Aggregate, Act, Anticipate – Three Things Industrial Firms Must Consider For ESG Reporting

Aggregate, Act, Anticipate – Three Things Industrial Firms Must Consider For ESG Reporting

Owing to the massive level of emissions and pollutants produced at most industrial facilities, organizations across energy, manufacturing and extractives face a considerable reporting burden, from both a voluntary and a mandatory compliance perspective. Reporting volumes will intensify as upcoming regulation, especially in Europe and North America, enshrines new levels of rigor for disclosures into law. In response, industrial organizations have taken steps to improve ESG and sustainability reporting governance and data collection.

While there is no one-size-fits-all approach, there are a few baseline activities firms should undertake to better understand and prepare for ESG reporting in the near future. These are split across three areas:

1. Digitize data collection and aggregation processes.
   Identifying the sources of emissions, pollutants and other key data points within the complex supply chains of industrial organizations is a major challenge. Collecting that data is another. Digitizing these processes sooner rather than later should be a key initiative. Several solutions have been developed to address data collection and aggregation challenges. Verdantix reviewed the ESG reporting and data management capabilities of 39 vendors to provide a high-level capabilities benchmark. Included in the benchmark was Workiva, which has worked with Spanish power utility Iberdrola to digitize its ESG reporting process.
   
   
2. Bolster voluntary reporting capabilities to keep step with competitive intensity.

   Voluntary disclosures are a significant force within the ESG reporting landscape, and we predict that this influence will continue in 2023. This is especially true as regulators, such as the UK Financial Conduct Authority (FCA) are renewing warnings to ESG benchmarking compilers. Industrial organizations should build out voluntary reporting capabilities, establishing processes and governance that can then satisfy regulatory disclosures in the future. Voluntary frameworks to which industrial organizations report include GRI, SASB and CDP.

3. Anticipate oncoming regulations to remain compliant.
   Organizations face a bewildering maelstrom of ESG disclosure regulations, both international and sector- or region-specific. Staying on top of these regulations is key to remaining ahead of the curve as well as ensuring compliance. Industrial organizations are particularly exposed given their sprawling supply chains and heightened environmental impact.

For more information on industrial tech and how it helps firms achieve their net zero and sustainability objectives, read the following Verdantix reports: Strategic Focus: The Role Of Operations Managers In Implementing Net Zero Strategies, Market Insight: Net Zero And Energy Transition Priorities Of Industrial Firms In 2023 and Market Insight: Ten Applications Of AI In Renewable Power Generation And Grid Management.