The importance of establishing robust ESG reporting

Environmental, social and governance (ESG) commitments are growing in relevance for businesses of all sizes. They no longer just carry ethical ramifications, they can also have a direct business impact. Customers, regulators, rating agencies and a range of third-party organisations are increasingly scrutinising enterprise-level ESG commitments and performance.

Getting it wrong can damage reputations, getting it right can enhance credibility, but bringing it all together can be problematic. Businesses therefore need to be proactive in mitigating the risk of allegations of misleading statements to avoid regulatory investigations, civil litigation and the negative financial impacts arising from criticism and censure.

Unfortunately, there are two major obstacles that businesses need to overcome. First, a recent assessment of the regulatory landscape identified more than 600 sustainability reporting requirements across over 80 countries. Making bold ESG commitments in such a complex landscape is one thing, but proving you’ve met your targets can be challenging. And if there are any disparities there can be trouble ahead.

The second challenge needs to be unlocked if businesses are to overcome the first hurdle – the availability of good, reliable ESG data. Unfortunately, ESG-related information has generally not been held to the same standards of accuracy as financial records and it’s often spread over disparate, unconnected systems. The result is incomplete and potentially inaccurate data, which can result in flawed reporting.

A specialised software platform

Enterprises of all sizes have dedicated IT systems for a range of activities, from HR management, to a book of records for accounting purposes. ESG reporting should be no different. Implementing a specialised software platform to automatically capture and calculate emissions data, monitor sustainability initiatives and scrutinise supply chain feedback makes the process more reliable, transparent and auditable.

To help companies measure and monitor their ESG performance, IBM has developed its Envizi ESG Suite, which helps organisations to automate data capture and centralise it for analysis and reporting purposes. As a result, all the required responses across multiple internationally recognised frameworks, such as SASB and Global Reporting Initiative (GRI), can be centrally associated in a library with one data set and one repository of information.

Envizi’s suite of cloud-based, ESG software modules work together in three ways. First, a single, unified system delivers auditable, robust ESG data and GHG calculations. Second, its flexible reporting tools meet internal and external requirements for comprehensive ESG reporting and disclosure. And third, its analytical tools identify opportunities to reach low carbon goals and track performance against sustainability commitments.

Additional benefits

Because of its automated, integrated operation, Envizi can cost-effectively break down data silos and streamline data collection, while also saving time. It can also be integrated with a range of other IBM solutions, further enhancing its effectiveness. These include:

· IBM Maximo enterprise asset management software

· IBM Tririga integrated workplace management system

· IBM Turbonomic hybrid cloud cost optimisation platform

Taken together, data from across sites, capital projects, facilities, workplace operations, portfolio data and environmental and energy management can be combined within a single technology platform. The upshot: auditable, trustworthy, uniform ESG insights that can be used to calculate and benchmark emissions data, sustainability initiatives and bolster ESG reporting.

A complex future

What is undoubtedly clear is that 2023 will witness further global disruptions and financial headwinds. These will continue to generate economic problems that could constrain ESG ambitions, at a time when ESG reporting is becoming more complex. IBM’s solutions can help businesses overcome these challenges by delivering the dependable data they need. The Envizi suite is also regularly updated in line with new framework requirements such as CSRD (Corporate Sustainability Reporting Directive) to ensure that reporting remains aligned with evolving market obligations and ward off scrutiny.

In the UK this includes the Competition and Markets Authority’s (CMA) Green Claims Code, which aims to protect consumers from misleading environmental statements. The USA’s Securities and Exchange Commission (SEC) is also looking into disingenuous environmental claims. Its recently formed ESG Task Force investigates climate and ESG-related misconduct.

These types of checks aren’t going away and neither are the business benefits available from credible, verifiable ESG goals. Clearly, getting it wrong has very serious implications, from brand impact to financial losses and negative consumer sentiment; however getting it right has therefore never been more important. IBM has the holistic tools, knowledge, insights and knowhow needed to ensure that happens.