IRIS On Moving ESG Data To The Core of Business Strategy

ESG reporting has become a core operational standard for many businesses. Alongside supporting compliance and sustainability initiatives, the data collected can also be used to inform and guide the company's overall strategy.

But there is a growing disconnect in corporate sustainability data that arises from the original design of ESG systems.

While most architectures meet the needs of external stakeholders, such as regulators and rating agencies, they often do not provide information which offers practical insights for business leaders.

To address this gap, analytical tools that build on traditional data collection can support organisations.

Integrating ESG metrics with core business functions like procurement and finance transforms sustainability from a compliance task into a strategic driver of long-term business growth.

Implementing these frameworks can create a compelling narrative for impact, rather than serving as a box-ticking exercise.

However, scaling such insights requires moving beyond traditional tools like manual spreadsheets, which become unsustainable as data volumes increase.

“These complicated and sophisticated systems have been designed to calculate and capture all of this data, but it's not really translating into that management piece yet," says Farzad Wadia, ESG Lead at IRIS RegTech Solutions, a software as a service (SaaS) provider operating in the Governance, Risk, and Compliance (GRC) space.

Effective implementation of these tools can position ESG teams at the centre of the organisation, providing data-driven credibility across all departments, the ability to influence major capital decisions, and the capacity to inform board-level strategy.

The compliance trap

Most ESG systems were designed for external rating agencies, so the data collected primarily meets external criteria, limiting the scope for impact.

“When ESG data requirements came out, they came out because of rating agencies and regulatory frameworks and it was always outside the organisation that demanded certain data points,” says Farzad.

“And then internally, what happened was data systems were designed to cater to those requirements.”

Farzad explains, however, that ESG data requirements cannot provide strategic guidance for internal decision-making.

“If you look at an organisation internally, you look at someone from the operations perspective; for example, all they want to know is which facilities contribute the most emissions.

“Someone in procurement wants to know sustainability risks in the supply chain. The CFO wants to know financial implications.

“These aren't metrics you typically report to a rating agency or to frameworks. So there is a slight disconnect.”

Spreadsheet breaking point

Many businesses continue to track ESG metrics using Microsoft Excel or similar software because of its familiarity, according to Farzad. However, spreadsheets are inadequate for rigorous external audits due to limited audit trails and the volume of data.

“Most people in the ESG side absolutely love Excel and it's only as the environment matures and you start getting external pressure – for instance when the rating agencies start asking you a deeper round of questions or say that your ESG report goes through assurance – that you realise Excel is breaking.

“Because you don't have an audit trail, you don't know where the numbers come from, you don't know who's edited what. It is scalable up to a point and then it kind of snaps, unfortunately.”

Effective sustainability reporting requires analytical engines layered on data collection tools to deliver relevant metrics for procurement, operations, and finance.

A mature ESG strategy empowers sustainability teams with data-driven authority to challenge capital expenditures and influence executive risk management.

IRIS RegTech helps businesses transition from spreadsheets by offering IRIS Carbon, a disclosure management platform that enables enterprises to create interactive ESG reports.

Operational integration with accurate data

Collecting accurate data can be challenging for companies with limited time and resources. And if you put in bad or inaccurate data, you will only get poor or imprecise insights back out.

“One of the biggest challenges in ESG is that it has always been a data collection piece,” says Farzad.

IRIS RegTech supports clients in sourcing accurate information about their ESG activities and environmental impacts. It can then help develop insights that are valuable for wider teams within the business, and not just ratings agencies.

“Because we know what the data requirements are, we're helping them collect the right sort of data,” adds Farzad.

“Essentially, we have an analytical engine that sits on top of the data collection piece, programmed to provide more insights into decision-making.

“We have dashboards and views designed for, say, someone from the supply chain to give them not just the ESG view, but also, say, a procurement view, for example. When you marry the two of them together, it's helping ESG set more operational and strategic goals for our clients rather than it being a siloed decision-making process.

Double materiality

The concept of double materiality has significantly influenced business ESG reporting in recent years.

Companies are already required to provide information about ESG topics that affect their activities on purely financial grounds. This is materiality.

Double materiality requires companies to report on how their activities, including supply chains and value streams, affect the environment and society.

The term grew in prominence largely as a result of the European Union’s Corporate Sustainability Reporting Directive (CSRD), which, from 2024, mandated a double materiality assessment.

“If you actually look at the double materiality base, it's one of the most powerful things that's come out of the entire ESG movement,” says Farzad.

“The whole idea that you can look at what your business does and how it impacts the environment, at the same time and how the outside world impacts our business, is a very powerful narrative.”

Robust data governance is an essential element of credible impact reporting, not just compliance. 

Without validation, organisations risk basing strategies on unreliable data. Prioritising data integrity and data analysis ensures that ESG outputs accurately reflect the true impact and avoid the 'garbage in, garbage out' pitfall.