Your ESG And Sustainability Questions, Answered

Your ESG And Sustainability Questions, Answered

During the recent webinar discussing our ESG and sustainability predictions for 2024, we received over 70 questions that were mostly focused on reporting, sustainable supply chains and organizational processes. While we didn’t have time to answer every question during the webinar, we wanted to provide responses to some of the questions that apply to a range of firms and represent the sentiment of other queries we are getting. Here are our replies to four questions asked during the webinar:

• “Is there any indication that other jurisdictions (and not just the EU) will introduce legislation similar to the CSRD?”
  Yes! For example, since our webinar, the three largest stock exchanges in China released a mandatory sustainability disclosure regulation that echoes the CSRD. The regulation will require large listed firms to disclose sustainability data starting in 2026 – including Scope 3 emissions – and will incorporate the double materiality approach. Additionally, we have seen guidance from EFRAG that interoperability between the CSRD and the IFRS Sustainability Standards will increase.
  
  
• “How are organizations engaging their employees in sustainable strategy?”
  Similar questions came up during panels and presentations at the Verdantix Climate Summit North America. Climate and sustainability leaders noted that engagement takes time, but that a vital first step is mapping key stakeholders; sustainability teams should then build relationships with these stakeholders as soon as possible, while using terminology that is familiar to employees in other departments. We are also seeing some firms – such as HSBC and Starbucks – offer external training to further educate employees on sustainability topics.
  
  
• “Are organizations building their own internal tools and moving away from software vendors?” We are actually seeing the opposite: firms starting to purchase software for a variety of use cases, such as sustainability reporting, ESG risk management and supply chain sustainability. As the demand for investor-grade data grows – due to both regulatory requirements and pressure from investors, suppliers and other stakeholders – we expect an increasing number of organizations to turn to external software. In fact, we expect the ESG reporting software market to grow to over $4.3 billion by 2027, at a CAGR of 30% (see Verdantix Market Size And Forecast: ESG Reporting Software Solutions 2021-2027 (Global)).
  
  
• “For supply chain, what type of data are firms looking to collect from their suppliers other than certifications and emissions? How is the software market responding to this and what kind of tools are needed?”
  In addition to certifications and emissions, firms are asking for more information regarding the origin of products and their associated raw materials. Some organizations are asking for risk metrics to track exposure to climate change, as well as DEI data and policies to evaluate human rights within the supply chain. In response, software providers are offering either supplier-centric solutions or capabilities to strengthen communication and engagement with suppliers. For more information on innovation in supply chain software, see Smart Innovators: Supply Chain Sustainability Software.