Corporations, significantly public-listed corporations, are more and more anticipated to fulfill related reporting and disclosure necessities. Topic to higher public scrutiny of key environmental, social and governance (ESG) metrics from numerous stakeholders, significantly from buyers and potential companions, many corporations now want to offer detailed details about how they’re managing their pure, social and human capital, in addition to data past what’s historically collected, together with on their carbon footprints, enterprise conduct and labour practices.
Gathering, measuring and reporting these non-financial knowledge, nonetheless, may be tough. ESG reporting has advanced shortly over a brief time period, with knowledge high quality turning into a key focus, and new standards, similar to these for monetary knowledge, are rising. Present worldwide tips, such because the Worldwide Sustainability Requirements Board (ISSB) of the IFRS Basis, the Sustainability Account Requirements Board, and the International Reporting Initiative, to call a couple of, are being consolidated on an ongoing foundation.
On the similar time, totally different frameworks are rising to tell apart between local weather, nature and carbon reporting, such because the Taskforce of Nature-Associated Disclosures, the Local weather Disclosure Requirements Board and the Carbon Disclosure Undertaking. ESG reporting stays an advanced and transferring panorama for corporations to navigate. Staff engaged within the assortment, validation and administration of ESG-related metrics have to be communicated to and warranted of efficient controls that may improve the usability and readability of such knowledge.
Corporations could face the next challenges:
- Not understanding the place to start out and what knowledge to report first
- Lack of assets to gather the wanted knowledge
- Speaking clear reporting tips to enterprise items
To ease this advanced course of, organisations could flip to expertise to strengthen their analytics capabilities.
“Globally, the sustainability expertise panorama is at a nascent section, however it’s quick evolving,” mentioned Arina Kok, Malaysia local weather change and sustainability companies chief and companion at international accounting agency Ernst & Younger (EY). The bottom line is to seek out the suitable applied sciences to spend money on, as corporations rework their enterprise fashions, she mentioned.
An Oracle survey of greater than 11,000 customers and enterprise leaders throughout 15 markets discovered that 88 per cent of enterprise leaders consider organisations that use expertise to assist drive sustainability and social points would be the ones to achieve the long term. These leaders recognized key areas they want help within the assortment and verification of information, goal planning and revision primarily based on efficiency, in addition to report and evaluation automation. The survey report said that people and expertise mixed could make for significant change.
Malaysian corporations are forward of the curve, in response to a current PricewaterhouseCoopers (PwC)’s
report. It discovered that amongst Asia Pacific international locations, Malaysia stands out for disclosures of boards’ tasks and corporations’ ESG governance buildings. It’s also among the many two international locations in Asia Pacific that exhibit the best degree of disclosure for mitigation methods.
“With ESG data more and more being utilized by the capital markets and numerous stakeholder teams to make funding and buying choices, it has by no means been extra necessary to make sure that ESG disclosures are of top quality,” mentioned Herbert Chua, Associate, Sustainability Reporting and Assurance at PwC Malaysia.
Listed here are 5 technology-driven options that may assist extra organisations enhance the standard of their ESG reporting.
1. Power administration methods
Step one to understanding an organisation’s carbon footprint requires the gathering and administration of information from numerous sources. Power administration methods (EMS) can help the monitoring and optimisation of vitality consumption to preserve its utilization throughout an organisation’s bodily belongings, together with in factories and workplace buildings. At the moment, ISO 50001, the worldwide vitality administration commonplace, specifies necessities for corporations to develop and implement a strong EMS, offering organisations with a framework that validates finest practices regarding vitality effectivity, use and consumption. This often requires the gathering and evaluation of vitality consumption knowledge, which may be applied utilizing units equivalent to sensible meters, sensors and energy monitoring software program. Areas of great vitality use and alternatives for enchancment are then recognized and organisations can higher perceive their vitality profile. In lots of instances, the ISO 50001 can also be used as a compliance route in help of different environmental rules.
For instance, telecommunications agency Telekom Malaysia was capable of calculate their oblique emissions and waste technology at eight websites that implement EMS. Utilizing their “unified electrical energy monitoring answer”, which incorporates superior vitality behaviour analytics and alert mechanisms, the group was capable of preserve observe of emissions knowledge in addition to cut back Scope 2 emissions – oblique emissions from the technology of bought vitality – by 9.2 per cent in 2021.
One other firm that has benefited from monitoring vitality utilization by an EMS is IOI Oleochemicals, a subsidiary of IOI Plantations. The group defined that the expertise “gives visibility of vitality circulation and vitality consumptions to attain optimum vitality effectivity”.
2. ESG knowledge monitoring dashboards
Corporations should not be misplaced within the deluge of information as a result of they don’t have the correct instruments to grasp and analyse it in alignment with a number of worldwide reporting requirements.
That is the place knowledge warehouse and dashboard companies are available. Cloud-based, central repository methods allow organisations to collate ESG knowledge from a number of sources, providing a single view of an organisation’s ESG efficiency.
Placing this into apply, telecommunications group Axiata has leveraged on a visible interactive dashboard together with their environmental knowledge system. “These kind an necessary reference level to steer our brief and long-term targets in addition to motion plans,” mentioned Axiata.
Along with serving to the agency determine alternatives to enhance vitality effectivity, Axiata additionally mentioned that the dashboard can operate as a key communication platform, creating consciousness of the corporate’s emissions amongst staff.
3. Built-in ESG analytics platforms
Past ESG knowledge assortment and overview utilizing dashboards, there at the moment are analytics platforms that corporations can use for higher planning and optimisation of assets. These platforms use numerous metrics to calculate impacts, create stories, unlock knowledge for evaluation and supply actionable insights for corporations to behave on. The result’s an additional streamlining of an organisation’s ESG efforts.
Many software program suppliers now supply built-in sustainability-focused analytics options. Hong Kok Cheong, Managing Director of software program supplier SAP Malaysia, mentioned that when corporations have full transparency on their environmental footprint to watch and report on sustainability metrics, they will determine areas for enchancment and adapt to altering regulatory situations.
In its current sustainability report, engineering, property and infrastructure firm Gamuda mentioned that using an analytics platform centered on useful resource planning, had helped in enhancing knowledge processing and transparency.
“Because the digitalisation of procurement and provide chain processes, the Group had achieved greater than RM300 million in financial savings by provide chain collaboration to attain extra aggressive pricing in delivering superior values to undertaking stakeholders. A holistic digitalisation initiative in procurement eliminates vital paper consumption which can be circulating within the provide chain processes,” Gamuda mentioned.
4. AI and machine studying for situation planning
Synthetic intelligence and machine studying are a number of the new frontiers for corporations to navigate relating to situation modelling. For corporations taking a look at assembly particular United Nations’ Sustainable Growth Objectives (SDGs) or different sustainability-related targets, knowledge may be fed into scenario-based fashions within the context of their sustainability plans. With machine studying capabilities, patterns in useful resource allocation and alternatives for course of optimisation may be recognized.
For instance, shopper items big Unilever sought to enhance its logistic effectivity and cut back prices by deploying a multi-mode transportation administration system to achieve higher visibility of its operations and streamline its transportation fleet. The system expanded Unilever’s visibility of transport lanes. With using automated planning algorithms, car and container utilisation have been additionally optimised. Knowledge offered by Oracle Functions (Asean), which gives Unilever with the situation planning system, signifies that total emissions of the corporate’s transport emissions have been decreased by 9 per cent because of this.
5. Interactive reporting
Speaking sustainability initiatives and metrics with numerous stakeholders, from buyers and clients to staff and suppliers, may be improved with interactive reporting applied sciences that make ESG knowledge accessible and related to every group.
To this finish, a number of suppliers of the above-mentioned options, equivalent to built-in ESG analytics platforms, have made it doable for each inner and exterior stakeholders to collaborate on knowledge and ESG narratives. This consists of offering third-party distributors or suppliers with entry to enter their metrics, to present an organisation’s senior administration, board and buyers a extra holistic overview of their provide chain.
As for buyers and clients, interactive sustainability stories which can be digital-first can enhance engagement and distribution. Easy tweaks, equivalent to utilizing responsive design, could make stories extra accessible throughout totally different units, whereas hyperlinks inside the report can broaden the entry readers need to an organisation’s present sustainable insurance policies or practices, additional enriching the ESG narrative.
“Traders are more and more involved about greenwashing in ESG reporting, marking the decision for Public Restricted Corporations (PLCs) to offer extra exact and clear non-financial data to assist steer their funding choices,” EY’s Kok mentioned.
“Reporting on the present state of ESG and sustainability shouldn’t be sufficient. The aim – in buyers’ and clients’ minds – is to drive change, and for that, you want the information to let you know not solely the place you at the moment are but additionally the place it’s essential to go,” Oracle mentioned on their web site.
In the end, expertise is simply as efficient as the aim it fulfils, PwC’s Chua mentioned. Organisations should be certain that underlying the implementation of latest expertise, rigorous processes and inner controls are utilized alongside efficient governance practices and the suitable human capabilities to make use of the information and take applicable actions.
This text was first revealed on Bursa Maintain, Bursa Malaysia’s one-stop data hub that promotes and helps growth in sustainability, company governance and accountable funding amongst public-listed corporations.