While the impact of COVID 19 continues to be, devastating, the pandemic is also a major turning point in various aspects of the life of both people and organisations.
The digital acceleration triggered by the COVID 19 pandemic is undoubtedly one of the developments impacting almost everyone, without boundaries of age, colour, nationality or limitations, including organisations, profit or non-profit, small, large or multinational, traditional craftsmanship or virtual start-up business.
In the shadow of this digital acceleration, the developments in environmental, social or governance (ESG) perspective may seem to be less prominent or important. Many organisations may still consider ESG management, to be a playground for investment bankers and fund managers and merely about eco-friendly investments in the attempt to slow down climate change. But make no mistake, a new set of expectations is rapidly emerging.
ESG consciousness is rapidly maturing, with various stakeholders, employees, customers, suppliers, investors, creditors, regulators… demanding organisations to assure and report on a variety of ESG Metrics around how the organisation is acting upon, sustainability, diversity, equity and inclusion, internal control and policies, …
Where the vigilance towards the environmental aspects is globally recognized, the public scrutiny towards DEI (diversity, equity and inclusion) and corporate responsibility related topics may be trailing. Unfortunately, ‘Me Too’, ‘Black Lives Matter’, ‘Panama Papers’, ‘Football Leaks’,… need little clarification anywhere around the globe. Accountability around governmental and social justice issues is here to stay.
Until now, ESG reporting remained mostly voluntary, but things are changing for the good. ESG reporting will shift from a ‘nice to have’ into an essential ‘must have’ reporting requirement. Only recently, the unification of the ESG reporting standard took off, as the International Financial Reporting Standards Foundation (IFRS) announced taking on the next steps towards establishing global sustainability reporting standards. In November 2021 at the COP26 (UN Climate Change Conference) summit the IFRS Foundation announced the formation of the International Sustainability Standards Board (ISSB), a global baseline for sustainability disclosure standards. The aim is to draft standards by the middle of 2022 and to have them adopted in 2023.
With ESG awareness maturing, organisations cannot be lagging. On the contrary, organisations should embrace the opportunity of embedding ESG into their DNA, considering it at the company strategic level. The inability to demonstrate ESG responsibility and progress will make organisations less desired or attractive to stakeholders, far beyond investors or creditors.
In the context of the current COVID 19 economic recovery, with many challenges in the Supply Chain, sudden shifts in customer demand and severe labour constraints, imperative stakeholders such as suppliers, customers and employees may best not be brushed aside. Positive engagement around the company- and industry-relevant ESG criteria will provide a strong foundation for the long-term viability of most organisations. The lack of ESG responsibility will most likely undermine shareholder value, company branding and operational excellence in the long term.
No matter which angle your company takes on the ESG agenda, the global and regional reporting requirements progress consistently and become more stringent. Whether your company pursues a minimal or comprehensive strategy towards ESG, your company cannot overlook to invest in a proper software foundation to support its ESG approach.
If your company chooses the minimal ESG angle, at least take an intelligent and integrated approach.
By now, many of you invested already in Corporate Performance Management (CPM) solutions. These tools are typically in place for financial and/or operational planning, reporting and disclosing activities.
CPM tools offer an easy extension towards ESG required reporting, both internally and as an instrument for performance benchmarking as well as externally to disclose relevant and validated information to the outside world. Enabling to report on the minimum disclosure requirements or facilitating an in-depth approach of, collecting data for all identified ESG metrics, planning for measurable ESG goals, and benchmarking progress, can be realized easily with our market leading portfolio of Performance Management solutions.
Companies opting to promote ESG at a strategic level, instinctively look for automatization and support from software. In this case, we advise a thoughtful approach rather than a quick fix, satellite solution.
The stretch that ESG data points are more likely to impose is very broad, with each data point potentially voluminous, hence the demand for a comprehensive solution arises. Companies are assessing that ESG measuring, benchmarking, planning and reporting are of strategic value must embed the call for ESG data & information, what we call a Modern Data Platform.
A platform where real-time and “big data” (eg. emissions) ESG data can be handled and enterprise ESG reporting is enabled. And why not, even relevant AI & Data Science ESG uses-cases can be developed.
A unique household for all enterprise data and the single source of truth for any information quest, also ESG related. Interested to discover what Data Platforms element61 proposes to take off your ESG journey, reach out to us.
What steps is your organisation taking to effectively tackle the upcoming ESG regulations and reporting requirements? Adoption from 2023 necessitates organisations to start acting today. Sustainability accepts no wait and see approach. It’s time to gather your troops.
Future proof organisations will embrace ESG as a strong competitive differentiator and USP.
Contact us for more information on Environmental, Social & Governance (ESG) reporting & disclosure solutions.