ESG Reporting as Compliance: How HR and L&D Leaders Can Prepare Staff

ESG Compliance, A New Imperative for Organizations

Environmental, Social, and Governance (ESG) factors have moved from a peripheral corporate concern to a core business mandate. Once treated as a voluntary “sustainability” initiative, ESG reporting is now increasingly required by law and regulators. For example, ESG disclosure has become mandatory for all large companies in the European Union, rather than just a voluntary CSR exercise. This shift signals that ESG is “no longer a sustainability side quest” but is now front and center in business strategy, with Human Resources (HR) playing a crucial role. Organizations worldwide are recognizing that robust ESG performance isn’t just about brand image, it’s about compliance, risk management, and staying competitive in the market.

HR and Learning & Development (L&D) leaders find themselves on the frontline of this ESG compliance era. They must ensure that employees not only understand the company’s ESG commitments but also have the skills and mindset to meet them. In the sections that follow, we’ll explore why ESG compliance matters for HR, how HR and L&D can drive ESG initiatives, and practical steps to prepare your workforce for this new reality.

Table of Contents

• ESG Reporting: From Voluntary Initiative to Compliance Mandate
• Why ESG Performance Matters to HR and Talent
• HR’s Role in ESG Compliance and Reporting
• Integrating ESG into Learning & Development Programs
• Preparing Your Workforce: Key Steps and Best Practices
• Final Thoughts: Empowering People for Sustainable ESG Compliance

In recent years, ESG reporting has rapidly evolved into a compliance necessity. Governments and regulatory bodies are introducing rigorous standards for sustainability and social impact disclosure. A prime example is the EU’s Corporate Sustainability Reporting Directive (CSRD), which took effect in 2023. This directive requires companies with a presence in EU member states, even those with only a handful of employees, to regularly publish comprehensive reports on their social and environmental risks and impacts. Such regulations greatly expand the scope of information companies must gather and report, far beyond what was historically required.

Crucially, these emerging ESG mandates treat people-related metrics with the same importance as financial data. Under frameworks like the CSRD (aligned with new ISSB standards), organizations must disclose detailed workforce information, from diversity and pay equity to training hours and labor practices, with audit-level rigor. In other words, ESG reporting is not just a paperwork exercise. It demands high-quality data and transparency about how a company treats its employees and communities, elevating the “Social” and “Governance” aspects alongside environmental metrics.

This compliance push reflects a broader trend: stakeholders now view ESG performance as integral to business viability. Poor ESG performance can directly erode a company’s productivity, profitability, and reputation. Investors and consumers increasingly scrutinize ESG disclosures, and companies that fall short risk losing trust and access to capital. It’s telling that over 80% of the world’s largest companies already publish sustainability or ESG reports, a figure that will only grow as regulations tighten. In short, ESG reporting has shifted from a nice-to-have to a must-have, compelling businesses across industries to treat ESG metrics with the same seriousness as financial compliance.

ESG isn’t just a concern for sustainability teams or investors, it has become a critical HR issue. Today’s workforce, especially younger generations, want to work for organizations that align with their values. Recent surveys highlight the growing significance of ESG for employees and talent attraction:

• 65% of employees prefer to work for companies with strong ESG values.
  
• 40% of Gen Z (and 34% of Millennials) have rejected job offers from employers that did not align with their social or environmental beliefs.
  
• 89% of L&D leaders consider ESG-related learning a priority, yet only 25% feel ready to address it.
  
• While 81% of HR professionals believe ESG is a core leadership competency, only 23% of companies provide training in ESG leadership skills.
  

The numbers don’t lie, ESG values are already influencing who joins your company, who stays, and how your culture is perceived. A strong ESG record can be a magnet for top talent, strengthening your employer brand, whereas perceived inaction or “greenwashing” can drive employees away. Moreover, an organization’s commitments to diversity, equity, inclusion, environmental responsibility, and ethical governance directly impact employee engagement and morale. People want to feel proud of where they work. HR leaders, therefore, have a vested interest in elevating ESG performance, not only to comply with rules but to win the “war for talent” and build an engaged, purpose-driven workforce.

From an HR perspective, treating ESG seriously also means developing future leaders who can navigate these issues. If ESG considerations (like climate risk, social justice, or ethical governance) are critical to business strategy, tomorrow’s leaders need competence in these areas. Yet, as noted, most companies still lack formal ESG training for managers and leaders. This gap presents an opportunity for HR and L&D to step up and weave ESG into leadership development, so that the next generation of executives is prepared to drive sustainable business practices.

HR departments are uniquely positioned at the intersection of people and strategy, which makes them pivotal in ESG compliance efforts. In fact, many of the metrics and initiatives required for ESG reporting fall squarely within HR’s domain. For example, the EU’s reporting standards for the “Social” category (such as the ESRS S1 Own Workforce disclosures under CSRD) include 30+ people-related measures covering areas like training provided, labor disputes, gender pay gaps, workforce diversity, and employee well-being. These are fundamentally HR issues, tracking and improving them is part of HR’s core mission. It stands to reason that HR should take the lead in coordinating ESG data collection and improvement plans for workforce topics. As one analysis put it, if HR doesn’t step up, other departments will fill the void; but without HR’s insight, the effort may become a check-the-box exercise rather than driving real change.

HR’s leadership in ESG compliance involves several key responsibilities:

• Data Gathering and Reporting: HR must ensure systems are in place to capture accurate data on workforce composition, DEI (Diversity, Equity & Inclusion) metrics, training hours, health and safety incidents, employee engagement, and more. With ESG reports now subject to external assurance (audit) in many cases, HR data needs to meet high standards of quality and reliability. This is a new challenge for many HR teams, surveys show that fewer than 1 in 5 companies due to report under CSRD feel fully prepared to cover all required workforce metrics to an “assurance-ready” level. HR leaders should begin by identifying data gaps and strengthening data governance for people-related metrics.
  
• Cross-Functional Coordination: ESG reporting is a team sport. HR must work closely with finance, compliance, sustainability, and IT departments to gather information and present a coherent picture. Unfortunately, in many companies there’s a disconnect, about 60% of HR leaders say their colleagues in finance or sustainability don’t fully grasp the complexity of HR’s data challenges in ESG reporting. HR can bridge this gap by establishing cross-functional ESG committees or task forces. By taking charge and aligning with other functions, HR ensures that workforce disclosure isn’t siloed and that narratives around people-data (e.g. explaining pay equity gaps or turnover rates) are contextualized and actionable. This collaboration also signals to leadership that people metrics are as important as financial metrics in measuring success.
  
• Policy and Culture Integration: Compliance aside, HR should embed ESG principles into HR policies and the company culture. This means updating codes of conduct, performance appraisal criteria, and recruitment strategies to reflect ESG values. For instance, hiring and promotion practices should reinforce diversity and equal opportunity goals; procurement and travel policies might incorporate sustainability guidelines; and employee reward programs could recognize contributions to ESG objectives. Proactively building a people strategy that embeds ESG goals will not only address compliance risks but also capitalize on opportunities, such as improved retention and innovation, that come from a values-driven culture. When ESG goals are woven into the fabric of how a company manages its people, compliance becomes less of a burden and more of a byproduct of doing the right thing.
  

Leading on ESG gives HR a chance to elevate its strategic influence. As one HR tech firm observed, we are entering a time when workforce data will have parity with financial data at the highest levels of corporate decision-making. Boards and CEOs are paying more attention to metrics like employee turnover, pay equity, and training investments, because ESG reports put such data in the spotlight. HR leaders who can deliver insights and improvements on these fronts will secure a “seat at the table” and drive business performance through a people-centric lens. In summary, ESG compliance is pushing HR to innovate, collaborate, and upskill, turning what could be seen as a reporting chore into an opportunity for HR to shine as a champion of sustainable business.

If HR sets the strategy and gathers the data, Learning & Development (L&D) is the vehicle to equip employees with the knowledge and skills to achieve ESG goals. L&D leaders now find themselves tasked with bringing the workforce up to speed on topics that might have been outside traditional training curricula, from climate change and ethics to diversity and community engagement. Incorporating ESG principles into L&D programs is vital for driving the necessary culture shift. By fostering awareness, knowledge, and skills across the employee base, L&D can empower employees to become agents of positive change in support of ESG initiatives.

Here are several ways L&D can support ESG compliance and performance:

• Embed ESG in Training Content: Companies should integrate ESG topics into onboarding, leadership development, and ongoing training. This could include sessions on the business case for sustainability, workshops on diversity and inclusion, seminars on ethical decision-making, and modules on governance and compliance. For example, an L&D program might train managers on how environmental risks could impact business operations, or teach employees about the company’s anti-corruption and data privacy policies (governance issues). Training should clarify how each employee’s role connects to ESG outcomes, so that ESG isn’t seen as abstract or “someone else’s job.” In fact, L&D departments can train employees on the specifics of external ESG reporting requirements and standards, so that relevant teams understand what data is needed and why it matters. When people grasp the “why” behind ESG metrics, they are more likely to contribute meaningfully, whether that means accurately tracking certain data or adjusting their work practices to meet sustainability goals.
  
• Use Engaging, Practical Learning Methods: ESG topics can sometimes seem technical or theoretical. L&D can overcome this by using interactive and practical learning experiences. Simulations and scenario-based workshops are particularly effective. For instance, a company might run a sustainability business simulation where teams of employees have to make decisions balancing profit, planet, and people outcomes. This kind of gamified learning makes ESG challenges tangible and relatable, encouraging employees to connect ESG goals with their daily actions. Case studies are another powerful tool, studying real-world examples of companies that faced ESG dilemmas or achieved notable sustainability wins can spark ideas and commitment. Hands-on activities (like energy-saving challenges or volunteer projects) can further reinforce training. The goal is to move beyond slide decks and policies, and enable employees to practice what ESG means in their work context.
  
• Develop ESG Leadership and Expertise: L&D should also focus on building a pipeline of leaders who are fluent in ESG. This might involve dedicated programs on responsible leadership, covering areas like ethical decision-making, stakeholder engagement, inclusive leadership, and long-term value creation. According to one report, training senior managers in areas such as ethical leadership, diversity and inclusion, and community engagement helps create leaders who will drive positive change and keep ESG considerations at the heart of decision-making. Some organizations have even begun to upskill entire departments on ESG; for example, in 2023, Bain & Company launched a global program to train all its employees on ESG issues by partnering with universities for curriculum development. This kind of comprehensive approach signals that ESG competence is expected at every level of the organization. While not every company will train “everyone on everything,” L&D can certainly identify key roles (like procurement, operations, or public affairs) that require deeper ESG expertise and create specialized training for those groups.
  
• Continuous Learning Culture: Finally, it’s important to treat ESG learning as an ongoing journey, not a one-time compliance task. The ESG landscape (including regulations, best practices, and stakeholder expectations) is rapidly evolving. L&D should establish mechanisms to regularly update training content and keep employees informed of new developments. Encouraging employees to discuss and share ESG ideas, through internal networks or forums, can help sustain momentum. In essence, companies should strive to build a culture of continuous ESG learning, where staying current on sustainability and social issues is part of “the way we do things.” This not only aids compliance with new rules, but also helps the organization anticipate risks and innovate in its ESG approach over time.
  

When L&D rises to the challenge, the payoff is significant. A workforce that is educated and engaged on ESG matters will be better at identifying risks (e.g. spotting unethical practices early, or noticing waste reduction opportunities) and more proactive in implementing sustainable solutions. It creates a shared sense of purpose, as employees at all levels understand how their efforts contribute to broader environmental and social goals. Moreover, providing growth opportunities in ESG topics can boost employee engagement, people appreciate employers that invest in developing their skills for the future. As one global survey found, companies that offer ample learning opportunities enjoy higher retention rates, underscoring that development is a key driver of employee commitment. By aligning L&D with ESG, organizations prepare their people not just to meet compliance requirements, but to innovate and lead in a business world where sustainability and responsibility are paramount.

How can HR and L&D leaders practically prepare their staff for success in ESG compliance and performance? Below are some key steps and best practices, drawn from industry insights and case examples, to build ESG competence across the organization:

• Tailor ESG Training to Roles and Departments: One-size-fits-all training won’t suffice. Different functions have unique contributions to ESG goals, for example, procurement teams need to learn about sustainable supply chain standards, HR needs to manage diversity and labor metrics, and facilities teams should learn about energy efficiency. Customize training content so that each employee learns how ESG principles apply to their day-to-day responsibilities. This ensures relevance and maximizes impact. For instance, a sales team might be trained on ethical marketing and understanding ESG concerns of clients, while an R&D team might learn about eco-design and product lifecycle sustainability.
  
• Incorporate Interactive and Scenario-Based Learning: Make ESG learning engaging by using workshops, simulations, and real-life scenarios. Interactive exercises help employees actively grapple with issues like reducing carbon footprint or handling ethical dilemmas, rather than passively listening to lectures. For example, a workshop could have teams brainstorm how to cut waste in their office, or a simulation game might let managers practice making decisions in a virtual company facing ESG challenges. Such experiences build practical skills and teamwork, and they drive home the message that everyone can play a part in ESG solutions.
  
• Use Real Case Studies and Examples: Ground your ESG training in reality by sharing success stories, failures, and lessons learned from other organizations (or from your own). Discussing how a well-known company achieved carbon neutrality, or how another faced backlash over labor practices, makes ESG concepts concrete. Real-world case studies help staff connect the dots between abstract principles and tangible business outcomes. They also provide a safe space to discuss potential trade-offs and complexities. Ask employees to analyze what went right or wrong in the case and how your company can apply those insights.
  
• Leverage Digital Learning Platforms: Given geographically dispersed teams and varying schedules, use online platforms to deliver ESG training content flexibly. E-learning modules, webinars, and virtual courses can reach more employees and allow self-paced learning. The digital format also makes it easier to update content as regulations change or new best practices emerge. Consider creating an internal ESG learning portal with resources, videos, and quizzes. This way, ESG knowledge becomes accessible on-demand, and participation can be tracked for compliance purposes. Digital platforms also enable interactive elements (like quizzes or discussion forums) to keep learners engaged remotely.
  
• Establish ESG Certifications or Recognition: To incentivize engagement, some companies implement an internal certification program for ESG knowledge. Employees who complete certain courses or demonstrate competence could earn an “ESG Champion” certificate or badge. This not only motivates individuals to take the training seriously but also signals that ESG expertise is valued in career advancement. Recognize and reward employees or teams who excel in driving ESG initiatives, for example, through awards, shout-outs, or linking achievements to performance reviews. Celebrating these efforts reinforces the importance of sustainability and governance outcomes alongside traditional KPIs.
  
• Measure Training Impact and Encourage Accountability: It’s crucial to ensure that training translates into action. HR and L&D should define metrics to evaluate ESG training effectiveness, such as improvements in compliance audit results, increase in employee suggestions for sustainability, or better scores on ESG-related employee survey questions. Track these over time. Managers should be encouraged to discuss ESG goals in team meetings and to hold their teams accountable for applying what they learned (for example, incorporating ESG objectives into project plans). When employees see that leadership is tracking progress and that their contributions matter, they are more likely to apply ESG principles consistently in their work.
  

By implementing these best practices, organizations create a robust infrastructure for ESG competence. You build not just awareness, but skills and habits. Over time, ESG-minded thinking becomes second nature in daily operations, which is the ultimate aim. Remember that training is not a one-off event but a continuous journey. Keep the dialogue open: solicit employee feedback on ESG issues, provide refresher sessions, and update training materials as new challenges (or new regulations) arise. In doing so, you’ll cultivate an agile workforce that can adapt to the fast-moving ESG landscape and drive continual improvement.

ESG reporting as a compliance requirement is here to stay, and it is reshaping how companies operate internally. HR and L&D leaders are critical agents in this transformation. By preparing and empowering staff, they turn a compliance exercise into an opportunity for positive change, strengthening company culture, building new skills, and fostering innovation. The message is clear: ESG isn’t a box to tick; it’s the future of work. Organizations that proactively educate and engage their people on ESG will not only meet the letter of the law but also seize the spirit of sustainability to drive long-term success. By embedding ESG values through every level of the workforce, HR and L&D can help create businesses that are not only compliant, but truly resilient and responsible in the face of global challenges.

FAQ

What is ESG reporting and why is it now a compliance issue?

ESG reporting refers to disclosing a company’s environmental, social, and governance performance. Once voluntary, it is now required under frameworks like the EU’s CSRD and the SEC’s proposed rules, making compliance essential for organizations worldwide.

How does ESG compliance affect HR leaders?

HR plays a central role because most ESG metrics involve workforce data—such as diversity, pay equity, training, and employee well-being. HR leaders are responsible for collecting accurate data, aligning culture with ESG values, and ensuring transparency in reporting.

What role does Learning & Development (L&D) play in ESG compliance?

L&D helps prepare employees to understand and act on ESG goals. This includes embedding ESG topics into training, offering scenario-based learning, and building ESG leadership skills. Effective L&D ensures staff contribute meaningfully to compliance and sustainability.

Why is ESG performance important for employee attraction and retention?

Surveys show 65% of employees prefer companies with strong ESG values, and many younger workers reject employers that don’t align with their beliefs. Strong ESG practices improve employer branding, engagement, and retention.

What are the best practices for preparing staff for ESG compliance?

Key practices include tailoring ESG training to roles, using interactive learning, leveraging digital platforms, sharing real-world case studies, and measuring training impact. These approaches ensure staff understand their responsibilities and drive continuous improvement.