With the introduction of the Corporate Sustainability Reporting Directive (CSRD), companies based in Europe or with a significant European presence will need to provide more information in their non-financial reporting than ever before.
The reporting requirements are documented in the European Sustainability Reporting Standard (ESRS), which provides a structure for determining which sustainability topics are materially relevant to each company and what information must be disclosed for those topics.
The information that must be reported is complex. Each disclosure requires quantitative information, such as strategies and policies, as well as qualitative metrics.
How to gather data for ESG reporting
It is a significant task to gather ESG data and get it into a format that can be reviewed and published. Like any work process, there are several methods that companies can use to support this activity.
Manually writing a report
The simplest option is to start with the ESRS standard and begin writing, gathering information as you go. While this option may seem like it will save costs, the inability to efficiently know what information needs to be gathered or assign tasks will mean that it will only serve the needs of the smallest of businesses.
A manual approach also generally doesn’t create the basis of a compliance programme that can be built and improved over the years.
Using a spreadsheet
A spreadsheet is like the Swiss army knife of technologies: it can be used for many problems but is not the best solution for any of them (other than for the financial analysis it was designed for).
Spreadsheets work well for numeric data as they can collate and aggregate well, but are poor for collecting text due to their limited ability to format and manage such content.
For complex organisations, collecting and managing multiple spreadsheets from multiple sources usually requires a whole different suite of spreadsheets.
Bespoke ESRS solutions
Many vendors are building solutions that directly take the requirements of the ESRS and create methods for entering the data into a report. This solution has the benefit of being extremely efficient for reporting for one standard, but it locks the information away from being used by other parts of the business or reporting out to different stakeholders.
Of all the topics that may be material to your business, only climate change is mandatory under the ESRS. It therefore makes sense that some companies start with climate change and find solutions that help them manage that particular risk.
This can be very successful for climate reporting, but doesn’t necessarily provide any support for your other material topics – especially if they fall into the social or governance parts of ESG. You may need to purchase multiple systems to manage all of the required disclosures.
Given the many topics that may need to be disclosed in an ESRS report, a flexible compliance framework that does not focus on any particular risk topic is ideal for managing the necessary disclosures.
Speeki has developed its Engage™ framework to help companies manage any material risk topics, thus allowing topics as varied as climate, diversity and corruption to all be built using the same thinking and structure.
Not sure which ESG reporting solution to adopt?
Whichever software solution you adopt, you should be looking to gain the benefits of:
- effectively answering the questions ESRS asks in the most efficient manner by ensuring that those who need to provide information and data know precisely what is required of them
- writing once, using often, by being able to extract the data and metrics into many different formats to meet the needs of not just the CSRD but also all internal and external stakeholders
- integration with the various systems that hold the metrics or with internal data lakes to gather the necessary data efficiently
- speed in generating the required regulatory reports.
Discover the top 20 must-haves in ESG software here.
Technology is necessary to meet your regulatory requirements
While there are many methods to build the reports needed to meet your regulatory requirements, it is clear that some form of technology will be necessary. Selecting the right solution for your company will require an analysis of your current toolset and the myriad ways you want to be able to use the data you gather.
Looking for effective ESG reporting software?
Speeki has ESG reporting software that is designed to support reporting to multiple stakeholders in many formats, providing a great asset to any company looking to save money on ESG and maximise the value of efforts you have made. Visit our website or contact us to learn more.