Innovation in ESG performance management software marches forward as the latest research from Verdantix shows; Market Insight: 10 Innovative Vendors Advancing ESG and Sustainability Performance. You would be forgiven for thinking that such innovative vendors, amongst whom YuzeData is proud to be named, are more often deployed for managing the E in ESG.
Environment sure has had a lot of airtime and investment with good reason of course. But the problems surrounding improved environmental performance are very similar to those of improving Social & Governance performance. It’s about knowing where your compliance risks lie in the organization, implementing efficient controls and monitoring the effectiveness of those controls all the way down through each of your operations.
Effective governance is a data problem
This requires an enormous internal effort to get departments aligned, run the right granularity of internal audits at the right frequency, monitor for policy non-conformances and then act when incidents are reported, or corrective actions stubbornly remain incomplete. Therefore, a modern approach to Social & Governance requires modern ESG tools to deal with current demands and growing complexity.
The complexity lies in how disparate the required data are. There are legacy Health & Safety systems all collecting varying data on worker risk and health. Disjointed tools monitor how external stakeholders and institutions feel the company impacts them. And then there are supply chain questionnaires, learning management systems and a myriad of spreadsheets, risk management, internal audit and inspection tools that create a lot of the data required for good governance.
Getting to a level of understanding on performance in key Compliance topics e.g., Security, Ethics, Safety, Diversity with all this data is something most risk and compliance teams can only manage to do once a year. Just as the need to report on Environmental emissions as part of ESG compliance will crop up immediately after the company’s financial reporting year ends, so too will the need to reveal progress on Social issues and key Governance programs.
Connect and collaborate
There are several ways to tackle this problem.
No surprises that we prefer Number 3.
As Verdantix highlights in its Market Insight report: ‘’YuzeData’s platform is well-suited to large organizations in which ESG data sit within different systems.’’ The advantage of connecting to the data where it sits today, and automating those connections is that insight on performance can be gained much earlier in the reporting cycle. This leaves time for intervention well ahead of official disclosure deadlines. Collaboration tools on top of this automation allow fast intervention to achieve performance goals.
Turn multiple tools into an early intervention system
Having so much cross-functional alignment as a Compliance team and separate data tools can be turned, therefore, into an advantage. Spending the time understanding which tools operations are using to manage information on controls and to collect granular information on performance, provides an effective roadmap for directing automated action to course correct if something is trending negatively.
A great example is compliance training; a surprisingly manual effort to check whether enterprise training goals are being met. A more automated approach consists of connecting data on actual training completed in multiple systems against the target, automating weekly monitoring, alerting on missed progress and directing automated action towards the control owners to rectify.
Even better, compare training progress with the rate of non-conformances reported in different systems and have that insight regularly sent to regional compliance teams. A simple use case, that goes beyond silos, that could help to course correct before an incident occurs.
And help you feel more confident about progress on Social & Governance performance, which are just as important as Environmental.