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How Technology Can Help Ensure ESG Data Quality

A former head of sustainable investing at a global investment firm recently accused the company of greenwashing. The accusation led to reputational damage and negatively impacted its stock price. In fact, according to a recent survey*, 68% of U.S. executives admitted that their companies are guilty of greenwashing. Greenwashing is the act of providing the public or investors with misleading or false information about the environmental impact of a company's products and operations.

But what if the misstatements from the investment firm were not coming from bad intentions? Companies must have defensible data and build efficient governance around ESG data to protect their reputations from similar accusations.

ESG data and reports provided by organizations can be difficult to benchmark from company to company, and investors are often unsure whether the data can be trusted. The European Union Council aims to tackle the challenges of voluntary ESG sustainability reporting with the Corporate Sustainability Reporting Directive (CSRD). The CSRD standard is designed to make corporate sustainability reporting more common, consistent, and standardized, like financial accounting and reporting.

Beginning in 2025, companies will have to produce CRSD reports based on 2024 fiscal year performance. So who will be impacted by CSRD? More than 50,000 companies in the EU will be reporting according to the following calendar:

  • FY2024: Companies subject to NFRD (The Non-Financial Reporting Directive)

  • FY2025: EU companies meeting at least two of the following criteria:

    • 250 employees, >€40M annual revenue, >€20M total assets

  • FY2026: Public companies with more than ten employees or €20M annual revenue

  • FY2028: International and non-EU companies with EU branches and annual revenue >€150M.

But in practice, non-EU companies are likely to be required to adhere to ESG reporting a lot sooner than 2028. This is because CSRD extends the reporting boundaries to include the data from the upstream and downstream value chain when it is material. Therefore, all companies worldwide working with large EU entities will be under pressure to collect ESG data and disclose their sustainability risks. In addition, it is worth noting that CSRD extends sustainability reporting to include the disclosure of risk management and internal controls to the public.

Archer's ESG Management solution enables organizations to collect and centralize ESG data into a single platform, evaluate the impact of risks and the opportunities on business strategy, understand 3rd party ESG risks, set ESG objectives, and produce auditable reporting on sustainability disclosures all from one integrated platform. In addition, Archer ESG Management can help automate and standardize the sustainability reporting process simplifying the effort needed to collect and aggregate data in sustainability reports and minimizing the risk of disclosing inaccurate information.

Interested in learning more? Register for our January 26, 2023 webinar, "Integrating ESG & Risk Management" Keys to Success in 2023," to learn about:

  • New ESG reporting requirements, mandates, directives, and technology to expect in 2023

  • The vital role of risk management in accelerating corporate ESG and sustainability programs

  • Technology solutions to help your organization advance your ESG practice

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