Why ESG Reporting Isn’t Just for the Sustainability Team: A Practical Guide for HR and Business Leaders

Why ESG Matters to You

If you’re an HR or business leader, ESG reporting might feel like a wave of new compliance requirements—another set of rules, more KPIs, and evolving regulations to navigate. However, ESG, especially the social aspects, goes far beyond just ticking boxes. It’s a chance to define what your company stands for, engage your workforce meaningfully, and show stakeholders that your commitment extends beyond profit.

With new reporting standards under the ESRS S (European Sustainability Reporting Standards – Social topics), and mandatory ESG reporting beginning for listed companies in 2025 and expanding to thousands of other companies by 2026, the social impact of business is quickly becoming a central pillar of corporate strategy. This shift demands the attention and action of HR and business leaders alike.

In this guide, we’ll unpack what the ESRS S standards mean for HR and business leaders, why they’re essential, and how to approach ESG reporting in a way that adds real value to your company and community.

What is ESRS S, and Why Should You Care?

The ESRS S standards are part of Europe’s broader push toward transparency in corporate ESG(Environmental, Social, Governance) practices. With social topics taking a central role, these standards go deep into how companies impact their workforce, supply chain workers, local communities, and even end-users.

Breaking it down, ESRS S covers four core areas:

1. S1 – Own Workforce: This part looks at your direct employees, focusing on everything from fair treatment and workplace safety to diversity and equal pay.
2. S2 – Workers in the Value Chain: The spotlight shifts to workers indirectly connected to your business, such as contractors or supply chain workers.
3. S3 – Affected Communities: This covers the communities where your business operates, ensuring you manage relationships with those potentially impacted by your activities.
4. S4 – Consumers and End-users: Ensures that your products and services are safe and that you’re upholding ethical standards for your customers.

Each of these categories requires HR and management to actively gather data, set policies, and engage with stakeholders to show accountability and progress. But beyond ticking off a list, meeting these standards opens up possibilities for strengthening your company’s culture, trustworthiness, and sustainability.

Why ESG Isn’t Just a “Sustainability Thing” Anymore

One of the most common misconceptions? That ESG is only relevant to sustainability or legal teams. In reality, HR plays a significant role, especially in the “S” of ESG. HR leaders need to look at this as an opportunity to craft a better workplace – one that aligns with the ethical and social values increasingly expected by employees and the public alike.

Employees today are paying attention to how companies treat social issues like diversity, health, and work-life balance. ESG is not intended for regulators only; it helps making your workplace a place people want to join, stay with, and support. And that’s where HR can shine.

Breaking Down ESRS S Reporting Requirements for HR

Let’s look at each ESRS S component and how it impacts the HR function and the role of business leaders:

S1: Own Workforce – Creating a Safe and Inclusive Workplace

This section focuses on the immediate workforce and asks companies to disclose data on employee demographics, diversity metrics, health and safety, wages, and more. For HR, this translates into:

• Tracking diversity and equal pay: Understanding your company’s demographics will not be a nice to have anymore; it becomes crucial for making targeted improvements. ESRS S1 encourages companies to document gender distribution, pay gaps, and diversity within management.
• Ensuring safe working conditions: Workplace safety is central to S1 reporting, and data on accident rates, health programs, and mental well-being are increasingly under scrutiny.
• Supporting work-life balance: Initiatives promoting flexible hours, fair wages, and robust health policies all contribute to your ESG story.

These requirements are about data collection and, more importantly, about using this information to create an environment where employees feel safe, respected, and valued.

S2: Workers in the Value Chain – Expanding Responsibility Beyond Your Walls

S2 extends ESG responsibility to all workers who contribute to your business, even if they’re not directly on your payroll. From supply chain workers to contractors, this section ensures fair treatment and safe working conditions across your entire ecosystem.

For HR, this means:

• Engaging with supply chain partners: Open dialogues about working conditions and fair wages can improve alignment with your company’s ESG values. Are your suppliers upholding similar ethical standards? Regular audits or certifications can help track this.
• Creating actionable policies: S2 reporting involves documenting policies that protect workers’ rights in the value chain. By taking a proactive approach, you show that your ESG commitment isn’t limited to     your direct workforce but extends to everyone involved in creating value for your business.

S3: Affected Communities – Recognizing and Respecting Local Impact

The S3 standard emphasizes a company’s impact on communities surrounding its operations. This includes respecting the social and economic rights of these communities and considering how business activities may affect them.

In practical terms:

• Community engagement: HR and business leaders can champion initiatives that connect with local communities, like educational programs, job opportunities, or sustainability projects.
• Assessing social impact: Understanding how your business affects the local area and taking measures to minimize any negative impact is an integral part of ESG reporting.

Focusing on these areas builds goodwill and trust, showing that your business is a responsible corporate citizen. This can become a strong part of your brand identity and appeal to socially-conscious consumers and employees.

S4: Consumers and End-users – Upholding Integrity and Safety

For consumer-facing companies, the S4 component ensures that products and services are safe, accessible, and ethically marketed. This one is about building trust with customers.

In the context of HR and leadership:

• Embedding consumer safety: From ensuring product information is clear and honest to protecting consumer privacy, S4 encourages companies to put customer well-being first.
• Responsible marketing: Transparent, ethical marketing practices create trust and resonate with customers who are increasingly skeptical of corporate motives.

Practical Steps to Implement ESG Reporting in HR

If ESG feels daunting, remember that it’s a gradual journey. Here are a few practical steps to help integrate ESG reporting into HR processes:

1. Create Cross-functional ESG Teams: Pull in people from HR, operations, sustainability, and even finance. ESG reporting needs diverse insights, and collaboration ensures a more comprehensive approach.
2. Leverage Technology: Use digital tools to track and analyze data like employee demographics, health records, and diversity metrics. HR platforms will more and more offer ESG-focused analytics, simplifying data collection and reporting.
3. Engage Stakeholders Regularly: Consistent communication with employees, communities, and value chain partners strengthens your ESG program. This dialogue cultivates trust and allows you to address issues proactively.
4. Set and Monitor Goals: Collect data; but more importantly, use it to set achievable goals. For example, aim to reduce workplace accidents by a certain percentage or increase diversity in leadership roles. Track     progress and adjust your strategies as needed.

ESG: Beyond Obligation, Building a Culture

Ultimately, ESG reporting goes beyond satisfying regulatory demands; it builds a foundation for resilience and trust. Consumers, employees, and investors alike are looking for companies that contribute positively to society. By stepping into ESG reporting, you’re actively choosing to create a workplace and brand that are relevant, responsible, and ready for the future.

HR leaders and executives who embed ESG values into their strategies are likely to see stronger employee engagement, customer loyalty, and even enhanced financial performance. While this regulation may initially appear as a constraint, it quickly reveals the opportunities it holds—a chance to make a meaningful impact, both within your business and across the communities and ecosystems that support it. As ESG reporting evolves, HR and business leaders have a unique role in bringing these standards to life.

‍