Environmental, social, and governance (ESG) reporting is a required functionality for organizations within the European Union and past, with most of them legally required to implement new laws (beginning in 2025 for the monetary yr of 2024) when the EU’s Company Sustainability Reporting Directive (CSRD) directive comes into regulation. ESG leaders usually grapple with vital challenges when establishing an ESG program but additionally when having to navigate the broad and sometimes complicated avalanche of software program choices promising the last word options to their sustainability administration and reporting issues. ESG leaders are dealing with a number of challenges, together with: 1) defining a sound technique; 2) managing knowledge assortment and processing; 3) aligning with ever-changing international requirements; and 4) figuring out the precise know-how to assist sustainability objectives.
I’ve seen a number of confusion out there as as to whether ESG reporting merchandise rise up as an answer characteristic or a market in its personal proper. Purchasers ask us how they’ll lower via the entire vendor hype and advertising and marketing snake oil to establish the precise resolution to assist them develop a long-term technique round ESG necessities and good-quality ESG reporting capabilities based on dependable and compliant knowledge.
Within the just lately revealed Forrester report, ESG Reporting Is A Function, Not A Product, I argue that, for many organizations, ESG reporting as a standalone market doesn’t make a lot sense. Many standalone options merely act as reporting shells, overlooking important steps within the strategy of defining and assessing the materiality of sustainability knowledge throughout all three pillars, organising dependable knowledge assortment practices, and making certain the standard and traceability of the info to be processed. Feeding in bad-quality knowledge dangers regulatory points and accusations of greenwashing, so making the precise alternative right here is essential. We discover that sustainability administration options, an adjoining market area, usually have reporting as a characteristic built-in right into a wider platform trying on the total reporting downside, from sourcing the info to assortment, transformation, and the ultimate reporting part. Forrester shoppers can learn my report to seek out out extra about this attitude however, extra importantly, the six steps that ESG leaders ought to comply with to implement a strong ESG reporting program. Here’s a sneak peek at a number of the key findings from our analysis:
- ESG leaders tasked with reporting are confronted with many challenges. ESG leaders face a lot of challenges, together with lack of sources, lack of knowledge, and lack of standardization. Organizations that we discuss to usually wrestle to outline and establish the precise knowledge sources pertinent to regulatory reporting on ESG issues required for laws such because the CSRD. Excel spreadsheets, emails, and handbook effort abound.
- Sustainability administration options might help. Standalone ESG reporting options may be costly, complicated, and troublesome to make use of. Sustainability administration options might help ESG leaders overcome the challenges of ESG reporting and produce high-quality studies that supply high-quality and traceable knowledge, guarantee compliance and transparency, and supply data-driven insights for performance-oriented optimization methods.
- ESG reporting is an embedded characteristic versus a market. ESG reporting resolution distributors usually discuss a very good recreation, however in actuality, they don’t concentrate on crucial facets of an end-to-end ESG administration program, which is to concentrate on getting and disclosing the precise knowledge. Sustainability administration platforms present many of the identical performance and concentrate on the broader image. For many ESG leaders in the hunt for a complete resolution, it doesn’t make a number of sense to even decide up the telephone when a standalone reporting supplier calls. The one restricted case the place it might make sense is for a mature group with an current sustainability administration platform that requires extra performance than offered in its incumbent supplier’s reporting options. I count on such events to be restricted at current.
If you’re eager about studying extra concerning the challenges and alternatives of ESG reporting, Forrester shoppers can learn the report right here. Additionally, be at liberty to achieve out to me at firstname.lastname@example.org to attach and share your experiences and finest practices on the subject. If you’re a Forrester consumer, schedule a steering session, inquiry, or technique session when you’ve got any questions or want any help in defining your individual ESG reporting technique.