESG initiatives through their various social media channels, companies can directly and effectively showcase this fundamental alignment, thereby fostering a more profound connection with consumers who prioritise these values in their purchasing decisions and significantly enhancing their overall brand image and reputation.
• Customer loyalty: A robust social media presence that prominently features a company's commitment to ESG can play a pivotal role in attracting and retaining a loyal customer base comprised of environmentally and socially conscious individuals who actively seek out and support brands that align with their core values.
• Enhanced reach and consumer trust: In an era where stakeholders increasingly prioritise sustainability and ethical conduct, social media offers a powerful platform to transcend the limitations of traditional reporting. By strategically leveraging social media, companies can achieve enhanced reach and foster greater consumer validation and trust. This is achieved through engaging content formats unique to social platforms, facilitating crucial two-way communication with stakeholders, and ultimately showcasing the authenticity of their ESG commitments more immediately.

The future of ESG reporting

Integrating social media insights with traditional ESG reporting is not just an enhancement, but a necessity. By embracing this hybrid approach, companies can effectively bridge the gap between investor expectations and consumer engagement, fostering transparency, building trust, and ultimately, driving a stronger, more sustainable brand reputation, especially among younger digitally-savvy audiences.

To truly fulfil its promise of holding companies accountable and driving real change, reporting methodologies must evolve. Real-time, unfiltered consumer led data sources are, like social media, are the missing piece, offering transparency, immediacy, and authenticity that traditional ESG metrics simply lack.

Find out how consumers really feel about leading fashion brands through the lens of social media feedback, in the ESG UK Fashion Sentiment Index.