ESG reporting has moved rapidly from voluntary disclosure to mandatory obligation. For corporate service providers, this creates a new category of client support requirement: helping entities understand whether they are in scope, what data they need to collect, what frameworks apply, and how disclosures need to be structured. This is territory that CSPs are not traditionally expert in — but it sits squarely within the entity administration lifecycle that CSPs already manage.
The challenge is that ESG reporting is not a single, unified regime. It is a landscape of overlapping frameworks — the EU's Corporate Sustainability Reporting Directive (CSRD), the International Sustainability Standards Board (ISSB) standards, the SEC's climate disclosure rules in the US, jurisdiction-specific stewardship codes, and emerging requirements in Singapore, Hong Kong, and the UAE. Each has different scope rules, different disclosure content requirements, and different implementation timelines. CSPs administering entities across multiple jurisdictions need to track all of them.
Which Entities Are In Scope?
The first question for any CSP is whether a client entity is in scope for mandatory ESG reporting. Under the EU's CSRD — the most significant of the current mandatory frameworks — scope is determined by a combination of entity size (turnover, balance sheet, number of employees), whether the entity is listed on an EU regulated market, and whether it is a non-EU entity with significant EU operations or EU-listed securities.
Large EU undertakings (meeting two of three thresholds: >250 employees, >€40m turnover, >€20m balance sheet) have been required to report since fiscal year 2024, with disclosure in 2025. Listed SMEs are subject to a lighter standard with a phased timeline. Non-EU companies with EU net turnover over €150m and at least one EU subsidiary or branch above certain thresholds are subject to CSRD from fiscal year 2028.
CSPs need to assess each entity in their portfolio against these thresholds. For holding structures with complex group configurations, the assessment may require input from the client's external advisers. The key operational requirement is that CSPs have a mechanism to flag entities approaching or exceeding CSRD thresholds and to initiate the appropriate compliance workflow.
The European Sustainability Reporting Standards
CSRD-compliant reports must follow the European Sustainability Reporting Standards (ESRS), developed by EFRAG. The ESRS cover environmental topics (climate change, pollution, water, biodiversity, circular economy), social topics (own workforce, workers in the value chain, affected communities, consumers), and governance topics (business conduct).
A key feature of the ESRS is the double materiality assessment — entities must assess both the financial materiality of sustainability matters (how ESG factors affect the entity's financial performance and position) and the impact materiality (how the entity's activities affect people and the environment). This assessment drives which disclosure topics are required for a given entity.
"The double materiality assessment is not a compliance checkbox — it is a substantive analytical exercise that requires input from across the organisation. For holding entities and special purpose vehicles, determining what is material requires understanding the underlying assets and activities in a level of detail that goes well beyond routine entity administration."
— Sustainability Reporting Specialist, EU-regulated fund manager
For CSPs, the practical implication is that ESRS-compliant reporting for complex entity structures requires specialist input that sits beyond standard corporate administration. CSPs can support the process — coordinating data collection, ensuring the report is filed in the correct format, maintaining documentation — but the substantive content of the double materiality assessment will typically require external sustainability advisers.
Data Collection: The Operational Challenge
Even where the analytical work is handled by external advisers, CSPs face a significant operational challenge in ESG data collection. CSRD-compliant reports require data on energy consumption, greenhouse gas emissions (Scope 1, 2, and often Scope 3), water usage, waste generation, workforce metrics, supply chain practices, and governance structures. For many holding entities, this data sits with operating subsidiaries rather than at the entity level where the CSP operates.
ISSB Standards and Global Convergence
Outside the EU, the ISSB standards — IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) — are being adopted or referenced by an increasing number of jurisdictions. The UK has confirmed adoption of ISSB-aligned standards. Singapore's SGX requires climate-related disclosures aligned to TCFD (which ISSB S2 incorporates and supersedes) for listed issuers. Hong Kong is implementing mandatory ISSB-aligned climate disclosures for listed companies from 2025 onwards.
The UAE — relevant for CSPs operating in DIFC and ADGM — has seen its financial free zones issue sustainability disclosure guidance. ADGM has published a sustainable finance framework, and the UAE federal government has committed to net-zero by 2050. Mandatory climate disclosure requirements for UAE financial institutions are expected to develop significantly over the 2025-2027 period.
For CSPs with portfolios spanning multiple jurisdictions, the practical approach is to use the ISSB standards as a baseline — since many jurisdiction-specific frameworks build on or reference them — while layering on the specific additional requirements of each jurisdiction's mandatory framework.
CSP Positioning: Service Scope and Limitations
CSPs should be clear about where their ESG support service begins and ends. The natural scope for a CSP includes: entity-level scope assessment (is this entity in scope for mandatory reporting?); coordination of data collection across the entity structure; maintenance of ESG disclosure records and filing confirmations; tracking of reporting deadlines and assurance requirements; and filing of the sustainability statement as part of the entity's annual compliance obligations.
What sits outside standard CSP scope — and should be explicitly carved out in engagement letters — includes: the double materiality assessment itself; calculation of Scope 1, 2, and 3 greenhouse gas emissions; sustainability strategy advice; supply chain due diligence under CSRD's value chain disclosure requirements; and limited or reasonable assurance engagements (which require accredited assurance providers).
CSPs that develop ESG compliance tracking within their entity management systems — deadline calendars, data collection checklists, filing confirmations — will be well positioned to offer a credible coordination service while referring the specialist work to appropriate advisers. This is consistent with how CSPs have historically approached tax compliance: coordinating the process while relying on tax advisers for the substantive work.