Reporting on Environmental, Social, and Governance (ESG) has become increasingly important in recent years as stakeholders, including investors, customers, and regulators, are demanding more transparency and accountability from organizations regarding their sustainability practices and performance.
The European Union (EU) introduced a new reporting demand, the Corporate Sustainability Reporting Directive (CSRD) which aims to improve the transparency and comparability of sustainability reporting by companies. With CSRD being approved in 2022 and coming into effect from the reporting year 2024 onwards, companies should start preparing for the new ESG reporting requirements to ensure compliance and safeguard awareness around their material topics and sustainability performance.
What does the CCH Tagetik ESG solution offer to facilitate ESG reporting?
CCH Tagetik, a cloud-based performance management software, offers a comprehensive ESG reporting solution, that enables organisations to collect and report ESG data in compliance with multiple major ESG frameworks. The solution provides a modular approach and currently consists of 2 modules, the KPI- and the EU Taxonomy module. Separate modules are in development and aim to support the CSRD, and ISSB regulatory frameworks as well as a module to facilitate strategic planning on ESG-related KPIs.
This insight document will focus on the ESG GRI KPI module.
The ESG KPI module offers an out-of-the-box extensive ESG KPI library, currently covering the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) standards. This pre-built KPI library, which is kept up to date by CCH Tagetik, in line with the ESG framework evolutions, assures the company's compliance with the chosen ESG reporting framework.
As such the KPIs provide insights into the overall performance on the various ESG topics, identified as being relevant in the company’s context, as typically resulting from conducting an ESG materiality assessment. As such, CCH Tagetik allows the activation of only those KPIs, covering material topics under the selected ESG framework. That way, CCH Tagetik ESG facilitates companies, to be compliant with reporting on their specific ESG demands.
It’s relevant to note that, in the course of 2023, the CCH Tagetik ESG application will also support the EU-specific Corporate Sustainability Reporting Directive (CSRD), allowing compliance with the upcoming European Sustainability Reporting Standards (ESRS), as well as with the upcoming IFRS sustainability disclosure standards being released by the International Sustainability Standards Board (ISSB).
How does the CCH Tagetik ESG solution service ESG reporting?
The ESG KPI module supports reporting on both quantitative as well as qualitative KPI data. The quantitative data represents numeric values concerning KPIs defined in the ESG frameworks. The textual input demands resulting from those ESG frameworks are managed by choosing the qualitative KPIs. These qualitative KPIs offer the possibility to activate additional follow-up questions, on top of the initial input to further describe ESG procedures or routines where needed.
Both types of KPIs can simply be enabled within the KPI structure setup of the ESG module. After the activation of the relevant KPIs and providing the desired ‘inbound’ data definition for each KPI, CCH Tagetik automatically generates the data collection templates for these KPIs.
In respect of the definition of the desired ‘inbound’ data, requested upon each KPI, the ESG solution proposes different levels of detail, to support both the regulatory and management reporting requirements. Choosing the desired level of detail for inputting or uploading the requested ESG data can be managed via the KPI attributes.
On top of the mandatory level of details requested for assuring the framework compliance, CCH Tagetik allows activating, preconfigured, discretionary (i.e., optional) levels of detail for each KPI, which offers the choice to customize, per individual ESG KPI, the level of detail required to be reported on each specific ESG metric.
Finally, if the prebuilt mandatory and discretionary data fields are not sufficient, a third option is available. As such, it is possible to add a custom level of detail to the KPI definition. Similar to discretionary levels, these additional custom levels of details can be requested per KPI. However, the possible data values to be reported on these custom levels are not prepopulated by CCH Tagetik and thus their content is freely configurable by the customer, in response to their specific needs against each ESG KPI.
Picture 1 - Discretionary level
To assure comparing apples with apples and to allow reporting in line with the KPI definitions, required according to the chosen ESG framework, the solution facilitates converting data reported within different units of measure (UOM) to a common UOM, as requested by the regulation. As such, each KPI can be converted between UOMs.
To do so, CCH Tagetik offers the possibility of uploading and using conversion factors. CCH Tagetik does not provide any specific conversion factors out of the box, but allows companies to upload their choice of conversion factors and facilitates the conversion of data, with prebuilt calculation logic. This data conversion feature allows companies to standardize their ESG data across different regions and UOMs, ensuring consistency and accuracy in reporting.
As an example, a company may need to convert data collected in the litres of diesel, burnt in a stationary combustion source, using emission conversion factors for litres of diesel towards tonnes per different greenhouse gas (GHG). The total GHG emission in CO2e can be calculated by multiplying each gas by its factor of global warming potential (GWP), resulting in the total GHG emission in tCO2eq.
Picture 2 - ESG conversion factors
CCH Tagetik ESG also supports sustainability reporting beyond the regulatory frameworks
In addition to the KPIs identified within the respective ESG frameworks, companies can create additional custom sustainability KPIs to report on. This feature enables companies to measure their ESG performance beyond what is prescribed by the existing frameworks.
Custom KPIs can provide businesses with a more complete view of their ESG performance and help to identify areas for improvement. These custom KPIs can be catalogued into one of the built-in ESG topics. As an example, on top of all the regulatory KPIs on the topic “workforce health and safety”, a company could additionally track the workforce's sickness days in relation to Covid19.
Picture 3 - ESG custom KPI
Data collection options
Upon finalisation of the KPI definition, the CCH Tagetik ESG module provides data collection forms that enable users to input ESG data manually, or eventually upload data directly from a source file or through a database connection, using the Tagetik ETL (extract transform load) functionality.
When opting for manual data input, the user can choose to open the data entry form in a web browser or input the data via the Tagetik Excel add-in. The data collection process contains instructions to make the input as smooth as possible.
Alternatively, the CCH Tagetik ESG module also provides a flexible data integration framework, allowing companies to collect ESG data from multiple sources and integrate it seamlessly into their reporting process. Several data integration methods can be used such as REST API, file transfer and database connectivity. As such, if desirable, granular ESG data can be loaded to the Tagetik Analytical Hub and from there easily integrated into the ESG regulatory module. Since the originally integrated data can contain very detailed information, capturing this data allows companies to gain a more comprehensive view of their ESG performance, leading to better decision-making and improved ESG outcomes.
Delivering ESG insights
The ESG KPI module in Tagetik can help businesses improve their ESG performance by integrating ESG-specific targets. The first focus may be to comply with the ESG reporting standards and collect data across various ESG domains. But moving on, the business can also use the CCH Tagetik’s ESG module to identify areas of strength or underperformance, on sustainability-related topics and identify the progress on pre-set targets for specific topics or KPIs.
Another option is to elaborate the standard ESG solution with more management info on ESG, by adding company-specific, custom KPIs, to enrich the ESG reporting. Finally, tracking the budget for ESG-related initiatives and tracking the progress over time on KPIs measuring the effectiveness of the ESG initiatives will close the loop on sustainability reporting.
Picture 4 - ESG output reporting
The CCH Tagetik ESG module offers robust reporting capabilities, enabling companies to create informative and visually appealing reports based on their ESG data. The module uses analytical dimensions for the mandatory, discretionary and custom levels that can be dragged and dropped into the rows or columns of a report, making it easy to customize the report layout and format according to the specific reporting needs. By using analytical dimensions, companies can create dynamic reports that provide insights into their ESG performance, allowing them to track progress against targets and identify areas for improvement. These reports as well can be accessed by using the web browser or by using the CCH Tagetik Excel add-in.
Picture 5 - ESG Dashboard
The ESG KPI module of CCH Tagetik supports the business to report efficiently on a broad set of ESG topics. The solution facilitates collecting ESG data in a structured and organized manner, tracking progress, identifying trends, and making informed decisions.
The ESG KPI module of CCH Tagetik is a comprehensive solution, allowing for an integrated setup to improve ESG performance, meet regulatory reporting requirements, and meet stakeholder expectations for ESG reporting.
For more insights & research, visit the element61 Knowledge Base.
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