A recent survey by professional services company KPMG U.S. has revealed that corporate plans to step up ESG reporting will likely “clash with spreadsheet realities.” With environmental, social, and governance, or ESG considerations becoming a bigger priority for many corporations, the report sheds light on the challenges companies will face as they strive to elevate their ESG data and reporting capabilities.
The KMPG US survey involved 550 executives, board members and managers from several private and public companies. According to the report, 43% of the respondents said they would boost investment in ESG personnel over the next three years while 40% would invest in ESG-specific software, 38% would spend on employee training and education, and 37% would focus on data collection and management tools.
Most of the participant pool (90%) said they planned on increasing their ESG-related investments over the next three years. The survey also found that although 83% of companies believe they are “ahead of their peers” in ES reporting, nearly one-half of study respondents (47%) said they still use spreadsheets for ESG data management. In addition, 38% said they use enterprise resource planning (“ERP”) systems with ESG modules, 37% leveraged purpose-built ESG software solutions, and 33% relied on ESG data management solutions.
According to the KMPG report, using spreadsheets for ESG data is problematic because spreadsheets make it harder to maintain a controlled and efficient sustainability reporting process. This, in turn, impacts the accelerated reporting timelines for transparent and accountable ESG information, the report said. Still, the survey found that innovative technology use in ESG reporting is expanding.
The study went on to state that 59% of the surveyed organizations reported using “advanced ESG data reporting systems” while 58% said they planned on leveraging artificial intelligence (“AI”) to boost their ESG data analysis and consolidation. KPMG U.S. Climate Data & Technology leader Tegan Keele notes that while machine learning and AI technologies can help companies use disparate data to gain valuable insights, they are not a magic bullet for corporate ESG reporting.
Organizations will have to make informed decisions on the type of data to use, where to source the data, and the type of controls needed for a cohesive strategy that is informed by the technology but driven by the organization.
On the bright side, the survey found that a large portion of companies increasingly see developing their ESG capabilities as a means of enhancing their performance. In fact, 45% of the respondents noted that boosting their ESG data management and reporting capabilities was one of their top strategies for integrating sustainability into their wider business objectives.
Insufficient resources coupled with internal silos and limited interdepartmental communication emerged as the top barriers to integrating ESG strategies into broader business goals.
Some outliers, such as Coyuchi Inc., have embraced sustainability in all their operations and mainstreaming ESG practices in all they do is turning out to be more of a seamless task than what some other companies are experiencing.
NOTE TO INVESTORS: The latest news and updates relating to Coyuchi Inc. are available in the company’s newsroom at https://ibn.fm/COYU
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