While some companies fear sustainability may hurt profits, ESG efforts preserve the profit motive. Participating in ESG efforts gives companies a competitive advantage, as customers are more likely to purchase sustainable and ethical products
International Sustainability Standards Board (ISSB) will soon publish the proposed International Financial Reporting Standards (IFRS) Sustainability Disclosure Taxonomy, adding to the alphabet soup of ESG frameworks that already exist.
Today, companies need to minimise their impact on the environment as well as record their efforts and communicate these to stakeholders - government, investors, and consumers. In India, SEBI mandates 1000 companies to report their ESG metrics under the Business Responsibility and Sustainability Reporting (BRSR) framework.
While some companies fear sustainability may hurt profits, ESG efforts preserve the profit motive. Participating in ESG efforts gives companies a competitive advantage, as customers are more likely to purchase sustainable and ethical products. This also improves the bottom line by shifting from heavy resource consumption to more efficient practices, and fosters goodwill among customers and the broader community.
While ESG can help enhance a company’s bottom line, doing ESG well comes with its own challenges for companies that have to report their sustainability metrics and improve their ESG performance.
Adopting digital tools for enterprise-wide sustainability data collection, conversion, reporting, and management can resolve challenges in global frameworks like BRSR, TCFD, GRI, and SASB. This approach ensures successful sustainability projects, closure, and long-term impact measurement.
Digital transformation is the lubricant that will help sustainability and ESG efforts run efficiently and generate the desired outcomes. Some applications of digital transformation in sustainability include:
Empowering Organisations in Seamlessly Reporting Sustainability Performance Metrics - Digital tools have the power to help companies move beyond manual methods to collect enterprise-wide sustainability data with automated metric conversions, emission factors
Improve Organisations’ Sustainability Performance and Achieve Net-Zero – Digital transformation can help organisations achieve net-zero goals by setting targets across environmental, social, and governance metrics, developing a decarbonisation plan, tracking carbon credits/RECs, and improving eco-efficiency at the site-level. This shift to sustainable practices saves costs and promotes a more sustainable future.
Support Organisations in Responding Effectively to the Barrage of ESG Requests - The ESG landscape today is characterised by an alphabet soup of ESG frameworks including BRSR, SASB, GRI, TCFD, EU CSRD, and others with each stakeholder preferring communication under different frameworks. Digital transformation can enable organisations to effectively report investment-grade ESG data under these global frameworks, saving on the time and resources that manual responses would have consumed.
Ensure that the ESG Data Generated and Communicated is Investment-Grade – Investors are increasingly seeking investment-grade ESG data, as companies are producing data to meet stakeholder demands. A recent survey suggests that data quality needs improvement across E, S, and G pillars. Digital solutions can collect and generate this data, ensuring timely, relevant, accurate, transparent, complete, consistent, and auditable information, ultimately satisfying investors and keeping organisations competitive.
Allow Organisations to Analyse ESG Data and Take Strategic Business Decisions – Analysing your organisation’s ESG data is critical to help inform strategic business decisions and ensure real impact. Digital solutions can help companies understand their ESG performance by analysing their year-over-year performance and comparing their metrics to industry benchmarks – enabling them to stay on the front-lines of ESG impact.
Going forward, it is vital for businesses everywhere to invest in creating safer and more sustainable products and workplaces, and digital transformation is critical. By consciously choosing to put sustainability first and streamlining ESG efforts, companies of all sizes can bring their sustainability, social, health and safety, governance, and other operational data on a single platform. This enables them to do their part for the planet while continuing to meet their growth goals.
(R. Mukund is ceo and founder, Benchmark Gensuite.)