ESG reporting for software companies: how to create a professional ESG report

Introduction: Understanding ESG reporting for software companies

For years, it has been enough to build great software. Ship features. Scale users. Keep uptime high. That is still the core of the business. But increasingly, clients are asking questions that have nothing to do with your product. How do you handle data? Are you compliant? What is your stance on AI? How do you treat your employees?

ESG is the answer to those questions. Not as a buzzword, but as a structured way to make your company transparent and relevant in a market that has changed. Transparency is key, and ESG gives you a framework to explain how your software company operates.

The reality is that ESG reporting for software companies is relatively simple compared to industries with physical production. You do not have factories, supply chains, or heavy emissions. But that does not mean you are off the hook. It just means your ESG lives somewhere else.

For software companies, ESG is heavily tied to governance and compliance. GDPR, data security, and frameworks like NIS2 are not optional. They are expectations. ESG is simply another layer that proves you have your house in order.

At the same time, new challenges are emerging. AI is becoming a bigger part of software products, and with it comes increased energy consumption and responsibility. That needs to be addressed as well when building an ESG report.

For software companies, ESG is not about pretending to be something you are not. It is about documenting that you are running a professional, responsible business that clients and partners can trust. And if you cannot do that, there is a real risk they will choose someone else who can.

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What does ESG reporting for software companies cover?

ESG reporting for software companies is a structured way to document and communicate how you operate responsibly across the three core areas. It is about making things measurable that are often described in vague terms.

For software companies, ESG reporting typically does not cover production or heavy emissions, but instead focuses on where your actual impact lies. That includes governance structures, compliance processes, data protection, handling of customer data, employee conditions, diversity, work environment, and how you interact with clients and partners. The purpose is to create a clear and credible picture of how your company operates in practice. Not just what you say, but what you actually do. When done right, ESG reporting gives clients and partners a solid foundation to assess your quality, risk profile, and long-term relevance.

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Why has ESG reporting become so critical for software companies?

ESG is not slowly entering the software industry. It is already here. Not because software companies asked for it, but because the pressure is coming from outside.

Clients are increasingly dealing with their own ESG requirements from investors, boards, and regulation, and it does not stop at their own business. It gets pushed down the value chain. And that includes software vendors. When companies are evaluated on risk, governance, and responsibility, they also need to document who they work with.

In practice, this means ESG is no longer something limited to large enterprises and annual reports. It has become part of vendor selection. If a client has to choose between two software companies with similar capabilities, the one that can document structure, governance, and responsibility will have an advantage. At the same time, regulation is moving in the same direction. The EU is increasing requirements around transparency and reporting, and even if software companies are not directly in scope, they are indirectly affected through their clients. This is where many realize it too late.

ESG is not a requirement that hits you directly first. It comes through your clients. And if you cannot provide the documentation they are asked for, there is a real risk they will find someone else who can.

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What should an ESG report for a software company include?

The short answer is that it should include what is relevant. The slightly longer answer is that this is exactly where most companies get stuck. They look at reports from large enterprises and end up with something that does not fit their own business. A software company with 500 employees has a very different ESG profile than one with 25.

The VSME framework is designed to avoid exactly that. It strips ESG down to what actually makes sense for small and medium-sized companies, including software companies.

Here is what it typically looks like in practice.

Governance: the most important area for software companies

If there is one area where software companies are heavily evaluated, it is governance. This is about how you run your business. Not what you say, but how you are structured.

An ESG report should as a minimum cover:

• Whether you have data protection and compliance policies
• Whether you are compliant with GDPR and security standards
• How you handle customer data and access control
• Diversity in staff and leadership

This is not new to you. What is new is that it needs to be documented and communicated in a structured way, and that it follows a framework that allows you to be compared to other similar software companies.

Social: employees and culture

Software companies are people-driven businesses, and your employees are the primary driver of value creation. That is why social factors often matter more than environmental ones.

You are expected to provide concrete information on:

• Employee well-being and work environment
• Diversity and gender balance
• Retention and development
• Workload and work-life balance

It does not need to be advanced. But it needs to be honest, concrete, and understandable from the outside.

Environment: keep it relevant

For most software companies, environment is not the biggest factor. That does not mean it should be ignored, but it should be proportional.

Typically, your report should include:

• Energy consumption from offices and infrastructure
• A CO2 calculation including scope 1, 2, and 3 (which is relatively easy for software companies)
• Basic initiatives such as reducing cloud waste or optimizing infrastructure

With the rise of AI, this becomes more relevant. Training models and running AI systems can be energy-intensive, and this is something that increasingly needs to be addressed.

The mistake many make is overcomplicating this. For software companies, environment is a smaller part of the report, and that is fine. Your impact is just located elsewhere.

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How to create an ESG report for a software company

Most companies make this more complicated than it needs to be. ESG is not about building a massive compliance setup from day one. It is about structuring what you already do and putting it into a format that others can understand.

If you have been tasked with creating an ESG report, here is a simple process that makes it possible to create a professional report without it taking a year.

1. Choose a framework

A framework defines the structure of your ESG report. It helps internally and makes it easier for others to understand your approach.

There are many frameworks available, but for mid-sized software companies, VSME is the most practical. It aligns with CSRD and ESRS and fits into what clients will ask for. If you are not committed to another framework, start with VSME.

2. Conduct your analysis

Before collecting data, you need to understand what is actually relevant. This is where most companies either overcomplicate things or miss the mark. In VSME, not everything needs to be included. Many data points are only relevant if they make sense for your business.

The most effective way to approach this is by using the 10 sustainability topics in VSME and performing a double materiality assessment. In practice, this means understanding what you impact and what impacts you.

For a software company, it quickly becomes clear that ESG is not about production or complex emissions. It is about governance, compliance, employees, and how you manage data and clients. That is where your ESG lives.

Be concrete. Look at what you already do. Where do you have policies. Where do you lack structure.

The goal is not to invent new initiatives. It is to get a realistic picture of your current setup so you know what is worth reporting on.

3. Build a data plan

Once you know what is relevant, the next step is to define how to measure it. This is where a data plan comes in. In VSME, it is not about collecting everything, but about collecting the right things. Each data point should be tied directly to what you identified as material.

Start by translating your key topics into specific data points. What do you actually need to document. Most of it is already defined in VSME, so there is no need to reinvent anything. Keep it simple.

For most software companies, a large part of the data already exists. HR systems, compliance documentation, security processes, and internal policies are already there. The task is to collect and structure it. Define ownership, update frequency, and ensure consistency over time.

If something is hard to measure, it is often a sign that it is not the right place to start. VSME is designed to be practical, and your data plan should reflect that.

4. Collect data

Now you do the work. Some data can be pulled directly from existing systems. Other parts require manual work the first time. That is normal. The important thing is to get started, not to get it perfect.

Once you have done it once, the process becomes significantly easier the next time.

If you want to simplify the process, using a system like Wardn can help. It makes it easier to collect the right data and keep it updated year over year.

5. Write your ESG report

This is where everything comes together. The analysis, the framework, your brand, and the data. The easiest way to start is by creating a template with your branding and structure.

Once the template is in place, you begin inserting data. Start with the numbers, and then add explanations where needed. That usually becomes obvious.

An ESG report does not need to be long. It just needs to clearly show where the company stands today.

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ESG software for software companies

Most software companies start their ESG work in Excel. That makes sense in the beginning. The problem is that it rarely stays there. Data ends up spread across multiple files, versions become unclear, and the process becomes heavy.

ESG software solves one problem. It brings everything into one place. Data, policies, documentation, and reporting become structured and manageable.

For software companies, the point is not complex calculations. It is overview. Who owns what data. What needs updating. And how everything comes together in a report that can actually be used with clients.

The difference between using software and not using it is not whether you can create an ESG report. You can. The difference is how much time it takes and how easy it is to repeat next year.

If ESG is to become more than a one-off exercise, it requires a scalable setup. That is what software enables.

Wardn ApS is the leading provider of ESG software for software companies in Europe. The platform is built for ESG reporting and makes the process faster, easier, and more accurate.

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Frequently Asked Questions (FAQ)

1. Why should software companies create an ESG report?

ESG reporting is a structured way to document how a software company operates in terms of governance, employees, and responsibility. The purpose is to make this visible to clients and partners.

2. Is ESG reporting mandatory for software companies?

No, ESG reporting is not directly mandatory for most software companies.

However, it becomes an indirect requirement through clients. Companies subject to CSRD need ESG data from their vendors, including software providers.

3. Why is ESG important for software companies?

It affects vendor selection. Companies with ESG maturity grow faster and require documentation from partners. If two vendors are equal, the one with ESG will win.

4. What should an ESG report include?

Relevant data on governance, employees, and environment based on VSME. The key is relevance and documentation.

5. How do you get started?

Choose a framework, assess materiality, define data, collect it, and build the report. Most companies already have the data. It just needs structure.

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