ESG And Sustainability Data Management, Reporting And Disclosures: A Herculean Endeavour

ESG And Sustainability Data Management, Reporting And Disclosures: A Herculean Endeavour

Worldwide, ESG and sustainability regulatory requirements are becoming more stringent – and increasingly complex – demanding a substantial amount of data and comprehensive disclosures. For example:

• The EU’s Corporate Sustainability Reporting Directive (CSRD), which strengthens and modernizes ESG reporting for large and listed firms operating in the EU, entails 12 reporting standards, 86 disclosure requirements, over 100 KPIs and more than 1,000 data points.
  
  
• India’s Business Responsibility and Sustainability Report (BRSR) framework – which mandates Indian businesses provide quantitative metrics on sustainability-related factors – is composed of 140 questions (98 on essential indicators and 42 on leadership indicators), requiring 300 data points (see upcoming Verdantix Strategic Focus: Understanding ESG And Sustainability Disclosure Requirements In India).
  
  
• The Global Reporting Initiative (GRI) – which is explicitly referenced in 168 ESG and sustainability reporting requirements in 67 countries – has over 200 specific data points, across various topics, that organizations are recommended to disclose against.
  
  

The extent of transformation necessary to address both current and future needs is extensive, and impacts multiple facets of every business. Describing this as challenging is putting it mildly. Organizations need to navigate an ever-evolving regulatory landscape, whilst simultaneously transforming internal strategies, practices and processes – and also communicating progress authentically.

Unsurprisingly, the ESG and sustainability task(s) at hand is exposing significant gaps in firms’ internal expertise and capacity. They are increasingly seeking external advice from ESG and sustainability consulting providers for reporting and disclosures. Over 86% of respondents to our 2024 ESG and sustainability global corporate survey state that their firms will increase spend on consulting services for reporting ESG and sustainability data in 2024 compared with 2023. We also forecast that the highest growth across ESG and sustainability consulting service lines will be in data management, reporting and disclosures, expanding at a CAGR of 29% for the period from 2022-2028 (see Verdantix Market Size And Forecast: ESG And Sustainability Consulting 2022-2028 (Global)).

Responding to market demand, consulting firms are rapidly scaling up their capabilities around two major components:

• ESG and sustainability corporate reporting and disclosures.
  These consulting services define an organization’s overall approach to regulatory compliance and can entail helping firms interpret and satisfy diverse disclosure requirements (mandatory and voluntary) for external and/or internal reporting activities. They also span broader governance issues that are increasingly interconnected with ESG, such as anti-corruption, corporate taxation, board diversity and governance, cyber security, and customer privacy.
  
  
• ESG and sustainability digital transformation.
  Businesses are relying on consulting firms for their digital transformation capabilities to design and implement the requisite digital architecture for reporting and disclosures. This can entail creating and enabling ESG and sustainability information architectures, integrations, workflows, processes, and cross-functional visibility and data access.
  
  

Service providers are developing internal digital tools to deliver crucial insights that require granular sustainability data and advanced analysis, and to streamline ESG processes. Additionally, they are partnering with software firms to support end-to-end sustainability reporting transformation. These partnerships are particularly critical for buyers of ESG and sustainability data management, reporting and disclosures services with elaborate digital ecosystems, multiple ERP systems or immature data management procedures.

To help C-Suite executives and leadership – the buyers of consulting services for CSRD and ESG regulation readiness – make informed purchasing decisions for 2024 and 2025, we have produced a high-level benchmark of the capabilities of 30 consulting providers in seven key service areas. For further insights, please read Verdantix Smart Innovators: Consulting Services For CSRD And ESG Regulation Readiness.