Almost all organisations across the UK and European Union are concerned that their environmental, social, and governance (ESG) reporting processes won’t scale to meet future regulatory demands, according to a new study from insightsoftware.

The financial software provider’s latest report, 2025 ESG Insights and Challenges, found that as well as 92% of companies worrying that their current approach won’t meet compliance requirements, more than half (52%) of decision-makers remain uncertain and confused about upcoming regulations such as the Corporate Sustainability Reporting Directive (CSRD), coming into effect later this year.

The report, based on a survey of 400 ESG decision-makers across the UK and EU, revealed that while many organisations are confident in their ability to comply with regulations like the CSRD, they struggle to find the right tools to accomplish the necessary compliance tasks.

Over half (58%) of respondents said that they are already exploring new technology to enhance their ESG reporting capabilities, driven by the currently high reliance on less robust systems, such as in-house automated custom builds which 42% of UK firms admitted to using.

Organisations are looking to adopt better tools, evidenced by the 86% of ESG decision-makers who said data visualization and dashboards as the most valuable features in an ESG technology solution.

However, 95% cited data collection as the biggest hurdle to their plans, with over half (52%) reportedly spending more than four weeks each year solely on collecting data.

Notably, 52% of businesses rely on data from more than five sources for ESG reporting, underscoring this as a significant hurdle to achieving compliance.

The collection of ESG data is a considerable challenge, with 77% of organisations using third-party data providers, while 76% employ automated data feeds. However, manual processes remain somewhat popular, with 51% relying on surveys of employees, suppliers, or stakeholders, and 40% resorting to manual data entry.

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Among the top barriers standing in the way of adopting new tech for ESG reporting are data security concerns (59%), complexity of the data environment (40%), difficulty in finding the right solutions (24%), compliance challenges and lack of clarity (both 21%).

According to the report, the UK stands out for its significantly higher concerns around a lack of internal IT resources and expertise (42%), and the lack of automation and manual processes (34%), both well above the average from across all countries.

“Without the proper tools, global businesses risk hampering their organisation’s ability to comply with ESG regulatory requirements,” said insightsoftware general manager, EPM & controllership, Monica Boydston.