Shuchi Nihajwan is the Senior Vice President, Global Human Resources & New Verticals of Eka Software Solutions which was established in 2004. Shuchi has been instrumental in transforming Eka HR from offshore development organization into a global IT organization with offices across 4 continents. As part of her dual role, Shuchi is not only responsible for leading the people function globally at Eka, but also leading the new vertical’s function where she launched the first ever Blockchain based Coffee Marketplace in the world. She is amongst a few handfuls of women working to promote software solutions in Agriculture & Sustainability solutions in the emerging markets (especially India), not just from the perspective of philanthropy or corporate social responsibility, but to effectively change the way the Supply chains operate and can bring business benefits to the community.
As creators of products, services, and makers of wealth, large enterprises contribute significantly to the social structure. Their everyday choices and decisions have the potential to change outcomes for entire communities and the environment at large. This growing and fortunate realization is fortunately leading organizations across the board to ground their decision-making in the principles of sustainability and making it a part of their strategic initiatives.
Enterprise stakeholders, from investors to employees, are increasingly taking critical decisions on investing or joining a certain organization based on how sustainable it is. It presents a compelling case for businesses to communicate sustainability goals and performance consistently through Environmental, Social, and Governance (ESG) reporting critical today.
A study by Bank of America Merrill Lynch concluded that companies with a better ESG record had higher three-year returns, were less likely to have large price declines, and were less likely to go bankrupt.
That said, tracking every aspect of a business and mapping it to the organizational sustainability goals as per various global reporting standards is certainly not an easy task. This is where technology, specifically ESG software, comes to the rescue.
Selecting the right ESG software
At its most basic, a sustainability reporting or an ESG software tracks an entire range of environmental, social, and governance-related data and its impact. This gets reported in a manner that can be deciphered by varied stakeholders, especially potential investors. But a smart and intelligent ESG software should go beyond the obvious and act as a strategic tool that helps drive transformation of an organization into a truly sustainable one.
The following are the primary criteria to consider when choosing ESG software:
1. Data integration from multiple sources
ESG relevant data tends to rest across multiple sources and spreadsheets. As Sustainability reporting requires diverse information across numerous functions like raw material sourcing, supply chain, human resources, office building management and more, collecting data is a daunting task.
A good ESG solution should integrate data from disjointed business process software and spreadsheets across the organization with minimal manual intervention. Connecting disparate business ecosystems allows lifecycle traceability easier to accomplish and helps ensure that the sustainability tracking closely mirrors strategic business goals.
A comprehensive view across Corporate and Social Sustainability, Environmental Sustainability and Employee Health and Safety is critical – something the chosen software should cover in addition to capturing diverse data. This could be parental leave, greenhouse emissions and more. A software with limited capabilities that doesn’t provide extensive coverage is half-baked at best.
2. Support specific and varied sustainability functionalities
There are certain requirements specific to ESG goals and performance that the software should offer. Let’s take for instance calculating emissions that require applying accurate variables and formulae or minimizing sourcing errors that call for complex calculations to be built-in and applying multiple unit conversions to an exhaustive database of emission factors.
A good ESG software should help analyze the data to identify gaps and opportunities that the sustainability team or leadership can leverage towards good decision making. Insights gleaned from this data have the power to drive key initiatives across corporate training, incident captures, and legal proceedings. The insights also help take course correction measures if key sustainability metrics get breached. With monitoring of relevant regulations built-in, a good ESG solution can help an organization stay compliant.
3. Communicate and alert Internal stakeholders
A reliable ESG software offers real-time and contextual actionable insights to stakeholders and decision-makers, thus allowing them to stay agile in their decision making. Goal tracking is only useful if the system or platform can alert on corrective measures to be taken.
An intuitive ESG software makes a better case for sustainability investments, as teams can set goals and track them to test new initiatives, while ensuring the results and impact are even.
4. Enable easy and quick audit process
A software and database with relevant data helps simplify audit processes. ESG solutions help ensure the accuracy in daily data capture which further enables error-free computation, saving the team from scrambling to fix errors that show up at the time of audit.
Sustainability software solutions that provide a dedicated auditor login, help ensure fast and cost-effective auditing of sustainability data and programs.
5. Data reporting data as per key reporting standards
While standardization of ESG parameters has been a positive development for enterprises wishing to stay atop sustainability goals, the hitch is, there are multiple reporting standards for ESG reporting.
Some of the leading reporting standards include Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), CDP (formerly the Carbon Disclosure Project), the Carbon Disclosure Standards Board (CDSB), and the International Integrated Reporting Council (IIRC). While an enterprise could choose to follow one reporting standard depending on its goals, external stakeholders such as investors, may prefer a different reporting standard.
An ESG software that can report data according to disparate reporting standards automatically not only saves time and effort, but also helps ensure the company’s ESG performance is communicated to a wider audience. Research firm Opimas found that the value of global assets applying ESG data to drive investment decisions has nearly doubled over four years to reach $40.5 trillion in 2020. Enterprises that can articulate their ESG performance to investors have a better chance of gaining access to this capital.
6. Scale with organisation growth and ambitions
A software solution that doesn’t scale as per the organization’s growth will soon be redundant. The software should be quick to implement, help make processes more efficient, manage increasing operational and strategic complexities and become an innovation driver. Programs mutate and evolve and the software should evolve accordingly to make sense of the complexity and support future program developments.
While an ESG or Sustainability software with all the essential features mentioned above is good, for it to help meet business objectives, careful evaluation and implementation are also critical for the investment to be worthwhile.