ESG Reporting for Franchises: Why It Matters in 2025

If you've heard a lot about ESG recently but aren't sure how it applies to your franchise, you're not alone.

ESG (Environmental, Social, and Governance) is becoming more than just a business concept.

In 2025, it’s shaping how businesses operate, attract investors, and connect with customers. And yes, even franchises like yours need to pay attention.

What Exactly Is ESG?

Think of ESG as a set of non-financial measures that tell the story of how your business impacts the world beyond dollars and cents.

• Environmental: How your franchise handles things like energy use, waste management, and sustainability efforts like reducing plastic or lowering carbon emissions.
• Social: How you treat your staff, customers, suppliers, and the communities you serve. This includes topics like fair labor practices, diversity, and community involvement.
• Governance: Behind-the-scenes details include your leadership, openness, ethics, and management style.

In short, ESG shows how responsible and trustworthy your business is, and that’s becoming a big deal.

Why should franchise owners care about ESG right now?

Here’s the kicker: ESG isn’t just a European thing anymore, and it’s not just for publicly traded giants. While Europe has already made ESG reporting mandatory for many companies, the United States is catching up fast.

Some states—California being the most notable—are stepping up with rules that require bigger companies to report on their ESG efforts starting soon.

At the federal level, there’s movement too. The SEC has climate disclosure rules for public companies, though enforcement timelines are still in flux. But the real game-changer? Investors and customers are demanding it. More than ever, people want to support businesses that care about more than just profits. They want to know you're doing your part to be sustainable, fair, and ethical.

How Can You Bring ESG Into Your Franchise Reporting?

You might be wondering, “This sounds important, but where do I start?” It’s simpler than you think:

1. Figure Out What Matters to Your Business: Talk to franchisees, employees, and customers to find out which ESG issues hit closest to home. Is it reducing waste? Fair labor policies? Transparent governance?
2. Get Your Data Together: Invest in tools that help collect information from all your locations—everything from energy bills to employee diversity stats.
3. Pick a Reporting Framework: There are a few ‘official’ ways to report ESG, like SASB, GRI, or TCFD. Choose one that fits your size and where you do business.
4. Show the Numbers Alongside Your Financials: ESG is part of your business health. Make sure you report it not just as an afterthought, but as an integrated part of how you share company performance.
5. Keep Everyone in the Loop: ESG isn’t a secret. Share your goals, wins, and even challenges transparently with investors, franchisees, and customers.

Examples That Inspire

Look at companies like Starbucks, which has committed to thousands of ‘Greener Stores,’ slashing energy consumption and waste.

Tesla powers its entire Supercharger network with renewables, proving sustainability can go hand-in-hand with growth.

Even IKEA has made bold moves in renewable energy and ethical sourcing. These brands aren’t just ticking boxes—they’re rewriting how business is done.

A Quick ESG Checklist for Franchise Owners

• Identify your ESG priorities with input from your team and stakeholders.
• Set clear, measurable goals around those priorities.
• Set up methods to collect data consistently.
• Choose an ESG framework that aligns with your business model.
• Regularly report progress alongside financial results.
• Verify your data and stories, ideally with third-party review.
• Communicate openly with everyone who matters.
• Revise and improve your ESG approach frequently.

Common Questions About ESG Reporting in the U.S.

Is ESG reporting required where I am?

Right now, ESG rules in the U.S. mostly affect large companies or those in certain states. But don’t wait—investors and customers are already expecting transparency, and regulations will likely spread.

How much work is ESG reporting?

It’s a process, but modern tools and a phased approach make it manageable. Plus, the benefits—lower risks, better financing options, customer loyalty—make it worthwhile.

What’s the real benefit to my franchise?

Beyond doing the right thing, ESG reporting helps you spot risks early, save money with efficiencies, and stand out in a crowded marketplace.

Wrapping It Up

ESG reporting isn’t just another report on your to-do list—it’s a meaningful chance to build a stronger, more resilient franchise that attracts great partners and loyal customers. Starting now will put your business ahead of others and prepared for the future.

Interested in learning how ESG might help your franchise's financial health?

Reach out for a free profit and cash flow analysis with Mohamed Karmous. Together, you’ll discover how smart ESG strategies can improve your bottom line and open doors to new opportunities.

Get Your Free Profit & Cash Flow Analysis