ESG Reporting: Paving the Path to Sustainability with the Right Solution

Environmental, social and governance (ESG) management has become a top priority for companies across all industries. It is a business and regulatory imperative and high on the C-suite agenda. As a result, ESG regulations and requirements were ranked by CEOs as the number one business risk in Europe in 2023, ahead of cybersecurity and economic concerns 1. ESG reporting is widely used by companies for transparency, comparability and accountability to various stakeholders. The different regulatory frameworks make ESG appear primarily as a legal necessity. However, ESG is much more than that. When ESG is established as a strategic pillar in your long-term business strategies, you can see it as an opportunity with massive impact and growth potential. Learn more on the potential challenges of ESG reporting and how finance professionals can overcome them with adopting a professional ESG reporting solution.

 

Current status of ESG reporting and challenges faced by finance professionals

ESG reporting can be challenging due to the lack of readily available data for most companies. With data scattered across multiple sources and functional silos, there is limited visibility and control over ESG data. When ESG is not operationalized, finance departments struggle to measure, monitor, manage, and report progress effectively.

Statistics reveal the current state of ESG reporting 2:

• 36% of companies have just started identifying and collecting ESG data
• 20% have visibility and are monitoring at least 75% of their ESG data
• Only 3% have a complete view of their ESG data

 

As a result of poor data tracking, many finance departments find it challenging to measure their environmental impact and quantify the business impact of ESG investments. Without clear visibility and control of ESG data, companies struggle to demonstrate the ROI of their sustainability efforts.

 

Navigating the top 5 technology and organizational challenges in ESG reporting

Research shows that companies face ESG reporting challenges on two different levels: technological and organizational 3. Let's take a look at them:

These obstacles highlight the intricate nature of ESG reporting and the need for organizations to address both technological and organizational challenges to succeed in this critical area.

 

Overcoming ESG data dilemmas in financial reporting

As a finance professional, you will have experienced first-hand the challenges posed by the ESG dilemma 4.

• Poor data governance and a lack of data integrity can lead to inaccuracies, outdated information, and susceptibility to manipulation.
• The fragmentation of data across various business departments and systems hinder alignment and create silos.
• Manual data collection processes that lack standardization and auditability contribute to inefficiencies, while the difficulty of integrating data from different sources and formats exacerbates the problem.
• Limited data analysis and poor data visualization tools impede the effective interpretation and presentation of ESG data.

 

Moving forward with an intelligent ESG reporting solution

To enhance their sustainability journey, companies are increasingly focusing on addressing data challenges and investing in ESG reporting software platforms with comprehensive capabilities. These intelligent ESG reporting platforms offer end-to-end solutions that encompass integration, automation, forecasting, tagging, and publication, providing finance and accounting teams with the tools needed to streamline their reporting processes and enhance accuracy. 5

To meet regulatory requirements and make informed business decisions, companies require an end-to-end ESG reporting solution that guarantees the accuracy and integrity of their ESG statements.

This comprehensive reporting approach rigorously reflects a company's ESG performance and facilitates strategic decision-making.

From data ingestion through automated collection and integration from multiple sources to output reporting and publication with rich visualization capabilities, these platforms offer a holistic solution for ESG reporting needs.

 

Effective ESG reporting and sustainable growth

ESG reporting can be a complex and challenging process: But with the right tool in place the CFO and the finance team can manage all the challenges and drive business growth. By establishing ESG as a strategic pillar in their long-term business strategies, businesses can unlock new opportunities, enhance stakeholder engagement, and create sustainable value in the long run. Embrace ESG reporting as a pathway to excellence and embark on a journey towards a more sustainable and successful future.

 

Source:
[1] IDC's CEO Survey, February 2023
[2-5] IDC, Global Sustainability Readiness Index, August 2023