What is ESG?
Environmental, Social, and Governance (ESG) refer to the three central factors in measuring a company’s sustainability and social impact. These factors are environmental impact, social/labor conditions, and corporate governance—three key areas to consider when assessing a company’s long-term performance.
- Environmental factors include a company’s carbon footprint, water usage, climate change stance and efforts, and waste management practices.
- Social factors encompass a company’s treatment of employees, customers, and suppliers, its impact on the communities in which it operates, and efforts around corporate social responsibility (CSR).
- Governance factors include its board structure, executive compensation, and transparency around its business practices.
Aligning ESG standards with your company’s values aids the decision-making process around investment, mergers, acquisitions, and other third-party collaboration.
An ESG software and solutions provide a complete picture of an enterprise’s sustainability performance by addressing environmental, social, and governance (ESG) disclosures and data requirements. It offers users the ability to measure, monitor, and report on a company’s track record and progress across all three dimensions of sustainability management. It also empowers organizations to identify risks and perceived threats, set targets, determine solutions, and track progress over time.
What is the Significance of ESG?
Oftentimes, companies with strong ESG ratings are better able to manage risks associated with environmental and social issues since they are more prepared, which has become increasingly important since the pandemic.
The growing focus on ESG factors is significant for many reasons. Firstly, a look into ESG demonstrates a shift in how companies think about direct counterparties and third parties they deal with.
Partnering with external companies can expose your company to various levels of risk. A company’s global third-party network is critical to continued growth. With the regulatory landscape and data complexity constantly evolving, compliance teams must have scalable solutions to stay in line with current standards.
The Exiger approach to third-party risk management is a game-changer for compliance teams. It provides the expertise, technology, and due diligence you need to confidently make critical partnership decisions without wasting time or money on guesswork.
The growing prominence of ESG highlights the need for companies to consider their entire ecosystem when looking at potential risks—including other parties who could potentially hurt or damage their reputation. By considering a company’s ESG profile, companies can get a better sense of credibility, long-term prospects, and how it is managing risk.
ESG and Supply Chains
As CEOs and other stakeholders begin to place a focus on ESG issues, it is pushing companies to increase transparency and accountability in their supply chains.
In supply chain management, the entire supply chain is considered to build a more resilient supply chain by implementing ESG practices.
Many companies voluntarily disclose their efforts to build a more sustainable supply chain through different ESG metrics, but there is no legal requirement in the U.S. to disclose regarding ESG practices.
Your company should know the potential risks associated with your direct counterparties and third party—even the fourth, fifth, and even sixth parties down the line. Your supply chain is an extension of you.
Exiger launched the platform Supply Chain Explorer with this in mind, allowing companies to look into various entities in the world’s supply chain.
Factors to Consider in ESG Software
When considering ESG software, there are a few key factors to consider—full reporting dashboards, customizable frameworks, automation capabilities, and team-wide collaboration functions.
Full Reporting Dashboards
The most crucial factor to consider is whether the ESG management software provides full and customizable reporting dashboards.The ability to see all of your data in one place and easily share it with stakeholders is essential for effective decision-making.
An entire sustainability reporting dashboard will provide you with all the information to make informed decisions and provide benchmarking on your ESG strategy. The dashboard should include data on greenhouse gas emissions, water consumption, energy use, waste generated, and other key indicators.
With Exiger’s seamless integration and reporting software, you can view your data in a dynamic dashboard. Its suite of technologies can integrate with your internal data and process orchestration technologies, enabling you to manage KPIs and produce executive-level reports.
Customizable reporting frameworks can tailor the software to your specific needs and requirements, enabling you to implement the exact features and functionality that suit your organization. They also make it easy to scale the software as your business grows. You can add or remove features as required without reconfiguring the entire system.
Finally, customizable ESG frameworks provide a high degree of flexibility, essential in today’s ever-changing business environment. With the right ESG software, you can quickly adapt the software to changing conditions and requirements without incurring high costs.
Automation can help your company save time and money by automating tasks that would otherwise be completed manually. It ensures that social, governance, and sustainability data, are accurate and up to date, which is crucial for making sound decisions. In addition, automation helps you identify and address ESG risks more effectively.
Look for an ESG software solution that offers automated data collection, reporting, and analytics.
Furthermore, when considering an ESG solution, you should evaluate the software’s automation capabilities to ensure that it meets your company’s needs. Some critical factors to consider include:
- The types of tasks that the sustainability software can automate
- The ease of use and flexibility of the software’s automation features
- The ability of the software to integrate with other systems
- The cost of the software solution
The automation capabilities of ESG software can make a significant difference in the efficiency and effectiveness of your company’s ESG program. By evaluating the automation capabilities of the software, you can ensure that you choose a solution that will help your company meet its ESG goals.
Team-Wide Collaboration Functions
When it comes to choosing an ESG software, it’s essential to consider the team-wide collaboration functions, which are vital in keeping all members of your ESG team on the same page.
Here are some factors to keep in mind:
- Ease of use: Does the software have a user-friendly interface that everyone on your team can easily navigate?
- Functionality: What types of collaboration functions does the software offer? Does it have all the features you need? Look for a software solution that provides project management, task tracking, and file sharing features.
- Compatibility: Is the software compatible with your team’s other applications and systems?
- Pricing: Is the software affordable for your organization?
- Customer support: Does the software provider offer customer support if you run into any problems?
Choosing an ESG software is an important decision for any organization. By taking the time to consider all the factors involved, you can be sure to select the right software for your team’s needs.
Improve Your ESG Impact with Exiger
Every decision comes with risk. Reputational due diligence is a critical step in minimizing your downside to stay focused on maximizing your upside.
With the broadest spectrum of due diligence available, Exiger empowers companies to take a risk-based approach to understand the people and companies on the other side of their most important decisions. We have reimagined due diligence with speed and confidence, starting with DDIQ to provide an overview, drilldown and extension to a global network of trusted in-country sources.
Exiger enables organizations to assess, report comprehensively, and manage their ESG performance. Our platform can help you automate your ESG reporting process, improve transparency, and reduce risk.
Contact us today to discover how Exiger’s technology can help your company evaluate ESG performance.