A carbon-neutral future with sustainability reporting
Themes such as sustainability and climate change lie at the heart of the United Nations’ stated goals for 2030. These goals are meant to be a shared blueprint for peace and prosperity for people and the planet, now and into the future. The 17 Sustainable Development Goals (SDGs) target areas such as health and education, inequality, and economic growth – all while considering climate change and working to preserve our oceans and forests.
The corporate world is taking notice
An October 2020 study by Coyote Logistics found that 81% of companies are more focused on sustainability today as compared to three years ago. The study also stressed the integral role of supply chains in owning sustainable initiatives across an organisation’s networks.
Another survey by Fast Company found that a strong sustainability plan had an impact on 70% of employees’ decisions to stay long-term with a company. 30% of respondents reported having left a job in the past because of the company’s lack of a sustainability plan. 64% of millennials, who will represent 75% of the workforce by 2025, said they wouldn’t even take the job at all if the company wasn’t socially responsible.
With COVID-19 disrupting life as we knew it, there is greater awareness across the globe on the need to prioritise sustainable practices and work towards creating a carbon-neutral future.
Importance of sustainability and ESG
Businesses have made significant progress on their commitment to environmental performance under the broader environmental, social, governance (ESG) umbrella. However, to create a real impact, the momentum needs to be sustained.
The disruption caused by the pandemic has certainly put the very survival of several organisations at risk. No doubt a majority of the focus is on near-term priorities such as cost-cutting, efficiency, and new business models, but it is becoming more obvious than ever that putting off long-term climate initiatives indefinitely is no longer an option.
As per a recent report from EY, “strong ESG programs may help buffer the impacts of the current crisis, hasten recovery, spur innovation needed to navigate a “new normal” and reduce risks to additional crises in the future.”
Sustainability ≠ ESG
While organisations often use the terms sustainability and ESG interchangeably, there are distinct differences between the two. They both require a different set of resources, skills, and technology to enable their success.
ESG relates largely to the financial health and valuation of a company and is used to assess an organisation’s risk through the lens of a company’s environmental, social, and governance initiatives. These can have a material impact on an organisation’s performance in the future and can dictate the longevity of the company and its resiliency to market upheaval.
Sustainability on the other hand emphasises factors such as environmental suitability, employee health and safety, and social and corporate sustainability.
While there is a certain amount of overlap between the two, it is important to understand the distinctions and treat them accordingly as part of the reporting process.
Measuring and reporting for sustainability
Despite the considerable awareness about sustainability itself, the concept of sustainability reporting is still quite ambiguous. Data lies at the heart of credible and transparent sustainability reporting since it helps move beyond the marketing rhetoric and provides an empirical basis to evaluate progress.
The quality of sustainability reporting data is determined by 4 factors – volume, velocity, variety, and veracity. If your company intends to truly make a positive impact on addressing global issues whether climate change, pollution, or human rights violations, then the ability to collect accurate, detailed, consistent, and comparable data is crucial.
Below are some data, insights, and processes needed to measure sustainability and ESG effectiveness within an organisation.
Building a system for sustainability reporting
1. Employee health and safety
Ethical recruitment and worker engagement efforts can be based on assessing the human rights impact of your policies and understanding your workforce. Invest in a solution that can aggregate disparate data for a comprehensive view on human rights initiatives including parental leave, equal compensation, child labour incidents, and harassment.
Data such as the number of employees covered under health management, work-related injuries, fatalities reported, etc. can help get a good picture of the company’s occupational health and safety performance.
From a regulatory perspective, the compliance requirements for environmental sustainability evolve constantly. A good sustainability reporting solution must comply with corporate reporting requirements as well as the GRI, SDP, CGP, and any other standards.
For instance, Global Reporting Initiative (GRI) provides businesses and organisations with a common global language to communicate their impact. Therefore, the right software solution for GRI reporting must help visualise and aggregate data on areas such as energy consumption, waste management, carbon emissions, and water usage, etc. It should also help identify sustainable suppliers and also ensure product traceability and ethical sourcing through prebuilt sustainability reports.
3. Social and corporate sustainability
The COVID-19 pandemic has tested the resilience and efficacy of global ecosystems that make it necessary to build sustainable relationships with suppliers, partner networks, and communities at large. To track this effectively, it is important to track supplier-level information about products sourced, certifications, compliance, organic products sourcing, etc. via custom dashboards.
Enabling anti-corruption initiatives such as training programs, incident captures, and legal proceedings and improving corporate reputation & brand equity are also important.
4. Social and corporate sustainability
Cultivating discipline around reporting is a critical step to meet increasingly stringent regulatory requirements. Therefore, the ability to adhere to key reporting standards, ensure easy and error-free audits and regulatory reports, and aggregate data from a myriad of sources and spreadsheets is key.
5. Ease of adoption and scaling
As sustainability initiatives become broader in scope, solutions that are more adaptable throughout an organisation will have the potential to be more robust and impactful over time. The right solution must help manage resource constraints by providing streamlined implementation and offering extensibility to support future program evolutions. The ability to connect business ecosystems for better lifecycle traceability plays an important role.
Key attributes for an effective sustainability and ESG reporting solution
Overall, a good sustainability and ESG reporting tool must set sustainability goals and measure progress, streamline compliance reporting, provide actionable insights to ensure compliance. It must enable an integrated view of company-wide sustainability risks.
In addition to the ability to track an entire range of environmental, social, and governance-related data and report it in a way that is easy to understand for a variety of stakeholders, a smart and intelligent ESG software should go beyond the obvious and enable:
- Data integration from multiple sources
- Support to specific and varied sustainability functionalities
- Communication and alerts for Internal stakeholders
- Easy and quick audit process
- Data reporting data as per key reporting standards
- Ability to scale with organization growth and ambitions
A software solution that doesn’t scale as per the organization’s growth will soon be redundant. The software should be quick to implement, help make processes more efficient, manage increasing operational and strategic complexities and become an innovation driver. Programs mutate and evolve and the software should evolve accordingly to make sense of the complexity and support future program developments.
As organisations appreciate the importance of transparency around sustainability programs, they will need to look beyond the mandated nature of sustainability initiatives and recognise the opportunity to capture a competitive edge. Check out this whitepaper on 5 considerations for mid-size sustainability programs to know more.
Eka Software Solutions is a global leader in providing digital solutions, including Sustainability and ESG Reporting technology which is powered by cloud, blockchain, machine learning and analytics.
To explore more resources please visit our website or request a free trial for our sustainability management solution here.
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