Fast-track Your Progress To Net Zero with ESG

INTRODUCTION

Around the world, companies are under immense pressure from regulators, customers, investors, and other stakeholders to reduce greenhouse gas (GHG) emissions. Decarbonizing is no longer a choice but an imperative. Fortunately, more than one-third of the largest publicly traded companies have taken a step in the right direction by setting net zero targets, up from one-fifth in December 2020 (The Net Zero Tracker). But are they making sufficient progress towards those targets? 

Accenture finds that 93% of companies will miss their net zero goals – unless they accelerate their decarbonization efforts. That starts with carbon accounting – measuring the number of emissions produced directly or indirectly from a company’s operations. According to a BCG GAMMA survey, only 9% of companies can comprehensively quantify their total emissions. Others are hindered by data errors, infrequent measurements, manual methods, and more. 

Without complete and high-quality emissions data, companies won’t know where to focus their carbon reduction efforts. But even if they did, the journey doesn’t there. Carbon reduction is just one part of a much larger environmental, social, and governance (ESG) imperative that requires companies to demonstrate not only sustainable business practices, but also workforce diversity, pay parity, inclusivity, anti-corruption, data privacy, and more. 

To effectively manage ESG, we must understand ESG risks, stay up-to-date on regulations, remediate any issues that arise, and generate reports that investors and customers expect to see. The fast, efficient way to do all that is with technology. Robust carbon accounting and ESG solutions can help you streamline and automate your ESG processes (including emissions measurement and monitoring) while also empowering you with all the data you need to get to net zero faster. 

Learn more about why ESG technology is important and how it can help you build a more sustainable and socially responsible enterprise in this eBook.

Decarbonization: The New Need-to-Have for Businesses

Decades of burning fossil fuels have contributed to global warming of 1.1°C above pre-industrial levels. To limit further rises in temperature and avoid catastrophic climate disruptions, we must massively scale up carbon reduction efforts. Our planet's health depends on it. 

That said, decarbonization isn’t just an ecological or even an existential issue. It’s also a business problem. 

Here are some reasons why companies should care about reducing their carbon footprint.

• Ensure regulatory compliance: The Securities and Exchange Commission’s (SEC’s) proposed climate disclosure rules, the Sustainable Finance Disclosure Regulation (SFDR), and the Corporate Sustainability Reporting Directive (CSDR) are just a handful of the new/proposed regulations that demand greater transparency into emissions risks. 
• Unlock opportunities: Government schemes and laws like the US’s Inflation Reduction Act are setting aside substantial grants, tax breaks, and loan interest rate reductions for companies that demonstrate sustainable business practices. 
• Win investors and clients: Today’s investors expect companies to not only track and report emissions but also have a comprehensive, credible strategy for climate risk mitigation. These demands have begun to resonate across the value chain. Buyers that need to report Scope 3 emissions increasingly prefer to work with suppliers that adhere to environmental standards. 
• Build credibility: Many sustainability ratings and certifications (e.g., B Corp, Carbon Disclosure Project (CDP), EcoVadis) take into account carbon footprints. Getting certified helps companies signify their commitment to sustainability, and strengthen trust with stakeholders. 
• Attract and retain better talent: Millennials and Gen Zs prefer employers that prioritize sustainability. 51% of business students are willing to accept a lower salary to work for a company with better environmental practices, and 26% would not accept a job at a company with poor practices.

You Can’t Manage What You Can’t Measure

Committing to a net zero target is the easy part. What’s hard is the next step – measuring your Scope 1, 2, and 3 emissions. If you don’t know which parts of your business are generating CO2 and in what quantity, you cannot reduce your carbon footprint in a meaningful way. 

One of the biggest challenges with emissions measurement is the vastness of the data. It can come from so many direct and indirect sources across the enterprise – electricity bills, water bills, data centers, travel invoices, supply chains, employee fuel receipts, waste disposal providers, etc. Trying to gather, consolidate, and analyze this data manually is neither effective nor efficient. 

How then do you get a faster view of your emissions? How do you ensure that your data is complete, accurate, transparent, and consistent? How do you know which aspects of your business are generating the most emissions? 

The technology could provide some answers. Cutting-edge carbon accounting solutions are emerging to help companies monitor emissions in real-time, and define a powerful reduction plan – all from one intuitive interface.

The technology could provide some answers. Cutting-edge carbon accounting solutions are emerging to help companies monitor emissions in real-time, and define a powerful reduction plan – all from one intuitive interface. 

With a solution like that, you can:

• Simplify emissions data collection: Seamlessly integrate with multiple systems to import information     
  for emissions calculations. This data could include:
  • Accounting data: Fixed assets, professional expenses, supplier investments, etc. 
  • Employee emissions: Commuting expenses, IT usage, etc. 
  • Company data: Number of employees, building area, energy consumption, etc.
• Get granular insights on your carbon footprint: Understand how much CO2 is emitted by your data centers, which suppliers are contributing to your emissions, what distances your employees have traveled, how much food is consumed at company events, etc. 
• Strengthen reporting with powerful dashboards and analytics: Identify the best opportunities to reduce your emissions; benchmark your decarbonization efforts against competitors; determine which suppliers are committed to climate action, etc. 
• Develop targeted emissions reduction roadmaps: Set sophisticated targets, build personalized action plans, and monitor your results in real-time. Define key performance indicators (KPIs), align them with frameworks such as the Science Based Targets initiative (SBTi), and enhance employee training.

As carbon accounting becomes more important, technology will be essential in streamlining and automating the reporting process. The faster you can quantify and reduce your emissions, the faster you can achieve your net zero goals.

The Bigger Picture: ESG

While carbon accounting is a core part of any ESG program, it isn’t the only one. There are other elements to consider as well. Take, for instance, ESG compliance management. Regulators ranging from the SEC in the US to the European Commission in the EU have either rolled out or are planning to roll out a slew of regulations requiring companies to disclose climate-related information. 

In tandem, several ESG reporting frameworks and guidelines have sprung up – be it from the Task Force on Climate-Related Financial Disclosures (TCFD), CDP, Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), or Value Reporting Foundation (VRF). 

Many of these frameworks and regulations are focused on large companies or public entities – but they will eventually trickle down to mid-sized and smaller businesses. So, rather than wait and watch, businesses of all sizes would do well to proactively build an ESG compliance and disclosure program with robust policies, procedures, and controls. 

ESG risk management is just as essential. The TCFD specifically recommends that companies disclose how they identify, assess, and manage climate-related risks. Since many of these risks are linked to other enterprise risks such as reputational and financial risks, it makes sense to manage all of them as part of a larger enterprise risk management (ERM) program. 

It’s also important to note that ESG isn’t just about the ‘E’ – environmental or climate management. It includes the S (diversity and inclusion, labor practices, employee health and safety, customer privacy, and data security), as well as the G (corporate structure, board composition, business ethics, anti-corruption, whistleblowing, and executive compensation). All of these elements have to be managed seamlessly and efficiently. 

The final piece is reporting. Data on climate risks, governance activities, and social responsibility metrics have to be gathered, analyzed, and positioned in the reporting formats that investors and regulators want to see. Additionally, for every piece of data that is reported, there must be controls in place to verify the accuracy, reliability, and completeness of the data, similar to financial reporting. 

In short, there are so many different things that companies have to do to meet their ESG requirements. So, what if there was one platform to do it all?

Building a Single Source of Truth

An ESG platform can help you connect the dots across carbon accounting, climate risk assessments, supplier sustainability monitoring, TCFD reporting, and more. It consolidates all your ESG data in one place – so, you don’t spend months gathering and putting together the evidence that auditors ask for. Instead, you’re audit-ready from day one. Plus, with real-time ESG insights at your fingertips, you can take faster and more informed steps to improve sustainability, drive positive social impact, and build trustworthy systems of governance. 

Here are some other ways an ESG platform can help:

• Improve the efficiency of disclosures
  • Collect ESG data once, and use it for multiple reporting requirements (GRI, TCFD, etc) 
  • Automatically integrate carbon accounting data from third-party systems 
  • Maintain reviews, certifications, and audit trails 
  • Create reports with just 1-2 clicks
• Strengthen ESG performance management
  • Create and manage ESG goals 
  • Forecast performance against those goals 
  • Monitor ESG performance by facilities, lines of business, etc. 
• Capture and remediate issues faster
  • Identify disclosure gaps and issues in a streamlined manner 
  • Automate issue creation when a threshold is breached 
  • Get automatic action recommendations 
• Gain faster ESG insights
  • Track and monitor ESG trends in real time 
  • Baseline or benchmark your performance by integrating with an external rating or performance monitoring sources 
  • Stay updated on regulatory changes and understand their impact 
• Simplify risk and control assessments
  • Streamline ESG risk identification and assessments 
  • Integrate ESG risk management into ERM 
  • Establish a centralized risk register 
  • Accelerate control testing and certifications 
• Assess supplier sustainability
  • Enhance visibility into third-party ESG risks 
  • Integrate with external data sources like EcoVadis for supplier ESG ratings

How MetricStream and Greenly Can Help

MetricStream, a global leader in governance, risk, and compliance (GRC) solutions and Greenly, a climate tech company have joined hands to deliver an integrated solution that can help you fast-track progress towards your ESG and net zero goals. 

Greenly’s intuitive carbon accounting platform makes it easy to calculate and reduce scope 1, 2, and 3 emissions. Say goodbye to complex spreadsheets and static reports. With Greenly’s smart data collection, you can track all emissions in one place. 

Carbon intelligence from Greenly flows seamlessly into MetricStream’s ESGRC product, where users can produce comprehensive disclosure reports, track ESG performance, assess ESG risks, identify reporting gaps, and more.

Built on the industry-leading MetricStream platform, the ESGRC product serves as your single source of truth for all data related to sustainability, social responsibility, and governance. Greenly and MetricStream together help you better prepare for ESG disclosure requirements, while also promoting sustainable and inclusive business growth.

Conclusion

Much like the quest for digital transformation, the race to net zero will require significant changes in technology. By using tools that automate carbon accounting and other ESG processes, you aren’t just likely to save costs or improve efficiency, but also create higher-quality ESG disclosure reports at speed and scale. That, in turn, will strengthen your credibility and reputation with multiple stakeholders, putting you ahead of the competition.