As requirements for sustainability and transparency increase, so does the need for data capture and reporting. This process is complex and how data is managed can vary between industries, organizations and even departments.
To address this challenge, many companies are turning to software solutions to streamline their ESG programs.
As a result, there’s an increased need for ESG platforms to be capable of a multitude of functions – supporting organizations as they build strategy, align data, report on progress and engage stakeholders.
In this article, we look at the components, capabilities and underlying technologies that comprise an effective ESG platform.
What is an ESG platform?
An ESG platform is a software as a solution (SaaS) tool that collects data and streamlines an organization’s ESG program. An ESG platform uses various metrics to calculate impacts, create reports, unlock data for analysis, and provide actionable insights.
Generally speaking, an ESG platform includes various features that funnel data sets into particular needs, requirements, and categories. It should allow for some flexibility and customization based on an organization’s requirements.
Not all ESG platforms are created equal, but a robust platform should have certain components without exception.
Components that make a great ESG platform
Components are specific functions that an ESG platform should be capable of doing, all of which should benefit your organization. Here are those top components.
1. An ESG platform should be cloud-based
As remote and hybrid work has become increasingly common, there’s been a greater need for business platforms to be hosted in the cloud as opposed to on-premise. This has been no different for ESG software.
The ability to access an ESG platform from anywhere simplifies collaboration, sharing, and reporting processes. It also has the ability to save time and reduce costs by eliminating the need for expensive on-premise servers and equipment.
A cloud-based platform provides the added benefit of simplifying security and easily enabling backups and restore points to be taken. Plus with many options for data residency, companies with regulatory requirements can ensure their data remains within their country.
2. An ESG platform should be comprehensive
ESG reporting isn’t just about environmental responsibility and accountability. It’s about comprehensive sustainability, which includes leadership and governance, diversity, and social considerations.
That means ESG software should be able to support even the most sophisticated ESG program – or scale as a program evolves. ESG software should enable strategy development, workflow management and data collection for multiple requirements, such as financed emissions, climate accounting, philanthropy, water stewardship and diversity, equity and inclusion (DEI).
To do this, a platform should have the ability to:
- Visualize data in real-time
- Conduct materiality assessments and sentiment analysis
- Turn complex data into actionable insights
- Integrate with existing business workflows and platforms
It may also include features like:
- Interactive strategy maps for strategy development
- Integrated scorecards for strategy reporting
- Microsites that can be shared with stakeholders
3. An ESG platform should be automated
While reporting is often still voluntary, standards need to be met and collecting ESG data is not a quick or simple process.
ESG data is usually collected across multiple sources within an organization, meaning redundancy can happen. The right ESG platform will automate and streamline data collection through the use of an API so you can populate reports directly at the data source.
It should also have the ability to automate other tasks, such as:
- Updating reporting framework standards for GRI, CDP, SASB, etc.
- Creating customizable scorecards and key performance indicator (KPI) dashboards
- Conducting quality checks and filling in data gaps
- Managing workflows
- Creating other reports for benchmarking and auditing
4. An ESG platform should be auditable
The ability to respond to audits, whether internally or externally, is an essential business responsibility.
From an ESG perspective, audits are often conducted for the purposes of:
- Meeting governmental and regulatory body requirements
- Meeting client requirements
- Responding to investors
- Risk management
An ESG platform should be able to support any audit by providing data exports, history reports, and data trails. When it comes to creating audit reports, an ESG software should enable their creation with flexibility, accuracy and ease. This enhances transparency and accountability, and builds stakeholder trust.
5. An ESG platform should be scalable
Scalability is essential for growth and an ESG platform that is fixed is one that will quickly become outdated. It may even produce non-comprehensive or inaccurate reports.
An ESG platform should be able to grow as an organization does – not just in overall size, but in various ESG requirements.
For instance, often an organization will begin their ESG journey by collecting only data on climate accounting. Then, and as their program matures, they will expand their data collection and reporting to other areas like philanthropy, water stewardship and/or DEI. As an ESG program changes and matures, a platform should be able to meet those needs through a comprehensive feature set.
Additionally, regardless of what reporting is required, a good ESG platform will always reflect the latest industry frameworks and standards. As standards shift, your ESG program should be easy to update without having to build from scratch or implement new reporting technologies.
6. An ESG platform should be secure
Last but not least, an ESG platform should be secure. ESG data is a business asset, and just like many other business assets, organizations require confidentiality and security.
This means the software should comply with industry best practices for security requirements and certification. Encryption, both for the transmission of data and while not in use, is also critical.
Furthermore, an ESG platform should be secure and protected from disaster, including cyberthreats, natural disasters, and hardware/software damage. A good platform will be capable of threat-monitoring and provide the ability to back up data in a secure location.
Preparing for the future
When it comes to ESG, a future-thinking mindset is essential. The same is true when it comes to choosing an ESG platform.
The platform you choose should enable your ESG program to grow – both today and in the future. That includes the ability to perform comprehensive reporting, analysis, and data collection.
To learn more about FigByte’s ESG platform, speak with an expert today.