From complexity to clarity: building a strong foundation for ESG reporting

Written by Iuliia Muraveva

The growing complexity of ESG reporting in a changing landscape 

The growing emphasis on responsible business practices has significantly increased the need for sustainability reporting, pushing organizations to be more transparent about their environmental and social impacts. Regulations like the Corporate Sustainability Reporting Directive (CSRD), SFDR, and EU Taxonomy have made reporting mandatory and broadened its scope sixfold. Consequently, companies now face the challenge of managing a vastly expanded set of data requirements, adding significant complexity and workload to their operations. 

The struggle behind ESG data collection 

Three primary domains illustrate the difficulties companies experience with ESG data: finding data, collecting data, and ensuring its quality. 

Firstly, it is already a challenge for an organization to locate the required data. Frequently, there are no clear individuals or teams assigned to manage specific metrics, leading to confusion over data ownership. This lack of ownership results in the absence of a go-to person when data needs to be accessed. Additionally, information is often dispersed across various departments—such as HR (social data), procurement, or plant-specific operations—and fragmented across multiple systems. Furthermore, the definitions of metrics often vary between systems. For instance, hazardous waste may be defined differently depending on whether local regulations or global standards are applied. 

Secondly, collecting ESG data is equally challenging. Often reliant on manual processes, data collection is prone to errors, highly time-consuming, and lacking in efficiency. The absence of standardization further complicates the process, with data recorded in varying formats that require extensive transformation efforts before it can be utilized effectively. 

Finally, ensuring data quality presents another significant hurdle. Due to the aforementioned manual processes and lack of standardization, data is frequently plagued with missing values, incorrect entries, and inconsistencies. Moreover, it is often difficult to verify that the data collected is both relevant and available at the appropriate level of granularity to meet compliance or strategic requirements. 

How to bring clarity in your ESG data 

BrightWolves typically addresses these challenges through a structured approach. First, we focus on setting up a pragmatic data catalogue, followed by automating data collection into a centralized platform, and finally building robust quality checks. This process enables organizations to move beyond merely reporting numbers and instead use ESG data to drive operational improvements. Read more about this in our second article. 

Overcoming challenges in ESG reporting starts with establishing a practical ESG data catalogue that clearly defines the information required for both compliance and strategic insights. This catalogue specifies the data needed, its definition, who is responsible for it, and where it resides within the organization. Assigning clear data ownership eliminates ambiguity and ensures accountability across all levels. 

The next step is automating data gathering. Automation allows for seamless capture of data from various sources, removing the need for manual extraction. Once automated systems are in place, the data can be integrated into a centralized platform, which facilitates combining information from multiple systems into one unified location. This centralization not only simplifies the reporting process but also empowers organizations to derive actionable insights from their ESG data. 

Lastly, once the centralized platform is operational, it is essential to implement robust data quality checks. These checks include identifying inconsistencies and flagging missing values. Incorporating such quality controls enhances the reliability and accuracy of the data while conserving resources and streamlining the overall data collection process. 

Conclusion 

Streamlined processes, clear ownership, and robust quality controls are fundamental to overcoming the complexities of ESG reporting. By implementing this approach, we have seen companies achieve up to 80% time savings in ESG reporting efforts while unlocking the potential to drive strategic and organizational improvements. If you would like to learn more, please reach out to Sven Van Hoorebeeck.