Published on January 30, 2024, 6:26 am
In today’s corporate landscape, environmental, social, and governance (ESG) reporting has become not only important but also highly complex. With regulations enacted and proposed in various parts of the world, companies are increasingly required to report on their ESG performance and practices. At the heart of this reporting lies data, making Chief Information Officers (CIOs) crucial players in these initiatives.
CIOs have long been responsible for managing and safeguarding the data necessary for ESG reporting. However, companies now rely on them even more heavily. The European Union’s Corporate Sustainability Reporting Directive (CSRD), which came into effect in January 2023, is a primary concern for businesses operating there. Additionally, other reporting requirements from regulatory bodies such as the US Securities and Exchange Commission and the International Sustainability Standards Board are taking shape.
The key challenge for companies lies in ensuring the availability, transparency, and actionability of ESG data. CIOs play a unique role in driving data availability at scale for ESG reporting because they understand what is needed and how it can be achieved. As auditability and data-backed reports become increasingly critical due to emerging regulations, CIOs’ role in ESG becomes elevated.
CIOs are well-positioned to lead data-enabled transformations for ESG reporting due to their track records in leveraging technology effectively. However, ESG data poses unique complexities that require special attention. Leading CIOs are quickly educating themselves about the nuances of delivering reliable and actionable ESG reports.
For example, Allianz Technology faces significant challenges in its own ESG reporting efforts. As an internal technology provider with thousands of employees, they employ over 100 ESG experts who spend considerable time collecting and reporting data manually. The company recognizes the potential for errors when relying on manual processes.
To address these challenges, organizations need time to streamline their ESG reporting efforts fully. This requires careful coordination between CIOs, Chief Financial Officers (CFOs), and Chief Sustainability Officers (CSOs) within the organization. The involvement of departments such as procurement, supply chain, manufacturing, human resources, legal, and tax is crucial for a comprehensive ESG reporting strategy.
To fully grasp the complexity of ESG reporting, CIOs are advised to start by reporting on IT’s own ESG impact. This process involves educating themselves about ESG terminology and understanding various reporting frameworks. Organizations such as SustainableIT.org offer free resources and practical advice to IT leaders on navigating the complexities of ESG reporting.
CIOs are also encouraged to conduct materiality assessments to focus on gathering the most critical ESG data both in the short and long term. Assessing existing data collection processes, identifying challenges such as manual reporting and poor data quality, and exploring tools for data management and analysis are essential steps for successful ESG reporting.
As companies develop their ESG reporting infrastructure, CIOs need to consider how their efforts align with broader IT strategies. Long-term roadmaps that synergize with other initiatives while addressing immediate needs should be developed. Furthermore, CIOs must prioritize communication within the organization to clarify roles and responsibilities concerning ongoing ESG reporting.
Implementing robust ESG reporting capabilities is a journey that requires increasing maturity over time. While data is at the core of this effort, it must also be integrated into business processes while considering organizational change management. CIOs have a unique opportunity to bring their expertise in tech-enabled business transformations into the realm of sustainability and help organizations achieve their ESG goals through effective data management.