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For many years, Environmental, Social and Governance (ESG) reports were the corporate equivalent of a 1980s glossy brochure. Most were long on vision but short on verifiable data or environmental progress.
In 2026, the vibe era of sustainability is ending. What used to be a PR exercise is now a rigorous data-engineering challenge, as frameworks like the EU’s CSRD (Corporate Sustainability Reporting Directive), India’s BRSR (Business Responsibility and Sustainability Reporting) or Australia’s ASRS (Australian Sustainability Reporting Standards) make corporate sustainability reporting as legally binding as quarterly earnings calls.
Organisations in the tech sector’s less sustainable corners can no longer hide behind greenwashing. Those that hide their data for fear of regulatory litigation, known as greenhushing, risk huge fines if caught. To find the truth, you must know where to look. Here is the TechFinitive guide on cutting through the noise and examining the data for yourself.
The key to decoding an ESG is locating the data table containing the raw numbers. Often the data tables are located in the appendix of the ESG, but not always.
Microsoft’s 2025 ESG is a beautifully prepared 90-page document that waxes lyrical about the company’s achievements. Whilst it contains some numeric data, the real numbers are in a separate and much harder to locate Data Fact Sheet. Real analysis begins with the raw tabular data, as declarations in one section of an ESG frequently contradict those in another.
In 2024, TechFinitive reported that Facebook’s ESG published a target which its own data stated has already been missed.
ESG data tables are sectioned into categories, but most normally begin with headline grabbing Greenhouse gas (GHG) emissions. This will certainly contain data for carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) but may also list hydrofluorocarbons (HFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). A common convention is to report these collectively under the umbrella of Carbon Dioxide Equivalent (CO2e). This can be useful for brevity, but can wrong-foot the unaware who confuse CO2 and CO2e as the same thing.
Most ESGs conform to the GHG Protocol Corporate Accounting and Reporting Standard. Under this standard, the origin of a GHG emission determines its classification into one of three ‘Scopes’. This can be a little confusing, so for illustrative purposes, imagine a global tech behemoth called TF-TECH:
This is the simplest as it defines emissions which come from sources owned or controlled by a company. In the case of TF-TECH, Scope 1 covers the emissions from its on-site fuel combustion from boilers or furnaces. Essentially, anyone coming directly out of the TF-TECH building is Scope 1.
This covers indirect emissions from the energy a company purchases to keep the lights on. For TF-TECH, this is the electricity bought from the local grid to power its office computers, servers, and the air conditioning. Even though emissions are belching from a power plant miles away, TF-TECH is indirectly responsible because it is the entity using the power.
In a modern ESG report, TF-TECH must report Scope 2 in two different ways:
Location Based: This reflects the physical reality of the local power grid. If TF-TECH’s headquarters is in a city that runs mostly on coal, their location-based emissions will be high because it’s based on the ‘average’ dirty air in that locality.
Market Based: This reflects TF-TECH’s specific choices. If the company pays a premium for a ‘Green Tariff’ or buys Renewable Energy Certificates (RECs), they can report a much lower – or even zero – market-based number.
This is the most complex category because it covers everything else in the company’s value chain. For TF-TECH, this includes upstream emissions from the raw minerals used in its circuit boards and the flights taken by its sales team for business travel. Downstream, it even includes the electricity their customers use when they plug in a TF-TECH device.
In short, if it results from TF-TECH doing business but isn’t coming directly from its building or power bill, it’s Scope 3.
Although carbon is usually the headline of an ESG, reports now provide a deeper dive into non-carbon liabilities, such as methane (CH4) and hydrofluorocarbons (HFCs). These are some of the cooling agents present within the data centres behind cloud and AI services. While CO2 is perceived as the primary focus of the climate challenge, gases like CH4 and HFCs often possess a Global Warming Potential (GWP) thousands of times higher than carbon dioxide. The tabular data of ESGs will show the year-on-year movement of these emission totals.
Organisations must report not just how much water they withdraw, but the ‘water stress’ of the specific region. A litre used in a drought-stricken basin carries a far higher regulatory risk than one used in a rainy climate.
One area where ESGs regulation has hardened is the ‘social’ aspect. This important factor has shifted from pseudo-charity handouts to full supply-chain traceability. Through Digital Product Passports, companies must provide audited proof that mineral supply chains, such as cobalt and lithium, are free from human rights abuses as mandated by the EU’s CSDDD (Corporate Sustainability Due Diligence).
The G in ESG is often the most overlooked element, yet it drives the entire sustainability machine. Governance is more than ensuring the company’s board is diverse. It’s about data integrity and executive accountability.
Savvy investors look for evidence that executive compensation is explicitly tied to meeting environmental and social targets, something Logitech implemented several years ago. Governance ensures that the rhetoric of the ESG is translating into operational reality. Thankfully, there is often a ‘tell’. By reading the ESG, it is easy to spot the well-worn platitudes being repeated page after page by various C-suite execs. Look at what they’re saying, then dig into what they aren’t.
Increasingly, this section also outlines elements such as anti-corruption policies, transparent tax reporting, cybersecurity and data privacy. Investors realise that a company that can’t protect its users’ data is fundamentally unsustainable. Strong governance underpins the credibility of the entire report.
The cost of non-compliance has shifted from pure reputational damage to a bottom-line battering as regulators are now acting on misleading claims. In April 2025, German prosecutors hit DWS Group with a €27 million fine for ESG marketing that failed to match operational reality. Similarly, the Australian Federal Court ordered Active Super to pay A$10.5 million for investing in banned industries like coal and gambling.
Additionally, the UK’s DMCCA (2024) now allows the Competition and Markets Authority (CMA) to levy fines of up to 10% of global turnover for deceptive environmental claims. For global firms, a data error is no longer just a PR crisis, it’s a multi-million dollar liability.
Although most ESGs conform to certain regulatory frameworks, each organisation can (and does) present its data in a unique way. Here are my top 3 tips for reading an ESG. Although you may not be able to use all the tips on every ESG, they’ll help to ensure that no major red flags go undetected.
- Distinguish intensity from absolute
- A company may often try to distract by stating that it is ’20% more carbon-efficient’ (its intensity), while the numbers show that its total emissions grew by 10% due to scaling (absolute). Always focus on total volume, as absolute emissions reduction is the only metric that effectively measures progress and will stop the planet from burning.
- Check for boundaries
- This can be hard to spot, but somewhere in the ESG’s small print should be a declaration if the reporting covers the entire global enterprise or just specific ‘clean’ subsidiaries. Sadly, carbon accounting can be obfuscated like tax accounting and a common tactic is to tweak emissions by divesting high-pollution hardware plants into separate entities. This can keep them off the main ESG ledger.
- Watch for offsets:
- There is a difference between carbon removals (basically pulling CO2 from the air) and carbon avoidance (paying someone not to cut down a tree). Regulators often regard avoidance as junk data. Try to spot actual decarbonisation efforts over balancing the books with cheap carbon accounting credits.
Besides the tips listed above, a good ESG can often be spotted by having numbers which are audited, verified and backed by a leadership team that treats the report as a core financial risk, rather than a PR side project.
