By: David Solsky, CEO and co-founder, Envizi
Despite the rising prominence of Environmental, Social and Governance (ESG) metrics in the business and investor community, ESG reporting isn’t getting any simpler.
As industry accelerates progress towards decarbonization, the emphasis on high-quality, verifiable, and consistent data will become increasingly important to demonstrate progress.
In over a decade of supporting organizations on their decarbonization journey, we are constantly reminded that ESG data capture and management present a challenge for many organizations. Environmental, social and governance metrics such as carbon, energy, waste, water and social indicators can be difficult to track and report, which makes it challenging to meet compliance and voluntary reporting requirements and puts your organization’s reputation at risk.
ESG reporting is challenging because:
- Data is stranded in silos across the business or kept in spreadsheets, which makes it difficult to consolidate for reporting and decision making.
- Data quality is inconsistent and unreliable. Financial grade reports require confidence in the data and auditability at every step in the process.
- The time and cost to report sustainability performance is high. Inaccessible and poor-quality data leads to wasted time and effort.
- Ongoing performance is poorly understood. Without access to consolidated, accurate data, it is difficult to monitor and manage your performance and to track the effectiveness of improvement initiatives.
How a sustainability data analytics platform improves ESG reporting and performance
Within organizations, core business processes are typically managed with the support of a dedicated IT system. In the same way an organization has an accounting system for capturing and reporting financial information, and a HR system for capturing and managing people data and metrics, it makes sense to have a dedicated, specialized software platform to support ESG reporting and performance improvement.
Nowhere is this more important than for the “E” in ESG, which is the most difficult to report and track, and the most essential for organizations looking to reduce their carbon emissions. Whilst many organizations may have systems for tracking social and governance data, greenhouse gas (GHG) accounting and sustainability reporting is complex. A sustainability data and analytics platform provides insight to accurate, granular energy data that can be traced back to meters and/or billing data and complies with audit and assurance requirements.
Ensure the system you choose supports a data structure that allows your organization to generate accurate GHG inventories, reflects the latest decisions on emissions boundaries, and generates meaningful reports. Data should be regularly updated to allow comparisons across reporting periods to benchmark performance against targets. Lastly, the approach to data collection and emission calculations should be rooted in internationally accepted standards. Energy data is voluminous, and complex which is why most ESG platforms struggle to support the “E” in ESG. Look for a system that specializes in sustainability data management and captures “S” and “G” data from existing sources for streamlined reporting.
In summary, here’s a list of features to look for in software designed to help organizations improve ESG reporting and performance:
- Automated data capture
- Audit trails and data health checks
- Hierarchy management tools
- Support for emission factors and carbon accounting methodologies
- Support for reporting schemes and industry standards
- Ability to set and recalculate baselines
- Target tracking capability
- Analytics to identify emissions savings opportunities
- The ability to interface with existing systems capturing social and governance data
- Flexible reporting functionality
- Global coverage
Getting to grips with data management for GHG accounting and ESG reporting is a key part of any successful decarbonization journey. We created this eBook to help organizations better understand how to use data to support their transition to a low carbon future.
In this eBook we answer how to:
- Establish finance-grade sustainability data.
- Account GHG emissions for reporting and disclosure.
- Tackle the more complex components of GHG accounting.