With the rapid rise of ESG reporting – whether driven by regulatory requirements, market expectations, or internal strategic ambitions – many companies are facing the same question: Should we build the necessary competencies in-house or seek external assistance?
There is no one-size-fits-all answer. However, there are important considerations that should be made consciously and strategically. ESG is not just a checkbox on a to-do list; it is about business development, risk management, and value. This makes it crucial to decide how reporting will be anchored within the organization.
Internal Resources: Depth and Integration
Some companies choose to handle ESG reporting internally. This typically allows for closer integration with day-to-day operations and a stronger connection to the company’s culture and strategy.
Advantages of Internal Resources:
• Closer knowledge of the company – including data, processes, and culture
• Better ownership across departments
• Long-term capacity building that strengthens the organization going forward
Challenges:
• ESG is complex and multidisciplinary – it requires expertise in environmental issues, social factors, governance, reporting standards, and strategy
• Resources and time may be limited, especially in smaller companies
• Risk of errors or subpar quality if the necessary competencies are lacking
External ESG Consultants: Expertise and Efficiency
An increasing number of companies – particularly small and medium-sized businesses – are opting to collaborate with external specialists when handling ESG reporting. These specialists can include ESG consultants, audit firms, or agencies with ESG expertise.
Advantages of External Help:
• Professional specialization and up-to-date knowledge on standards, legislation, and best practices
• Efficient processes and professional reporting
• Opportunity for objective feedback and critical review of data and processes
Challenges:
• May lack internal insight and context
• Risk of the reporting becoming an external project rather than an integrated part of the strategy
• Can be a larger financial investment, especially with long-term collaborations
The Hybrid Solution: The Best of Both Worlds
Many companies today opt for a hybrid model, where internal employees and external advisors collaborate. For example, an internal ESG manager may handle data collection and coordination, while an external consultant assists with framework setting, analysis, and the actual report.
This approach combines internal integration with external expertise and can be a powerful solution, particularly for growing companies or those starting to implement a more structured ESG strategy.
So, What Should You Choose?
The choice depends on your company’s size, complexity, ambitions, and, importantly, where you want ESG to take you. Here are three key questions to consider:
- Do we have the right competencies internally – or can we develop them?
- Is ESG strategically prioritized – or is it just a requirement we need to fulfill?
- Do we want to use reporting to develop the business – or merely document the status?
Regardless of whether you choose to go internal, external, or a combination, the most important thing is to make a deliberate decision. ESG is not just for compliance – it’s for competitive advantage.
