The number one challenge that is faced by companies in their social governance ESG reporting efforts is data. Reporting ESG and strictly following the recommended disclosure frameworks is an important indicator to investors, regulators, peers, customers, and competitors that your enterprise is taking sustainability seriously. These stakeholders mainly look at the report you publish, but preparing it can be pretty challenging without the right software.
For about two decades, ESG reporting was mainly voluntary, with most organizations opting for corporate social responsibility (CSR). However, this model has not been adequate to address the challenges facing the planet. For example, the problem of global warming is getting worse year after year, making governments and regulators make ESG reporting mandatory. Keep reading as we demonstrate the main role that sustainability reporting apps play in social and governance ESG compliance.
What is ESG Sustainability Reporting?
ESG sustainability reporting is the process of disclosure of a company’s environmental, social, and governance impacts from its operations. The reporting helps to tell stakeholders that your company is part of the global efforts helping address global issues. While the target is creating an ESG report for stakeholders, the reporting process goes even deeper. The process extends into company dynamics, strategy formulations, and long-term planning: implying that sustainability will become part of the organization’s design.
The process of ESG sustainability reporting for your company has to follow a specific framework, such as the Task-force on Climate-Related Financial Disclosures (TCFD) or the Global Reporting Initiative (GRI). Further, you need to ensure the process adheres to the following guiding principles.
- Materiality.
- Verifiability.
- Accuracy.
- Continuity.
Adhering to these principles is never easy for many companies. When the rules, such as those set by Hong Kong Stock Exchange (HKEX), call for a clear focus on the future challenges, compliance becomes even more challenging.
This is where social governance ESG software comes into play.
ESG Sustainability Reporting Trends
Before we can look at the role of ESG software in your sustainability reporting process, it is important to appreciate the emerging trends. These numbers show that more companies are adopting sustainability reporting and you should not be left behind.
- PricewaterhouseCoopers indicated that 76% of customers have expressed their intention to stop buying from companies that treat staff, environment, and community they operate in poor
- According to S&P Global, about 50% of revenue generated by the 500 biggest companies in the US and the 1,200 largest firms across the globe comes from activities that support Sustainable Development Goals (SDGs).
- KPMG established that 71% of CEOs believe it is their personal responsibility to guide their organizations to reflect ESG policies.
The Role of Social Governance ESG Software in ESG Promoting Compliance
As we demonstrated already, there are so many risks, cross-functional stakeholders, and data sources involved in ESG reporting. However, social governance ESG reporting software can help you to manage all of them. It allows you to streamline and automate the entire process and craft high-quality reports.
Here is a closer look at other things that ESG sustainability management software can help you to do.
Simplifying the Process of Compliance
Almost every authority, government, and internal standards body that your firm is affiliated with has some compliance requirements. If you take the example of the EU policy to cut down greenhouse gasses (GHG) by 55% by 2030 compared to 1990 levels, it implies that you have to set clear strategies to reach the same level by then. Social governance ESG reporting software can help you set a clear roadmap to follow in order to reach pre-set targets.
Remember that when your report indicates your company has cut down emissions, reduced water use, or supported social justice with a certain margin, the information must be verifiable. The software you use will make that easy to win the trust and support of the authorities and other stakeholders.
Providing Insights into the Reporting Process
The process of gathering data is the most challenging in ESG reporting. However, a good sustainability reporting app will help to simplify the process and increase accuracy. Sustainability reporting apps by Diginex.com easily integrate with management systems to pull out data relevant for analysis.
The software also comes in handy in data analysis and generating graphical presentations to help you assess progress.
If you target to create reports for different authorities, such as investors and stock markets, the software will use the same information to create them. This means that you will not need to repeat the process of data gathering for compliance.
Assessing ESG Compliance in the Supply Chain
The effort to adopt ESG reporting should not be aimed at simply creating reports for stakeholders but also to genuinely address challenges facing the planet. To have a bigger impact, it is a good way to also rope in other parties in the supply chain, and the sustainability reporting software can help in assessing compliance. If you agree with suppliers or vendors that all the products must be produced through eco-friendly practices, are the terms being bet? The app you use can help to check compliance.
This post has demonstrated that Social governance ESG reporting software is an important tool that every company should have in its arsenal for compliance. Indeed, we have only scratched the surface because you are sure of getting a lot more, including reduced risks and better stakeholder engagement. At Diginex.com, our target is to create apps that will not just help simplify compliance but build your company's momentum for growth.
