As stakeholder capitalism gains ground and regulatory scrutiny intensifies, environmental, social, and governance (ESG) metrics are no longer the concern of sustainability teams alone. From investors and boards to customers and employees, stakeholders increasingly expect companies to not only articulate their ESG commitments but to embed them into the core of financial decision-making.

This shift has clear implications for Financial Planning and Analysis (FP&A) teams who must now rise to a new challenge: integrating ESG considerations into planning processes in a way that is consistent, transparent, and measurable. It is not enough to report on ESG performance retrospectively. It must become part of how the business plans for the future.

Why ESG is becoming financially material

The relevance of ESG metrics to financial performance is no longer up for debate. Climate risk, for example, can directly affect the valuation of assets, insurance costs, and supply chain stability. Social factors such as employee wellbeing or community engagement can influence productivity, talent retention, and reputational risk. Governance practices, including data privacy and ethical conduct, are now central to maintaining trust and compliance.

Institutional investors have been early movers in recognising this materiality. Leading asset managers and private equity firms are integrating ESG data into valuation models and due diligence. Regulatory bodies are following suit, and ESG reporting is fast becoming a mandatory part of modern business.

This evolution has brought ESG into the sphere of financial planning. If ESG factors can impact enterprise value, they must be part of how that value is forecast and managed. For FP&A professionals, this means rethinking models, metrics, and mindsets.

The integration challenge for FP&A teams 

For most organisations, ESG data sits in siloes. Sustainability teams gather it manually for annual reports or regulatory filings. There is often limited alignment with financial data, which hinders strategic integration. For FP&A to play a meaningful role, ESG metrics must be treated with the same rigour and accessibility as traditional financial KPIs.

This is easier said than done. ESG data is diverse and often qualitative, covering everything from carbon emissions and energy efficiency to workforce diversity and board structure. Many of these metrics lack universal standards or financial equivalents. Moreover, data collection often depends on manual inputs, third-party sources, or varying regional disclosures.

The result is a lack of consistency, comparability, and timeliness – all of which FP&A teams rely on to plan effectively. Therefore, integrating ESG requires not only new data pipelines but also changes to the planning process itself.

How FP&A software can support ESG integration 

Advanced FP&A platforms are uniquely positioned to bridge the gap between ESG ambition and operational execution. Here are several ways in which FP&A software can support this transformation:

• Unified data models. Modern FP&A tools, such as what we offer in the Apliqo suite of solutions, allow for the integration of financial and non-financial data into a single environment. ESG metrics can be modelled alongside financial KPIs, enabling scenario analysis that reflects both sets of drivers. For instance, a carbon tax scenario can be overlaid on a P&L forecast to assess its impact on profitability.

• Flexible, multidimensional modelling. ESG impacts can vary by region, product line, or supplier. Multidimensional modelling capabilities let users drill down and model assumptions at granular levels. For example, energy consumption data from different facilities can be tracked by location and used to simulate how efficiency upgrades affect both emissions and operating costs.

• Real-time collaboration and transparency. Integrating ESG requires cross-functional collaboration. Finance, sustainability, operations, HR, and legal must work from a shared source of truth. FP&A platforms facilitate this with real-time data sharing, audit trails, and permission controls. This supports accountability and makes ESG integration a team effort rather than a finance-side initiative.

• Scenario planning and risk management. One of the greatest advantages of integrating ESG into FP&A is the ability to assess risk proactively. For example, users can model the financial implications of regulatory shifts, extreme weather events, or changes in consumer behaviour. These scenarios help leaders prepare for disruption and make informed trade-offs between short-term performance and long-term resilience.

• Reporting and stakeholder communication. Once ESG metrics are embedded in planning models, they can be used to create dashboards and reports tailored to different stakeholder needs. Board members may want high-level risk exposure summaries, while sustainability teams require detailed emissions tracking. FP&A software enables flexible reporting that improves transparency without creating duplication.

• Alignment with strategy and incentives. By tying ESG metrics to forecasts, budgets, and incentive structures, organisations can ensure alignment between sustainability goals and business outcomes. For example, linking executive bonuses to emissions reduction targets that are embedded in the financial model encourages accountability. FP&A teams play a crucial role in operationalising this alignment.

Bringing ESG into the FP&A process is not simply a matter of adding new metrics. It requires a structural shift in how planning is done – one that demands flexibility, collaboration, and real-time insight. FP&A software provides the framework to make this integration practical and scalable, turning ESG from an isolated reporting function into a core component of strategic planning.

Best practices for getting started

Integrating ESG into FP&A is a journey, but there are several best practices that can help teams start on the right foot:

• Engage stakeholders early: Involve sustainability teams, risk managers, and operational leaders in identifying relevant ESG metrics and setting assumptions.

• Start with materiality: Focus on ESG factors that are most financially relevant to your industry and business model. Prioritise quality over quantity.

• Invest in data infrastructure: Automate data collection where possible, and ensure ESG data flows into the same systems used for financial planning.

• Build ESG scenarios: Use scenario modelling to explore potential ESG risks and opportunities. This will help embed ESG into decision-making.

• Measure progress: Track performance over time and update assumptions regularly. ESG integration is not static; it must evolve with the business.

If you can focus your efforts on these pillars, you can gain early momentum and buy-in which can help engender a new ESG focus in the company culture and in its planning workflows. From there, you can tweak and adjust to meet the long-term organisational objectives that are important to the business.

From compliance to competitive advantage

ESG integration is no longer just about staying ahead of regulations. It is about building resilient, future-ready organisations that can navigate uncertainty and create long-term value. For FP&A teams, this means expanding their remit to include sustainability and governance factors that were once outside the scope of financial planning.

Technology plays a critical role in enabling this shift. Platforms like Apliqo, provide the tools needed to bring ESG and finance together. By unifying data, enabling scenario planning, and fostering collaboration, they help organisations move from ESG compliance to strategic advantage.

As ESG expectations continue to evolve, the ability to integrate these metrics into planning and performance management will become a hallmark of financial leadership. Now is the time for FP&A professionals to step into that role – and for organisations to equip them with the right tools to succeed.

To explore how you can bring this to life in your organisation, get in touch today.