Practical challenges in compiling a meaningful ESG report:

Across global markets, ESG reporting has moved from “good practice” to “strategic expectation.” Yet many organisations still struggle to produce ESG disclosures that are truly meaningful, decision-useful, and assurance-ready. Saudi Arabia is entering a period of accelerated sustainability regulation, influenced by Vision 2030, CMA’s guidelines, MOC governance requirements, SAMA expectations for financial institutions, and ZATCA’s push for reporting transparency. Despite growing maturity, organisations face several practical challenges in compiling a meaningful ESG report.

Fragmented data across functions and subsidiaries
Organisations, particularly conglomerates, often operate multiple ERP systems and manual registers. ESG reporting often sits between functions. Finance owns energy spend, HR owns workforce metrics, HSE owns emissions, Procurement owns supplier data, yet no single governance structure oversees completeness and accuracy. This results in duplicated work, unclear responsibilities, and avoidable delays. Data inconsistencies create challenges for completeness and reliability.

Limited readiness for IFRS S1/S2 transition
As Saudi Arabia gradually aligns with global sustainability standards, organisations must prepare to disclose climate risks, governance structures, material sustainability issues, and scenario analysis. Many do not have the internal capability to interpret technical requirements.

Challenges in scope 3 and supply chain data collection
For most businesses, Scope 3 emissions represent the dominant share of their footprint. However, supplier immaturity, inconsistent data formats, incomplete procurement records, and lack of emission factors make Scope 3 disclosures unreliable or omitted entirely.

Weak documented controls and assurance preparedness
Many reports are still compiled through spreadsheets, email requests, and manual consolidation, without audit trails, verification steps, or documented methodologies. As assurance becomes the norm, weak internal controls pose reputational and compliance risks.

Lack of governance integration and board-Level oversight
Many boards have not yet integrated ESG into their committee structures, risk appetite frameworks, or strategic planning cycles.

Limited scenario analysis and climate risk modelling
IFRS S2 expects companies to demonstrate climate resilience through modelling and scenario analysis. Most lack the tools, datasets, or internal expertise to quantify impacts on revenue, costs, assets, and future cash flows.

Resource constraints and capability gaps
The demand for ESG talent in the Kingdom exceeds available supply. Organisations often rely on consultants for reporting but lack internal capacity to maintain year-round ESG governance and data accuracy.

Path forward for Saudi companies:

Establish ESG governance models aligned with CMA and MOC requirements
Implement internal controls, documentation, and data workflows comparable to financial reporting
Map disclosures to IFRS S1/S2 and integrate climate risks into ERM
Develop supplier engagement programs to strengthen Scope 3 data quality
Prepare for independent assurance to meet evolving regulatory and investor expectations

As Saudi regulators elevate expectations under Vision 2030, meaningful ESG reporting will depend on governance maturity, data integrity, and strategic alignment, not merely compliance.

How BDO can help

For further information, insights and assistance with your ESG and IFRS reporting needs, please contact us. Our team of experts is ready to support you in this transition.

Authors

Abdur R. Sharjeel

Head of Advisory

Mobile: +966 55 754 0579

a.sharjeel@bdoalamri.com

Syed Moin Ahmed Zaidi

Senior Manager – Sustainability Services

Mobile: +966 50 765 1071

s.zaidi@bdoalamri.com

The material discussed in this article is meant to provide general information and should not be acted on without professional advice tailored to your organization’s individual needs.