Whitepaper
Why ESG data matters
The start of 2024 brought another period of change for ESG mandatory reporting. Since January, we have seen a watered down CSDDD accepted by Member States in the EU, the passing of SEC but with legal challenges, and increasingly tangible and salient CSRD requirements for applicable organisations. In the voluntary reporting world, SBTi marked several climate commitments of some of the world’s largest brands as ‘removed’ and followed up with a statement weeks later allowing companies to use Environmental Attribute Certificates to help meet Scope 3 reduction targets.
Underlying these changes, the need to identify, assess, and prioritise aspects that are material for businesses has never been more important – and the ability to respond to these shifting priorities with clear, transparent and auditable data baselines, collection processes and reporting strategies is integral to success.
Businesses armed with accurate ESG data build credibility with investors, campaigners, and the market. Leaders consolidate their position as genuine advocates for societal well-being, resonating with consumers who are increasingly conscious of the impacts of their purchasing decisions. In Europe, this will be increasingly important with the recent passing of the EU Green Claims Directive where organisations could face fines worth at least 4% of the annual turnover for vague, misleading, or unfounded claims.
Effective reporting, underpinned by quality data management
Your ESG reporting programme should be underpinned by robust data management processes. You can achieve this by implementing a secure, framework-aligned, integrated ESG data management system. Implemented correctly, this will position you to speak confidently and openly about your ESG data and progress. While an integrated digital ESG management system requires upfront investment, it should offer a short-term return on investment by saving staff time on manual reporting processes, data management, and assurance.
There are many software solutions for ESG data management, so how do you choose which one is right for you?
Selecting the right ESG data management platform
Through our experience of developing digital solutions that drive transformation in ESG management, we have identified six key features that are essential for an effective ESG data platform:
- Configurability: Businesses often have their ESG data held in disparate systems – Excel, CRM or simply a mass of emails. Your selected platform should collect and integrate your data in a way which rapidly meets you where you are. For more advanced businesses, there may also be scope to integrate your data using an API.
- Alignment with recognised ESG frameworks: The inclusion of frameworks such as the European Sustainability Reporting Standards (ESRS) or Global Reporting Initiative (GRI) is vital to ensure consistency and comparability in reporting. Aim to choose a platform which includes the frameworks you need or enquire about the bespoke addition of ESG frameworks you need to respond to stakeholder requirements.
- Technical know-how and advisory experience: ESG data management does not take place in a vacuum. Aim to work with a provider who can help align with other elements of your ESG strategy. For instance, providing support and experience on Corporate Sustainable Reporting Directive (CSRD) compliance requirements and data management. Having a breadth and depth of expertise on ESG topics is essential to helping you address the impacts, risks and opportunities that are most material to you and identifying the commercial opportunities that these could present.
- Security: This is paramount to safeguarding sensitive ESG information and ensuring compliance with privacy regulations. The tool should incorporate robust security measures to protect data integrity and prevent unauthorised access. Regular ethical hacking and an incident management process are also indicators of best practice. As a minimum, seek out platforms with an information security management certificate, such as ISO 27001.
- Accessibility and ease of integration: Integration with your existing systems and an intuitive, logical interface which minimises the need for training is key to facilitating a seamless adoption and maximising operational efficiency.
- Traceability and data quality: Ensure that your selected platform gives you the ability to report fully and in line with your strategy. For instance, ensure you can build custom outputs and reports in line with any potential data request and all outputs can be fully evidenced or referenced for auditing purposes. Where you (or a 3rd party) are undertaking quality assurance, this should be undertaken directly within the platform to maintain data integrity and save time.
By evaluating potential tools based on these criteria, you can select the solution that provides you with confidence in your ESG reporting. This will empower your decision making, support your ESG initiatives, and ultimately enable you to boost your sustainability performance – positioning your business to succeed.
Our ESG data management platform, MERO, has been designed to integrate sustainability into your business strategy seamlessly. Backed by over a decade of expertise, MERO has supported over 200 organisations to navigate their ESG and sustainability journeys. Find out more here.
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