Organizations turning toward ESG software solutions, IDC

A recent International Data Corporation (IDC) survey shows that organizations with the most mature environmental, social, and governance (ESG) strategies are increasingly turning to software platforms to meet their data management and reporting needs. This represents an important transition toward independent ESG program management and away from dependence on ESG consultants and service providers.

“Software platforms will play an essential role in an organization’s ESG maturity journey. These platforms will support organizations from early-stage data gathering and materiality assessments through sustainable business strategy enablement and every step in between,” said Amy Cravens, research manager, GRC and ESG Reporting and Management Technologies.

IDC identified three stages of maturity among the organizations that have adopted ESG software. Early stage maturity includes those organizations where formal disclosure and compliance processes are in place but ESG is not yet a component of daily practice. Organizations with established key performance indicators (KPIs) and controls for ESG goals are in the middle stage of maturity. The final stage of ESG maturity is signaled by ESG being fully incorporated into the organization’s business model and strategy.

IDC found some variability in ESG maturity across industries with the manufacturing and services sectors being further along in their ESG journey while the education and government sectors are still in the earlier stages of maturity. Despite these variances, the goals for ESG software were largely the same across industries: data management, data reporting, and risk management.

Among the organizations that have adopted ESG software, data management was identified as the top driver for this decision, followed by ESG reporting and ESG risk management. Similarly, the survey showed that management of sustainability goals was the most important business priority for ESG software. However, the business priorities for ESG software varied somewhat across industries with improved compliance, improved financial performance, improved brand perception/customer loyalty, and improved operational efficiency identified as the top 4 priorities.

While reporting was perceived as the most important ESG software tool, data management remained an important factor in software purchase decisions. Because internal sustainability goals and external reporting initiatives are dependent on the availability of quality data, survey respondents identified data management, accreditation, and analysis as three of the top ranked ESG software capabilities. And to meet these data needs, carbon accounting, non-carbon accounting, and audit management were among the most important ESG software tools.

CT Bureau