Sustainability is no longer a ‘nice to have’ advantage. It is now a thing of the past when sustainability initiatives were seen as a luxury only first-class companies had been embarking on. It has now become an increasing concern for companies as they are responsible not just to increase their profitability but also for the environment they are a part of. Establishing an environmental management strategy is now seen as an essential component of a sustainable company.
The rapid growth of Environmental, Social, and Governance (ESG) is staggering. PwC reports that ESG-focused institutional investment will soar 84% to US$33.9 trillion in 2026. Asset managers globally are expected to increase their ESG-related assets under management (AuM) to US$33.9tn by 2026, from US$18.4tn in 2021.
There were times when only a small number of companies were committed to reducing their carbon footprint and ensuring corporate social responsibility. Now that has changed profoundly. Companies across the globe are rethinking the way they do the processes of sourcing, producing, distributing, and recycling. That is because the potential growth of the company is now evaluated by how its business operations influence the environment and society at large.
The Answer: ESG Management And Reporting
New regulations are being introduced to grapple with the urgent need of pursuing net zero carbon emissions. These regulations are aimed at companies to encourage them and at the same time enforce mandatory due diligence and reporting. As investors are increasingly concerned with the ethical implications of their investments, ESG management has become the paramount importance to protect businesses from reputational and operational risks.
Global businesses and policymakers, to combat the emerging threat to humanity in the forms of rapid climate change, environmental pollution, and workplace discrimination, are making sizable operational investments in efforts that can drive both sustainability and business success. Since customers, investors, and governments now judge a company by its sustainability priorities and initiatives, it is important to improve the impacts of your business model on people, communities, and the planet.
When companies start reporting on their ESG (Environmental, Social, and Governance), they become transparent in their conduct towards the environment, workforce, and community. So, solid reporting on the progress of ESG initiatives can be a big, bold move. These reports can help focus on bottlenecks in ESG goals and measure the progress toward the commitments and ambitions. ESG reporting provides actionable information to stakeholders and shows them how far the organization is willing to go in ESG investments. But it’s no easy job.
Challenges In Implementing ESG Solutions
Although sustainability may be deeply rooted in all of a company’s priorities, translating them into an effective ESG strategy can be really hard. Integrating sustainability into all the aspects of a business model may seem a daunting task as long as companies do not have the right ESG management system in place.
The first challenge would be the reporting framework and handling the huge influx of data. For a company that wants to take ESG in all its fullness to the company as a whole, that move will involve collecting, managing, and using a massive amount of ESG data. A company may be required to report comprehensive information on their efforts to drive decarbonization, lift their communities, ensure the safety and wellness of the employees, and protect the environment. It will take a complex network of systems to manage the sheer volumes of data.
Companies adhering to the ESG philosophy are required to promote inclusive sourcing, respect human rights, and reduce environmental impact when doing business with third-party supply chains. The company should track and report the supply chain’s sustainability: are they ethical in all their dealings? Are the materials they produce eco-friendly? Are they capable of building and managing a qualified supply chain? These efforts can prove very difficult without a good ESG management solution to simplify the processes.
As regulators are tightening the laws and introducing stringent measures to adopt ESG-forward initiatives, regulations are evolving at a faster pace. To meet the requirements it is necessary for businesses to design programs that promote sustainability. They should develop capable product stewardship and goals to ingrain the policies and initiatives across their business operations.
It is equally important to have a mature system to incorporate and implement the latest ESG regulations. When new policies are coming into effect, old practices are ineffective in implementing them. A good ESG management system will invariably accelerate the large-scale deployment of solutions. That can involve integrating technology and functional excellence.
Opportunities And Strengths Of ESG Data Management
ESG is considered by industry leaders as an integral solution that can create a business environment conducive to long-term growth. Good ESG goals focus on water, waste, emissions, diversity, human rights, health and safety, making it an indispensable force for good. The performance of these non-financial metrics can be as important as the profitability reports because they can help in long-term value and creating a people-centered business model.
Disclosing a company’s ESG metrics can underscore its commitment to building trust and taking accountability for the impact they make on society. The decarbonization of an industry is a complex challenge, but a good ESG data management system can help enterprises measure the total carbon footprint and securely share the data with the stakeholders for timely decision-making.
The real strength of ESG data management lies in its ability to enhance the rigor of management processes and controls. How does it do that? The solution embeds fully automated ESG frameworks in assessing the scenarios. ESG data management then evaluates the actual data against the core ESG factors. This way, businesses can see for themselves the potential risk of their existing practices to their reputation, purpose, and values. ESG data management serves as a mirror and a mitigation tool that enables companies to be ready to stand out in terms of ESG management.
Easily Measure ESG KPIs With ESG Data Management
ESG data management offers sophisticated tools to perform data analysis at a massive scale. It takes into account multiple KPIs to measure ESG progress. The timely reporting of health-focused indicators, sufficient infrastructure, equitable access to business solutions, data privacy, waste management, board diversity, people development, and prioritization of integrity and transparency can guide the shareholders to approach their capital investments using strong ESG instruments.
For example, ESG data management provides a well-rounded framework to identify risks and manage the outcomes. It becomes easier now to report to the ESG audits or the Board of Directors. Businesses can navigate complex reporting standards as ESG risks are firmly integrated within the operations. Companies can now have a holistic view of risks associated with their everyday business model and meet the climate ambitions regardless of the process complexity. While many modern ESG-aspirant companies are overburdened with data processing, ESG data management can help them identify their success metrics efficiently.
WNS-Vuram’s solution ESGHall helps environmentally minded organizations in achieving mandatory disclosure requirements with real-time integration and information for auditing. The solution complements businesses’ sustainability efforts by empowering them to assess, gather insights, and spot opportunities through the automation of the process. Organizations can now play their part in building a better world and managing their operations in line with environment-friendly manners.