As companies grapple with formulating their Environmental, Social, and Governance (ESG) strategies, time is running out. With a 1st January 2025 deadline fast approaching, businesses across Europe must prepare to meet the stringent requirements of the Corporate Sustainability Reporting Directive (CSRD). This new regulation will require large companies to begin reporting on their ESG metrics in alignment with the European Sustainability Reporting Standards (ESRS), making 2024 a critical year for data collection.
The challenge is clear: companies need to have a comprehensive data strategy in place, but many are struggling with fragmented systems and incomplete data. Without a joined-up approach, organisations risk falling behind, failing to meet compliance requirements, and missing out on the opportunity to leverage ESG data as a strategic asset. The urgency to address these gaps has never been greater - acting now can mean the difference between staying ahead of regulations and facing significant hurdles in the reporting process.
At Spark, our role as a Data Acceleration Partner goes beyond just helping businesses lay the right foundations. We guide you through each step of your ESG journey, ensuring that your reporting and compliance needs are met with precision and confidence. Our Data Platform provides comprehensive data solutions that support your ESG goals, from the initial collection and integration of data to detailed reporting. We ensure that your ESG metrics are seamlessly embedded into your broader business systems and tailored to meet local regulatory standards.
So, what are the main challenges and how can companies set themselves up for success?
One of the biggest hurdles for businesses is the fragmented nature of ESG data. To formulate an effective ESG strategy, companies must gather information from various sources - internally from different departments and externally from suppliers and customers. This is particularly challenging for organisations operating across multiple regions, as different countries may have distinct regulations and reporting requirements.
Frameworks like the EU’s CSRD and the UK’s TCFD introduce clear reporting obligations, but focusing only on compliance can create blind spots. While adopting these frameworks can help streamline reporting, real success lies in ensuring quality data collection from the start.
To overcome this challenge, organisations should carefully decide which reporting frameworks align best with their long-term goals. ESG priorities, such as alignment with industry best practices or the values of your customer base, will strongly influence these decisions. It’s essential to adopt the most recognised ESG reporting standards for your strategy and strive for consistency in your reporting processes. Be open about areas where your reporting might be incomplete or still evolving. This transparency helps build credibility and trust with stakeholders, ensuring they understand your ESG journey.
In most organisations, ESG data is siloed, stored in different systems that don’t communicate with each other. This separation makes it nearly impossible to draw a clear connection between ESG activities and business impact, hindering any meaningful insights.
For example, data related to environmental initiatives might be housed in one system, while financial or social impact data resides in another. Without a cohesive system in place to integrate these data points, businesses are left with a fragmented picture of their ESG efforts. This can be particularly challenging in regions where regulatory scrutiny is increasing, making it more important than ever to ensure that ESG data is accurate, auditable, and complete.
The market is seeing a rise in ESG platforms promising to solve reporting challenges. However, these platforms are only as effective as the data that feeds them. The pitch from most ESG vendors is that their platform can use API integration to solve all of these problems, but in reality, these tools cannot overcome the fundamental issue of disorganised or incomplete data.
An API might allow the platform to connect to other systems, but it doesn’t ensure that the data flowing through those connections is accurate, complete, or usable. Without addressing the root problem - how data is collected, stored, and managed across the organisation - these platforms can only provide limited value.
For organisations to get ESG reporting right, they need to start by developing a comprehensive data collection strategy that encompasses the entire business ecosystem. At Spark, our proven Data Platform can help. Our platform helps organisations report on not just internal operations, but also suppliers, partners, and even customers where relevant. Our data-driven approach to ESG reporting helps companies focus on:
Ready to start or accelerate your ESG Reporting and Compliance journey?