ESG is not just about reporting, but planning how to reach sustainability goals

May 2, 2022 | 5 minute read
Wayne Heather
EPM Product Marketing Director, Oracle
Text Size 100%:

Never before have companies been under such pressure to manage their businesses in a more sustainable way. Consumers want to shop for sustainable brands, investors are looking for more sustainable initiatives—even employees want to make sure the companies they work for embed sustainability into the core of what they do. And of course, there are pressures from regulators who demand that companies report on their environmental, social, and governance (ESG) initiatives—for example, the European Union recently adopted two pieces of legislation that mandate rigorous ESG disclosures for the benefit of investors. The SEC also announced it will extend mandatory company reporting into the realm of ESG.

Business leaders know that this is a priority, but they face a lot of hurdles. A recent study conducted by Savanta and Oracle revealed that 91% of business leaders face major challenges with their ESG initiatives—including sourcing the right data to track their progress, and time-consuming manual reporting.

Why is ESG reporting such a challenge?

ESG covers a lot of ground beyond environmental issues; it can encompass everything from diversity initiatives to executive compensation. Therefore, you need to gather data from across the business: human resources, supply chain, manufacturing, sales, finance, and more. The data you collect will be both financial and non-financial; you’ll need to standardize it to a common set of metrics, and then aggregate it for a common view of performance across your whole organization.

Complicating matters is that data often resides in multiple systems that aren’t connected to each other—let alone to your planning and reporting systems. In such cases, the whole process is done manually by exporting and poring over spreadsheets—creating delays, inaccuracies, and corporate risk.

ESG is about more than reporting

Simply reporting on sustainability is not enough. The goal is to drive change. 

When companies set ambitious ESG targets, they must be able to plan how they’ll achieve these goals. It’s critical to translate your longer-term goals into shorter, actionable plans across the organization. Sustainability should be part of your enterprise-wide plan, so that every line of business understands how their own actions will impact the company’s wider ESG goals and can easily communicate their own progress. When you embed ESG into your planning process, you can plan and track your progress; moreover, you can quickly avoid unintended consequences and identify new opportunities to improve.

Aiming for long term goals—for example, reducing carbon emissions—involves several types of planning. First, there is the strategic plan, which requires long-term scenario modeling. This is typically done over a 3-5 year term (or longer depending on the industry). The long-term plan must then be broken down into short-term annual plans. For this, you need to connect your plans across every line of business, so that you can track all elements of your ESG progress:

Environmental initiatives could involve reducing the carbon or environmental impacts of various company operations. For this, you need to tie together operational, financial, and project planning, so that you can plan for and track the ESG impact of any project or capital investment within the company.

Social initiatives include issues like diversity, gender disparity, wage equity, and so on. For this, you need to connect your strategic workforce and workforce planning systems to each other, and to finance.

Governance includes things like tax provision and planning—for example, making sure your company is planning for and paying tax in the right jurisdictions and investing in local communities.

How can technology help?

To plan for and track such a complex set of initiatives, you need a full suite to cover off all connected planning. Of course, it must include a robust reporting capability that’s flexible enough to give stakeholders a quick overview of their ESG performance using highly visual, interactive dashboards—but that’s only one step in the process. The ability to do ad-hoc analysis of these metrics and explore more detailed information is key to taking the bold actions needed to drive change. To communicate your ESG performance to stakeholders, consumers, and regulators, your solution should have the ability to combine narrative and data in a structured, secure environment—yet be completely flexible to report in the multiple frameworks set out by various ESG regulators.

Having machine learning embedded into the platform also makes it possible to predict likely outcomes. In fact, research with Savanta shows that 93% of business leaders would trust AI over humans to make sustainability and social decisions. 42% would trust technology over humans to be unbiased in decision-making, and 41% trust AI over humans to predict future outcomes based on metrics/past performance.

ESG is not just about reporting, but planning how to reach sustainability goals

Machine learning models can analyse large volumes of data better than any human; with the right planning system, you can put these models in users’ hands, so they can take advantage of all data (internal and external) that might help them predict ESG outcomes. AI also helps users to analyse the data in their plans instantly, letting the machine look for anomalies, hot-spots or extreme variances. Teams can quickly take action to correct course and stay on track with their ESG aspirations.

Only Oracle delivers these capabilities in a single enterprise performance management (EPM) suite that addresses all your ESG reporting and planning needs—including  enterprise-wide connected planning, regulatory and ad-hoc reporting, and enterprise data management for standardisation across all your ESG metrics.

The business value of ESG planning and reporting

Communicating your goals and progress will help attract consumers, investors, favourable rates—and in some cases, increase profits. Let me give you an example:

A large food supplement manufacturer received customer feedback that the plastic they use for packaging was not sustainable. The company decided to look into these claims, using Oracle Cloud EPM to run ad-hoc analyses on their products’ carbon footprint. They found that, in fact, the plastic made up only 3% of the supplements’ carbon footprint; transitioning to cardboard or tin packaging would increase the products’ carbon emissions significantly. By harnessing the data in their planning process, the manufacturer could make the right decisions, stay on track to meet their ESG goals, and give feedback to their customers. Today, they’re one of the fastest-growing food supplement brands on the market.

Make progress now, or fall behind

Time—and the public’s patience—is running short. In our research with Savanta, 78% of respondents expressed frustration with society’s lack of progress on ESG initiatives, and 91% want businesses to be held accountable. Business leaders see technology as a solution—89% believe companies that use technology effectively to help drive sustainable business will be the ones to succeed in the long run.

But any technology must be used intelligently to drive success. The way to make progress isn’t just to report on what you’re doing; it’s to plan for continuous improvement, set your ESG goals, track your progress, and adjust course as needed. An intelligent, connected planning and reporting solution like Oracle Cloud EPM can help you accomplish your goals—and help ensure that your company succeeds financially, too.

no planet b report



Read the full report, No Planet B: How Can Businesses and   Technology Help Save the World?  

Wayne Heather

EPM Product Marketing Director, Oracle

Previous Post

How leading banks plan and forecast with confidence

Avinash Mullick | 4 min read

Next Post

How the “fear of missing out” is driving cloud ERP adoption

Rudy Lukez | 4 min read