ESG reporting is most effective when it’s real-time – when data on your social and environmental footprint is continually incorporated into strategic decision-making. Yet, for many companies, that’s easier said than done. ESG reporting is not a standalone activity. It’s the culmination of multiple processes, ranging from self-assessments and metrics collection, to compliance management and issue remediation. Coordinating all these processes manually can seem like a Herculean task. But technology can make things easier through process automation and data-driven insights.
Here’s a deeper look at how technology can help:
Navigating the alphabet soup of regulations and reporting standards governing ESG can be challenging. Fortunately, efforts are being made towards establishing a single, standardized reporting framework but this could still be several years in the future. In the interim period, different investors still require companies to report against different ESG frameworks.
Technology can make the process easier by centrally capturing all your ESG disclosure requirements and mapping them to your business units and geographies. So, reporting becomes more structured and efficient. Through technology, you can map your component ESG data to various standards and frameworks to identify compliance gaps – collect component data once and let the technology intelligently map this data to the appropriate framework.
Meanwhile, regulatory change tracking tools can help you keep up with updates or modifications to ESG standards. And automated reporting can give you a faster, better understanding of your ESG compliance.
For accurate ESG reporting, data needs to be aggregated and synthesized from multiple sources within and outside the enterprise. This data could range from carbon footprint emissions and renewable energy use, to employee turnover and gender quality indexes. Since this data is often scattered across multiple systems and geographies, it can be difficult to consolidate.
Technology can help by automatically integrating ESG information from various sources onto a single platform. So, you gain a 360-degree view of your ESG impact to enable data-driven decision-making. With technology, you can also streamline and digitize the entire process of data collection. So, there’s better visibility into how and where each piece of information was gathered.
To top things off, technology can be integrated with third-party rating sources to build a clearer picture of your company’s ESG performance. This helps the board and leadership team be more transparent about the risks and opportunities their business faces.
Some of the biggest ESG risks emerge from third-party ecosystems. In fact, a CDP report found that companies’ supply chain greenhouse gas emissions are 5.5 times greater than their own impact from scope 1 and scope 2 emissions. Proactively mitigating these risks is key to improving ESG scores. However, today’s supply chains are complex and multi-tiered, with contractors increasingly outsourcing to sub-contractors. How do you efficiently track ESG risks across this vast network?
Here too, technology can help by providing a unified and real-time view of your extended enterprise. Processes such as third-party due diligence, ESG risk assessments, and audits can be streamlined and automated for optimal efficiency. You can also create a third-party portal to collect and manage supplier information easily.
By integrating with external content sources, technology can help you validate a supplier’s ESG information, and identify red flags faster. Powerful dashboards and analytics can give leadership teams a sound understanding of third-party ESG risks, compliance, and performance to drive informed decision-making.
Implementing ESG goals goes beyond writing a new policy or collecting data. It’s about building a culture where everyone is committed to environmental sustainability, social responsibility, and good governance. Companies with strong, purpose-driven cultures tend to create positive impact and higher returns.
With technology, you can unify everyone involved in ESG reporting on a single platform. So, they’re all working towards the same goals and objectives. Stakeholders from compliance, risk management, HR, investor relations, legal, and senior management can communicate and collaborate much more effectively when they have a single source of ESG truth. Roles and responsibilities can also be clearly defined and tracked. So, everyone feels a sense of accountability and ownership for ESG.
What’s more, technology can help create an environment that encourages employees to report ESG issues – be it workplace discrimination, bribery, or unsustainable business practices. Tools like browser plugins, conversational interfaces, and intuitive web forms provide a simple way for business users to record their ESG observations from the front line. This data can then be triaged and routed for further investigation. The result is that ESG incidents or risks are proactively identified and mitigated through a collective effort, thus improving your company’s overall ESG performance.
MetricStream’s Environmental, Social, Governance, Risk, and Compliance (ESGRC) software enables companies to effectively measure, report, and improve ESG performance. Through its integrated platform, you can capture disclosure requirements, conduct self-assessments, identify issues, and gain meaningful insights for decision-making