Fifty percent of large US firms dependent on spreadsheets to manage ESG data are ramping up their ESG data and reporting capabilities.

A professional services firm KPMG US survey reveals that most large companies feel confident that they are ahead of the curve in managing ESG data. 

KPMG US polled 550 board members, executives, and managers at public and private businesses for its most recent study. Of these, roughly two-thirds had revenues of $1 billion or more, primarily from North America and Europe and a variety of industry sectors.

The majority of large companies are ramping up their ESG data and reporting capabilities, the authors note. Many are planning to increase investments in sustainability-related software and workforce capabilities over the next few years.

However, nearly half report that they are still using spreadsheets to manage ESG data, the authors note.

The difference in perception and the real level of readiness:

The KPMG study showed a discrepancy between businesses’ perceived and real levels of readiness for ESG reporting. 

Though 83% of respondents claimed their companies were ahead of their peers in terms of sustainability reporting, many still seem to rely heavily on manual data collection. 

• 47% used spreadsheets are the most commonly used ESG data management system
• 47% use spreadsheets and ERP systems 
• 38% use spreadsheets, ERP systems with ESG modules
• 37% use specialized ESG software solutions 
• 33% use ESG data management solutions 

Enhancing ESG data management:

Even though almost half of businesses still use spreadsheets to compile their ESG data, the majority have plans to improve their ESG reporting capabilities soon. 

• 58% intend to use artificial intelligence and machine learning to improve their data consolidation and analysis over the next three years
• 49% are currently offering management and employee training to improve the quality of their ESG reports

The survey indicates that businesses are prioritizing enhancing their ESG capabilities due to increasing regulatory pressure to disclose sustainability information.

• 90% plan to increase their ESG investments over the next three years
• 37% will invest in data collection and management tools as a top priority
• 38% will invest in employee training and education 
• 43% will invest in dedicated ESG personnel 

Capacity building: 

The survey said that many organizations see developing ESG capabilities as a crucial tool for improving organizational performance and meeting compliance requirements. 

The survey revealed that 45% of respondents believe enhancing ESG data management and reporting capabilities is the most effective method for integrating sustainability goals with business objectives.

ESG skills, including data analytics, sustainability management, risk assessment, and carbon emissions reporting, emerged as high skills. 83% of companies predicted increased ESG responsibilities in non-ESG roles.

Challenges:

The study highlighted the significant challenges businesses must overcome to integrate a sustainability strategy into their broader corporate goals. 

• 44% of respondents cited “insufficient resources or capacity to collaborate effectively” as the biggest obstacle
• 19% of respondents mentioned competing priorities or budgetary constraints
• 21% said it was difficult to calculate the return on investment for ESG activities
• Respondents mentioned internal silos and poor departmental communication as another major obstacle to sustainability integration 

Notably, more than 75% of respondents stated that they anticipate organizational restructuring to better align sustainability goals with overall business strategy to achieve better coordination, with 33% anticipating a “major restructuring.’

Quotes: 

Tegan Keele, Climate Data & Technology Leader, KPMG US, said, “Artificial intelligence and machine learning technologies can help organizations gain valuable insights from disparate data and make more informed decisions. However, they are not a silver bullet for sustainability reporting or for setting a strategy that adds value to the business. Judgment calls like which data to use, which sources to collect the data from and the type of controls that need to be in place require a cohesive strategy. The strategy should be driven by the organization and informed by the technology rather than driven by it.”

Maura Hodge, ESG Audit Leader, KPMG US, said: “Timely and accurate reporting of sustainability information is key for businesses to meet regulatory reporting guidelines. However, compliance alone should not dictate an organization’s strategy – focusing on the core elements of ESG that will drive financial value over the long-term is paramount.”

Rob Fisher, ESG Leader, KPMG US, said, “Sustainability touches every part of the business, making it very difficult for large organizations to organize around and very easy to have a ‘check the box’ mentality and focus solely on compliance. The organizations that view new reporting requirements as more of an expansion of their broader sustainability strategy and who continue to invest in the right people and technology to make progress on that strategy will be better positioned to both realize and communicate the full value sustainability initiatives can bring to their business.”