For forward-thinking businesses, Environmental, Social, and Governance (ESG) isn't just a buzzword—it's a tangible factor driving profits and performance. A report from the Infosys Knowledge Institute has underscored this, revealing that a boost in ESG spending can lead to a direct uptick in profitability. However, the ESG landscape in 2023 poses its own set of challenges.
1. The Challenge of Manual Data Management
While 90% of executives notice significant financial returns from ESG activities, many companies are mired in the manual aggregation of ESG data, diverting time and resources. This not only strains budgets but makes achieving ESG goals seem more expensive than they truly are.
2. The Reactive vs. Proactive Approach:
Companies often find themselves in a reactionary stance, relying heavily on spreadsheets for ESG data. This reactive approach can obscure the bigger strategic picture. As Shari Littan from the Institute of Management Accountants notes, there's been a heavy emphasis on external ESG reporting rather than adopting a holistic, integrated strategy.
3️. Navigating the Complexity:
With data sets scattered across departments and a lack of clarity on who owns what, the ESG data journey—from collection to final reporting—becomes even more convoluted.
But there's a silver lining. Here's how companies can pivot and master their ESG data:
Collaborate with Industry Peers:
Join forces with other businesses in your sector to define ESG standards and requirements. Such collaborations can lead to more streamlined and efficient ESG practices.
Invest in Automation and Evolving Tech:
Hesitating to adopt new technologies due to their perceived inadequacy for future ESG needs? Partner with software solutions that are at the forefront of ESG capabilities. These tools can automate processes, enhance data categorization, and assign specific roles, ensuring everyone understands their place in the ESG strategy.
Leverage the Expertise of Finance & Accounting:
These departments are often the first to understand the value of technological investments for sustainability, thanks to their experience in data oversight, system building, and reporting.
In the evolving world of ESG, it's crucial to anticipate and adapt. By taking proactive steps, businesses can ensure they're not just reacting to ESG demands but strategically positioning themselves for sustainable success.
