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 typically grapple with vital challenges when establishing an ESG program but additionally when having to navigate the broad and infrequently complicated avalanche of software program choices promising the final 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 information assortment and processing; 3) aligning with ever-changing world requirements; and 4) figuring out the proper know-how to help sustainability targets.
I’ve seen loads of confusion available in the market as as to whether ESG reporting merchandise get up as an answer function or a market in its personal proper. Shoppers ask us how they will minimize via all the vendor hype and advertising snake oil to establish the proper answer to assist them develop a long-term technique round ESG necessities and good-quality ESG reporting capabilities based on dependable and compliant information.
Within the not too long ago 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 means of defining and assessing the materiality of sustainability information throughout all three pillars, establishing dependable information assortment practices, and making certain the standard and traceability of the info to be processed. Feeding in bad-quality information dangers regulatory points and accusations of greenwashing, so making the proper alternative right here is essential. We discover that sustainability administration options, an adjoining market area, typically have reporting as a function built-in right into a wider platform trying on the complete 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 angle however, extra importantly, the six steps that ESG leaders ought to observe to implement a strong ESG reporting program. Here’s a sneak peek at a few of the key findings from our analysis:
- ESG leaders tasked with reporting are confronted with many challenges. ESG leaders face a variety of challenges, together with lack of assets, lack of knowledge, and lack of standardization. Organizations that we discuss to typically battle to outline and establish the proper information sources pertinent to regulatory reporting on ESG issues required for laws such because the CSRD. Excel spreadsheets, emails, and guide effort abound.
- Sustainability administration options will help. Standalone ESG reporting options may be costly, advanced, and troublesome to make use of. Sustainability administration options will help ESG leaders overcome the challenges of ESG reporting and produce high-quality reviews that supply high-quality and traceable information, guarantee compliance and transparency, and supply data-driven insights for performance-oriented optimization methods.
- ESG reporting is an embedded function versus a market. ESG reporting answer distributors typically discuss a very good sport, however in actuality, they don’t give attention to an important elements of an end-to-end ESG administration program, which is to give attention to getting and disclosing the proper information. Sustainability administration platforms present a lot of the identical performance and give attention to the broader image. For many ESG leaders in the hunt for a complete answer, it doesn’t make loads of sense to even choose up the cellphone 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 anticipate such events to be restricted at current.
If you’re keen on studying extra concerning the challenges and alternatives of ESG reporting, Forrester shoppers can learn the report right here. Additionally, be at liberty to succeed in out to me at ralexandru@forrester.com to attach and share your experiences and greatest practices on the subject. If you’re a Forrester consumer, schedule a steering session, inquiry, or technique session in case you have any questions or want any help in defining your individual ESG reporting technique.