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What to Consider When Choosing the Best ESG Software for Your Company: A Guide

Last updated on August 10th, 2023

As market demands for ESG disclosure continue to increase, and as regulators around the world actively work to make standardized sustainability disclosures a mandatory practice, a “wait and see” approach is no longer a feasible business plan.

The time is now to get your data in order and ready for reporting.

ESG and Sustainability are Key Components of an Impactful Business Strategy

ESG risks aren’t just environmental, social, or governance risks – they’re business risks. Identifying and addressing the gaps in your ESG performance is a key component of proper risk management, and of managing business opportunities in their entirety.

By taking a proactive approach to effectively managing the data required for disclosure, you can have a holistic overview of the risks and opportunities present for your business today. Because what gets measured gets managed, having a better picture of where you currently stand on your material issues enables you to make informed business decisions, so you can begin to create real value from your sustainability efforts – and so you can communicate that value to your community.

Benefits of Using an ESG Software

An impactful ESG strategy is informed by reliable ESG data that is available for viewing, analysis, and internal and external ESG reporting. As the amount and complexity of data companies are expected to disclose continues to increase, it’s clear that an ESG software platform is becoming a necessary tool for companies who wish to demonstrate that they treat sustainability and ESG as a priority, not an afterthought.

An ESG software solution for data management and reporting will help you to do the following:

Improve data collection and management

A quality ESG software tool will automate the process of data collection, and provide a system of record (SOR) for your team.

Why it matters

Automating your data collection process greatly removes room for human error, and frees up valuable human resources to work on other, less routine tasks.

Centralizing your data to a system of record, combined with a repository for supporting references and documentation will help improve the quality and audit-readiness of your data. It will also help to facilitate the alignment of your team with a cohesive sustainability strategy and help you walk the talk.

Gain visibility and access to analytics

An ESG tool can aid you in assessing your current performance by helping you visualize the data you already have, and by giving you visibility into the connection between your sustainability efforts, your financial performance, and your measured progress in the key ESG metrics you’ve chosen to track.

Why it matters

Access to analytics is valuable to analyze performance over time, track progress against targets, or to benchmark your performance against similar peers. Insight into the connection between your sustainability efforts and your financial performance can be particularly helpful as you present your data to investors and other stakeholders, manage risk, and also as you assess your progress internally.

In short: analytics can help you to quickly understand where you are, where you should be, and where you want to be.

Streamline your sustainability reporting

A good ESG data management and reporting software will make it possible to collect data in accordance with the various reporting standards and frameworks. It will also provide a report builder to enable collaborative report drafting for documents of all kinds.

Why it matters

Report building functions will enable you to create ESG reports that are relevant to your industry and location that are compliant with the latest reporting standards. With confidence in the quality of the data you’ve collected, and clarity in the way you present your data for disclosure, you’ll be able to communicate clearly when engaging with investors and other stakeholders.

Gain actionable insights

An ESG data management and reporting software will give you visualization into how you’re performing on multiple ESG metrics throughout the year, as you manage programs to execute on your sustainability strategy. 

Why it matters

Collecting data is an essential first step, but it’s not enough. Your data needs to inform your strategy so you can continue to manage ESG issues, and improve upon and create value from your ESG efforts. With an ESG tool that helps you see how you’re doing, you’ll know whether you’re on the right track or what the appropriate next steps are to improve moving forward.

What to Do Before Looking for ESG Software

Determine your company’s specific needs, goals, and priorities

Before you begin shopping around for the best ESG software for your company, you’ll want to first have a good idea of what it is you want your ESG strategy to achieve. Your end goals will dictate which features are most important for your needs.

By first identifying and defining the specific needs, goals, and priorities of your company, you’ll be better suited to choose an ESG software that checks all your boxes.

So, How Do I Choose the Best ESG Software for My Company?

There are a number of things to keep in mind as you decide which sustainability software is best suited to the specific needs of your company. Some of the questions to ask yourself as you make your decision include:

How does this software handle data management?

A major challenge of any sustainability program is the handling of data collection and management. ESG data comes in quantitative and qualitative formats, and from a multitude of sources – which contributes to the complexity of the task. A good ESG software should provide visibility and traceability into the data collection process.

Data collection should be automated, and it should follow best practices for quality assurance so you can be confident in its audit-readiness. Collected data should be linked to a centralized system of record, alongside supporting references and documentation.

Will this software provide up-to-date, contextualized guidance?

ESG is a continually changing landscape. As expectations surrounding disclosure practices become more stringent, reliable guidance that is both contextualized to the specific needs of your industry (if there are any) and up-to-date with the latest standards will be important to your company as you work to disclose your sustainability performance in a way that is relevant to your goals.

Will this software simplify the reporting process?

Choosing an ESG platform that provides a report builder will facilitate the process of creating internal and external reports. When used alongside a centralized repository of data, you can automate your workflows to respond consistently to requests from third-party ESG questionnaires and other sustainability survey requests.

By creating corporate sustainability reports that are compliant – and relevant to your industry – you can take control of your ESG narrative and clearly communicate the priorities of your company, the impact you’ve had, and the connections you’ve made between sustainability efforts and financial performance.

Will this software enable me to benchmark against my peers?

A sustainability data management platform should make it easy to analyze and extract insight from your data. The ability to visualize your data is key – the software you choose should feature a visualization engine that includes tables and benchmarks so you can compare your performance and disclosures against those of your peers. This can help you to identify any gaps relative to your peers, so you can make informed decisions on whether or not to strive to close these gaps..

How will this software help to facilitate stakeholder engagement?

An ESG or sustainability data management tool should empower you to speak about your ESG initiatives with confidence and clarity. A platform that follows best practices for data collection and management, and that enables you to extract and present valuable ESG insights in your report, will help you to engage stakeholders on the important issues and inform them of your efforts – and the value you’ve created.

Looking For ESG Software?

Sustainability and ESG data management and reporting can be a resource-depleting and time-consuming process. But it doesn’t have to be – finding the right software to streamline your ESG journey can help.

Novisto’s ESG software ensures that corporate ESG data and reporting is quality assured, audit-ready, efficient, and insightful. If you’re looking for support with your sustainability data management and reporting efforts, we can help. Reach out today to request a demo.

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