ESG reporting software is a technology that helps organisations measure and report their environmental, social, and governance (ESG) performance. ESG reporting has become increasingly important in recent years as investors have become more interested in sustainable investing and many countries have begun to require ESG reporting by law.
Given the complexity of ESG investigation and reporting, ESG reporting software can be an invaluable tool for both organisations and investors.
It can help organisations track their ESG performance over time, compare their ESG performance to peers, and identify opportunities for improvement. ESG reporting software can also automate the ESG reporting process, making it easier and faster for companies to comply with reporting requirements.
For investors, ESG reporting software can provide insights into which companies are managing ESG risks effectively, which are making commitments, and which companies may be exposed to ESG-related risks in the future.
Owing to the varying reasons why organisations and investors might use ESG reporting software, there is no one-size-fits-all solution. When choosing ESG reporting software, it is important to consider the specific needs of your organisation or investment firm.
In this blog post, we will provide an overview of ESG reporting software and discuss some of the key considerations for companies when choosing the right tool for their needs.
What is ESG Reporting?
ESG reporting is the process of measuring and disclosing an organisation’s environmental, social, and governance (ESG) performance. ESG performance refers to the impacts that an organisation has on key ESG issues, such as climate change, human rights, bribery and corruption.
Why It Matters
ESG reporting is important because it helps investors and other stakeholders understand an organisation’s ESG risks and opportunities.
What are ESG risks?
ESG risks are potential negative impacts that could occur as a result of an organisation’s activities on key ESG issues, for example, the risk of loss from climate-related damage to property or the risk of reputational damage from human rights violations.
What are ESG opportunities?
ESG opportunities, on the other hand, are potential positive impacts that could occur as a result of an organisation’s activities on key ESG issues, such as the opportunity to reduce greenhouse gas emissions or the opportunity to improve employee engagement.
ESG Reporting: A Bonus, or a Necessity?
ESG reporting used to be voluntary, but it is now becoming increasingly compulsory. The European Union has adopted new rules that will require all companies listed on EU stock exchanges to disclose their ESG performance beginning in 2023. And in May 2022 the U.S. Securities and Exchange Commission proposed new rules that would require all companies to disclose their ESG performance.
ESG reporting is also becoming more important to investors. A 2018 survey by Morgan Stanley found that 80% of asset owners said they consider ESG factors when making investment decisions. And a global 2020 survey by BlackRock found that over half (54%) of global investors consider sustainable investing to be “fundamental to investment processes and outcomes.”
The Challenges of ESG Reporting
ESG reporting can be complex and time-consuming. Organisations need to collect data on a wide range of ESG indicators, which can be difficult to measure in a consistent and comparable way. In addition, ESG data sets are often changing and evolving, which can make it difficult to track ESG performance over time. Finally, ESG reporting is typically a recurring annual obligation for companies, which can add to the complexity and cost of ESG reporting.
How ESG reporting software can help companies
ESG reporting software can help organisations gather and analyse ESG data, track their performance over time, compare their ESG performance to peers, and identify opportunities for improvement.
Some ESG reporting software can also automate the ESG reporting process, making it easier and faster for companies to comply with ESG reporting requirements.
How ESG reporting software can help investors
ESG reporting software can help investors screen companies for ESG risks and identify companies that are leaders in ESG performance. It can also help investors track the ESG performance of their portfolios over time. It can also help corroborate sustainability claims made by organisations and weed out controversial companies before time is wasted on further investigation.
The Best ESG Reporting Software
There’s no one-size-fits-all solution to ESG reporting. The right tool for you depends on the size and complexity of your ESG program, the industry you are tracking or operating in, as well as your budget and resources.
So when choosing the right ESG reporting software for your needs, here are 10 points to consider:
1. Investor or organisation?
Investors and companies require different things from ESG reporting software: If you’re a company, make sure the software you choose can help you meet the disclosure requirements of your investors and policymakers. If you’re an investor, make sure the software you choose can help you screen companies for ESG risks, identify ESG leaders and keep track of whether companies are upholding their ESG commitments.
2. Self-managed or fully supported?
Do you want a self-managed solution or one that is fully supported by ESG experts? If you’re just getting started with ESG reporting, you may want a software solution that offers more support. But if you have an ESG team in place, you may prefer a self-managed solution.
3. What languages does the software need to support?
If you operate across various territories, you will need ESG reporting software that can support multiple languages.
4. What industries does the software need to cover?
ESG reporting needs to vary by industry. For example, companies in the oil and gas industry will need ESG reporting software that can track emissions data, while companies in the food and beverage industry will need ESG reporting software that can track water usage data. Make sure the software you choose offers features that are specific to your industry.
5. What data sources does the software need to integrate with?
The ESG data you need will likely come from a variety of sources, including financial data, operational data, and survey data. Make sure the software you choose can integrate all required data sources.
If necessary make sure that the tool is capable of accurately analysing unstructured data. For example, employee reviews, reports, and internal and external communications all constitute useful ESG data but can be unstructured. The ESG reporting software you choose should be able to accurately analyse this type of data, in addition to structured data.
6. Does the software offer ESG data collection?
In addition to analysing ESG data, some software solutions also offer ESG data collection services. This can be helpful if you don’t have an ESG team in place or if you need help collecting ESG data.
7. Does the platform provide benchmarking features?
Benchmarking in ESG is important for understanding where your company stands in relation to its peers, and assessing what is considered “best practice” in ESG performance. Some ESG reporting software solutions offer benchmarking features, which can be helpful in setting ESG targets and measuring progress over time.
8. Is the UI friendly?
The user interface (UI) of ESG reporting software can also vary widely. Some ESG reporting software offers a simple, straightforward UI that is easy to use, while others may offer more features and functionality but at the expense of usability.
It’s also important to consider the transparency of your insights. Transparency is key when it comes to ESG reporting software. Make sure the platform you choose has a user-friendly interface that makes it easy for you to navigate ESG insights to trace the source of the data.
ESG reporting software should also make it easy for you to share ESG insights with stakeholders.
9. What is the software's pricing model?
ESG reporting software can be priced in a variety of ways, including subscription fees, pay-as-you-go fees, and one-time licensing fees. Be sure to consider the ESG reporting software’s pricing model before making a financial commitment.
10. Security Compliance
Make sure the ESG reporting software you choose has the necessary security features in place to protect your data and comply with all relevant regulations.
For example, GDPR in the EU, and SEC regulations in the US.
ESG reporting software should also offer features that allow you to control who has access to your ESG data and insights. For example, some ESG reporting software solutions offer role-based access control, which allows you to restrict access to certain users.
The above considerations are just some of the things you should keep in mind when choosing ESG reporting software. Be sure to do your research and choose the ESG reporting software that best meets your needs.
Get Started With Symanto
Symanto uses a combination of NLP technology (functional on 100+ languages) and advanced data sourcing and analysing capabilities to help both companies and investors get a quick and clear overview of ESG risks and opportunities based on a variety of publicly available sources.
With an ESG scan from Symanto, investors can quickly rule out controversial companies before time is wasted on further investigation. Compare the performance of your target against its peers, quickly identify ESG leaders and laggards, and stay on top of the latest ESG trends.
Companies can use Symanto’s ESG scan to benchmark their ESG performance against their peers and identify areas of improvement. By analysing social media, reports, articles, employee reviews and other public data, companies can get clear insights into their competitor’s commitments, strategies and performance.
To learn more about how Symanto can help you with ESG reporting, get in touch. Our mission is to empower data-based decision-making for a more sustainable future.
