Technology Can Help Businesses Make ESG Reporting Easy

ESG data management and disclosure, together with decarbonization execution and capacity creation, are currently among the major difficulties encountered by businesses in India, including more than 80% of the 1,000 listed companies.

Business Responsibility and Sustainability Reporting (BRSR) is required for the top 1,000 publicly traded businesses by market capitalization, according to SEBI regulations.

The BRSR must be included in the annual report, which is distributed individually to shareholders, posted on the company's website, and disclosed to stock markets.

Material environmental impacts, energy consumption and intensity, water consumption, intensity, withdrawal and discharge, and greenhouse gas (GHG) emissions are the primary environmental parameters that firms must declare starting with the current year in the BRSR.

Many market participants are looking for ESG performance information from public and unlisted companies with an impact on the financial results and productivity of enterprises. Investors who either practise impact investing or need pre- and post-investment ESG measures are some of the major market participants. Corporates fall under the second category; they assess the sustainability criteria of their supply chain partners. The third group consists of rating agencies, including credit and ESG rating agencies, which may have an effect on rating output, and consequently, cost of capital and ability to raise money. As part of their credit underwriting and risk management procedures, lenders have started asking major borrowers for ESG data, which is the final category.

Given the importance of ESG data, it is crucial for companies to have strong internal controls and efficient procedures in place to collect accurate and comprehensive data points for reporting and analytical needs. To gain acute insights and create plans that may be implemented to improve ESG scores, data analytics would be crucial.

Along with decarbonization execution and capacity creation, one of the major issues currently faced by Indian businesses, including more than 80% of the 1,000 listed companies, is ESG data management and disclosure. Only 15% of 1,000 publicly traded corporations published sustainability reports last year. Although our most recent meetings with several of these listed firms, including their CEOs, CFOs, Heads of Sustainability and EHS, reveal that support of developing and implementing ESG strategy is at the highest level, data management continues to be a concern.

The majority of these businesses currently follow a manual, irregular, error-prone data collection trend that spreads data across numerous departments, locations, and offices. Then there is the problem of supply chain sustainability, which addresses the influence of ESG on products and services across their entire lifecycle. When a company's entire climate impacts are considered, supply chains frequently account for more than 80% of its GHG emissions. Companies are under pressure to update their methods and procedures for evaluating sustainability as a result of constantly changing standards and norms. The administrative data flow takes up more time than advancing ESG efforts that will reduce carbon emissions and improve overall rankings.

By enabling organizations to gather dispersed and unstructured data and analyze it more efficiently in order to achieve their net zero goals, technology can be leveraged by businesses to improve the ESG reporting procedures.