Principal Sustainability Data Consultant Katie Gibson explains how an ESG system can help you improve the accuracy of your data, and streamline your sustainability reporting.
As the reporting requirement landscape for non-financial data is increasing, having an ESG system to collect data is becoming more important. There are a wide variety of software options out there and choosing the right one will ease your reporting burden. But it is more than the software that is needed to ensure accurate data. (To find out what we mean by accurate data, check out our previous blog post by Senior Sustainability Data Manager Grace – the 6 dimensions of data quality.)
The need for accurate sustainability data
The requirement to report non-financial data is increasing with pressure growing from regulators, investors, employees and consumers. But just having the data is not enough, it’s important that the information is accurate and of high quality.
Consumers and clients are increasingly attracted to organisations with strong ESG values. Therefore, sustainability reports are very important for many companies’ branding and reputation. However, these must be backed up by accurate data to avoid greenwashing claims. Accurate ESG data can support the wider narratives that companies are aiming to portray in their reporting.
Investors are increasingly looking at ESG scores to make portfolio decisions. Research in PwC’s 2021 Global Investor Survey has shown that investors are more likely to trust ESG information when it has been assured. Having accurate data that can be efficiently extracted, can help you get ready for assurance.
Many companies are expected to report to global reporting frameworks such as the GRI (Global Reporting Initiative), CDP (Carbon Disclosure Project) and DJSI. Data underpins these frameworks; therefore, accurate and reliable data can ease the burden of reporting to them.
What exactly is an ESG system?
ESG software systems are an effective tool for gathering, understanding and reporting on large ESG data sets. There is a wide array of indicators that can be collected, often not in financial units, for use in a company’s ESG strategies and reporting.
So how can ESG systems improve data accuracy?
The scale and nature of ESG data can be hard to interpret, and ESG systems can consolidate data to increase both the visibility and usability of the data.
By allowing for a holistic view of a business across multiple business functions, anomalies and changes in data can be spotted and tracked at different scales.
Similarly, there are often multiple sources of data from different areas of the business that need to be consolidated into one place.
ESG software can be the answer to this problem. There are functions (APIs) that can connect your various data sources to the EGS software to reduce the risk of human error when entering the data into the ESG software.
ESG systems can also reduce the burden when preparing to report externally; they have central dashboards that can allow for reports to be tailored and pulled for specific indicators and scope.
Some even have inbuilt tools that map your data directly to frameworks such as CDP, decreasing the confusion between the names of your indicators versus the terms that the reporting frameworks use. This allows you to accurately collect data that is formatted correctly for the framework you’re using.
Many companies now have their ESG data audited by external companies such as the ‘big four’ accountancy firms including PWC and KPMG.
Having a sustainability system allows for accurate data to be easily presented to auditors, and for any changes to be tracked.
But why couldn’t I just use Excel?
Excel is a versatile tool with a range of functions to aid with data collection and reporting. However, the scale and scope of data that is now collected and the risk of human error on calculations and input can limit the effectiveness of Excel as a tool for collecting, analysing and reporting data.
Also, using an ESG system can save you valuable time that would be spent sifting through large data sets in Excel and then editing them for reporting needs. This is especially true if you’re collecting data to submit to a framework or be audited when large amounts of information would need to be pulled from Excel. Having an ESG system encourages businesses to report to frameworks that require accurate and reliable data, overall increasing the robustness of their ESG claims.
Overall, ESG software can be an incredibly useful tool to streamline reporting and reduce the risk of error. However, it is important to also note that the system is only as useful as the data entered into the system. If information is incomplete or inaccurate to begin with, the software alone cannot make your ESG reporting accurate. What they can do is make it easier to spot errors and assess where there is room to improve the accuracy of your data collection processes.
We can help you map your data from source to report so that you can ensure accuracy and traceability throughout. With the increasing rigour in reporting, this is a crucial step in ensuring you have robust data to support your ESG claims. With this information, we can help you choose the right solution for you. Software vendors are constantly adapting and improving their offerings to meet the needs of businesses, and we can help you choose the right solution for you. This can be difficult, but luckily we’re experts in software selection, systems upgrades and data quality checking here at Sustainit. Get in touch if you want to find out more!
Find out more about our technical and data support