Large and public organizations treat environmental, social, and governance (ESG) as a major strategic imperative for businesses today. Market research shows how companies make long-term commitments now more than ever to help address climate change; stir social empowerment; and improve policies for worker safety, diversity, equity, and inclusion.
Overseas, small and large companies publish reports about their ESG initiatives. Locally, companies need to comply with the Philippine Securities and Exchange Commission’s (SEC) Sustainability Reporting Guidelines for Publicly Listed Companies on a “comply or explain” basis, as part of efforts to help them assess and manage their economic, environmental and social impacts in the country.
However, many organizations struggle to embrace the ESG mandate. Experts noted that companies can streamline their journey in ESG reporting using technology to revolutionize the traditional sustainability management through the automation of existing processes, intelligence and data-driven insights, and revving-up communication between a company and its various stakeholders.
As early as 2018, a World Economic Forum report presented that ESG data is becoming more fragmented and technology can provide auditable records for insight and visibility by helping companies to illustrate their performance and enabling investors to make informed decisions.
To provide transparency to investors and employees, build trust in communities, go deeper and act faster in innovating the brand, other companies have worked with digital solution providers to develop tech-enabled ESG record-keeping. They build efficient data centers that create a structure for reporting designed for each stakeholder by simply identifying which information to collect and defining methodology and performance indicators.
Meanwhile, as ESG data is often scattered across various locations, experts suggest that companies must digitize and automate the entire process of last-mile data collection and trace the data back to its source. By doing this, organizations can account for the credibility of the report and minimize the amount of cost and time spent on data gathering.
According to SEC, in reporting sustainability and non-financial issues, companies should adopt any of the following globally recognized frameworks: the Global Reporting Initiative’s (GRI) Sustainability Reporting Standards; the International Integrated Reporting Council’s (IIRC) Integrated Reporting (IR) Framework; the Sustainability Accounting Standards Board’s (SASB) Sustainability Accounting Standards; and, the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD).
Due to an exponential increase in the number of frameworks, experts advise companies to create an agile mechanism that can help them to scale their ESG reporting to these different standards.
Business analytics provider S&P Global Market Intelligence reported more than 30 technology trends that can transform ESG reporting and how these technologies, in return, will also play a more subtle role across the palette of sustainability narrative over the coming years.
They added that technologies like 5G, artificial intelligence (AI), the cloud, customer-employee experience technologies, cybersecurity, data management, and the Internet of Things (IoT) are all influencing the ESG reporting in distinct ways, to varying extents and at different speeds.
With technologies’ potential longstanding impacts on ethical consumerism, talent strategies, consumer data privacy and dependence on ‘smart’ technology, the business analytics provider reminds companies, technology suppliers, and public policymakers to look closer and take note on how technological choices today can impact sustainability goals in the future.
Overall, market analysts encourage business leaders to innovate ESG reporting using technologies and view it as not just about showing transparency, but a transformation mechanism that can help drive industry and societal change. — Allyana A. Almonte