February 12, 2026 Why Manufacturing is at a Crossroads with ESG Reporting

As CSRD & UK SRS take effect, manufacturers face a test: can their sustainability data stand up to audit, or will it crack under pressure?

by Juanjo Mestre

Why manufacturing is feeling the pressure first

Manufacturers have entered 2026 under more scrutiny than ever – with new regulations coming into force on top of rising costs, geopolitical instability, and supply chain disruption, which are already stretching operations. With wave 1 CSRD disclosures set to land this January, and UK Sustainability Reporting Standards (UK SRS) due to finalise in February, manufacturers are being asked to produce something many have never had to deliver before: audit-ready, traceable sustainability data across operations, procurement, and production.

Historically, sustainability reporting in manufacturing has been largely voluntary, fragmented and retroactive. Data was collected to satisfy customer questionnaires, investor requests or annual reports, often assembled manually and retrospectively. But this approach is no longer sufficient, as the 2026 reporting landscape demands the same level of discipline, governance and confidence that companies apply to their financial data. And for manufacturers, whose data spans multiple plants, suppliers and geographies, the gap between expectation and reality is becoming impossible to ignore.

Fragmentation is manufacturing’s hidden risk

Manufacturing businesses are very complex to begin with, as energy use, materials, waste, emissions and labour data sit across different systems, teams and locations. In many cases, sustainability teams are still dependent on spreadsheets, email chains and siloed tools to gather this information.

This creates three fundamental problems.

First, the issue of data trust. When information is pulled together manually from multiple sources, there is limited visibility into where it came from, who owns it and whether it has been changed. Under CSRD and UK SRS, that lack of traceability becomes a direct compliance risk.

Secondly, the issue of scale. Reporting is no longer annual and does not only require high-level breakdowns – disclosures have now become more granular, more frequent, and subject to assurance. As manufacturers expand operations or suppliers, the reporting burden scales in parallel.

Thirdly, the issue of operational strain. Sustainability teams are forced into constant data-chasing cycles, relying on busy colleagues across finance, procurement and operations to supply inputs. While it most definitely slows down reporting, it also creates friction across teams in the business and erodes trust in the overall output.

These challenges are not new, and what has changed now is that regulators, auditors and commercial partners are now scrutinising sustainability data with intensity that’s on a new level.

Why spreadsheets are not the solution

Under CSRD, limited assurance is already mandatory, with reasonable assurance expected to follow. This means auditors will not only look at top-line analysis, but also at how data is collected, validated, stored and regulated. Manufacturers attempting to meet these expectations with fragmented spreadsheets and siloed tools often discover the problem when it’s too late, when reporting deadlines are looming and trust in the data is already compromised.

To tackle these problems, the beloved 40-year-old Excel spreadsheet cannot handle the ESG pressures of this day and age.  While spreadsheets remain one of the most common tools used in manufacturing sustainability reporting, they were never designed to function as systems of record under regulatory scrutiny. In an audit or assurance context, spreadsheets quickly expose their limitations – version control becomes unclear, calculations are difficult to trace, data lineage is hard to evidence. One small error can cascade across an entire dataset.

Why manufacturers need to have a single system of record

This first CSRD reporting cycle will be a defining moment for manufacturing. Not because of the regulation itself, but to see how manufacturers are trying to meet 2026-level disclosure demands with systems and processes built for a very different era. Some might respond by adding more tools, more templates and more manual checks, which will keep reporting afloat in the short term, increasing cost, complexity and risk. Others might take a different approach – instead of treating sustainability as a reporting obligation, they are focusing on data control.

They are shifting away from fragmented data collection toward a single system of record that consolidates sustainability information across plants, suppliers and functions. This creates a consistent foundation that supports multiple reporting frameworks without rebuilding datasets each time, embedding traceability and ownership into their data processes. Every figure can be linked back to a source, a methodology and a responsible owner, which not only helps with audit and assurance, but also builds internal confidence and accountability.

By connecting sustainability data with operational and financial data, these manufacturers are able to get clear visibility into energy efficiency, material use, waste and supplier performance, turning sustainability insights into inputs for operational improvement and risk management. In this model, compliance becomes a bi-product of better data, not the primary goal.

‘Control’ will become a key distinguisher

Manufacturing is under pressure because it sits at the intersection of regulation, supply chains and operational impact. Sustainability reporting is no longer something that can be managed at arm’s length. Manufacturers need to move beyond compliance firefighting and take control of their data. The stakes are high, not just in terms of regulatory penalties, but it also risks commercial and reputational damage.

So, how can firms take control in this way?

Practical steps that manufacturers can adopt now

For manufacturers still navigating this transition, the challenge can feel overwhelming, but meaningful progress does not need to be a complete overhaul overnight. There are practical steps that can be taken now to reduce future problems:

1. Start by mapping where sustainability data actually lives across the organisation. Identify which systems, teams and suppliers contribute key inputs and where the biggest gaps or risks sit
2. Assess whether current tools can support traceability, governance and audit requirements on top of data collection. If data cannot be confidently explained or defended, it will struggle under assurance
3. Prioritise consolidation over expansion. Reducing tool sprawl and centralising data into one system creates more resilience than layering new solutions onto existing complexity
4. Finally, treat sustainability data as a strategic asset, with the same discipline applied to financial data systems

With these measures in place, manufacturers will be in a position to take control of their own ESG data, enabling them to make informed business and operational decisions.

About the Author

Juanjo is the CEO and Co-Founder of Dcycle. With a unique background in UX design and philosophy, he transitioned from creative roles at top agencies in Spain to leading Dcycle, with a mission to make sustainability both accessible and actionable for businesses.

Driven by a deep passion for philosophy, strong leadership, and an innate inclination toward innovation, Juanjo provided Dcycle with the vision and direction it needed to become the #1 ESG solution in Spain within just a few years. The company has attracted over €6 million in funding, gained more than 2,000 clients, and expanded its operations across Spain, Portugal, Italy, and the UK. Juanjo firmly believes that sustainability should be a strategic lever for businesses, not merely a compliance requirement. His vision is to empower companies of all sizes to seamlessly integrate sustainability into their core operations through intelligent data solutions.

Read more from the author:

Scrapping mandatory ESG reporting risks setting businesses back years | Sustainability Online, November 2025

What UK fashion sector can learn from Europe’s CSRD challenges | Just Style, October 2025

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