Why the increased focus on ESG?
Investors, consumers, analysts, employees, and other key stakeholders have long looked at financial metrics as key indicators of a business’s operational health. Now, those same stakeholders are demanding companies make – and keep – strategic commitments to advance social responsibility and environmental stewardship, too. That’s because investors and analysts increasingly report strong correlations among ESG performance, business value, and operational performance. ESG performance is also an increasingly important factor when it comes to driving employee retention and engagement – and consumer trust and confidence, too.
ESG reporting: what are the challenges?
Today’s businesses are expected – and sometimes required – to report and comply with myriad of inconsistent and ever-evolving ESG regulations. They’re also faced with the overwhelming task of centralizing and standardizing non-financial ESG data from a multitude of internal and third-party sources.
Just like financial reporting, effective ESG reporting requires multiple corporate regions, functions and businesses to rise above their siloes to work together to collect and report ESG data, analyze that data to identify and manage risks, and assure its accuracy. That kind of true collaboration and integration can only happen with the support of digital transformation: technologies that can break down siloes, bring clarity to complexity, and assure the traceability and auditability of ESG data.