Transforming ESG reporting from compliance responsibility to strategic advantage

Julie Kae, VP Sustainability and DEIB, Executive Director of Qlik.org

It’s not an easy time to be responsible for a company’s Environmental, Social, and
Governance (ESG) initiatives. The world is changing around us quickly,, driven by ever-
present climate change, ethical consumerism, and expectations of corporate transparency.
The ESG benchmark for businesses is only getting higher.

Some organizations assume they are meeting it, but this is based on internal perceptions of
voluntary standards. Before long, there will be nowhere to hide. The introduction of
mandatory reporting requirements — such as the CSRD (Corporate Sustainability Reporting
Directive) — increase pressure to comply with regulations, deliver on commitments made, and
report tangible impact. ESG compliance has never been more complex.

Now let’s be clear — ESG officers are in their roles because they want to make a difference.
But there is increasing scrutiny from regulators and wider society around how organizations
report this impact. As we hear from our customers, this means they are spending more time
focusing on data and compliance, both inside their own businesses or across the supply
chain.

This shift has prompted a fundamental rethink of how ESG data is managed. At the same
time, we are seeing businesses change their perception of regulatory compliance from a
tick-box exercise to an issue of commercial strategy — a company-wide imperative that can
impact the bottom line. It’s time to streamline the reporting process, so ESG teams can get
back to achieving the impact they set out to makein the first place.

In this context, organizations have a significant task on their hands: identify the right data
from disparate sources, structured or unstructured, and ensure it is as accurate and
accessible as possible for internal and external stakeholders. This process can seem
daunting, particularly for those creating an ESG reporting framework from scratch. But it
doesn’t have to be. Manually collecting vast volumes of data is yesterday’s problem — with AI
at the center of this evolution. Rather than isolating ESG from other business initiatives,
considering as a pillar of digital transformation allows those responsible to benefit from some
of the advanced tools used for other types of reporting and reduces the compliance burden.

Looking beyond regulatory compliance, though, the opportunity is much greater. If
traditional ESG reporting has been a backwards-looking process, the power of AI and
predictive data techniques allows progressive organizations to evaluate information in real time. This enables proactive decisions to save money, time, and the planet. Reporting is
getting an image makeover, from unavoidable admin to something at the heart of company
strategy.

We find ourselves at a tipping point where organizations have a choice: treat ESG as a
burden to be alleviated as quickly as possible, or take steps to embed it in the fabric of the
business to drive meaningful change.

End

Step-by-step guide

Five Steps to Create an ESG
Reporting Framework

You can’t manage what you can’t measure. To create an effective ESG reporting framework, it’s important to build a trusted data foundation. With that in place, organizations can undertake the necessary analysis to stay compliant with regulatory requirements and achieve targets. Here are five key steps to enhance this process:

Step 1

Create a clear strategy and baseline metrics

Ad-hoc reporting can be valuable, but doesn’t lend itself to proactivity. Establish a clear, intentional strategy that outlines your ESG goals and a roadmap for achieving them. This ensures your program moves beyond reactive initiatives and is guided by measurable objectives. This, in turn, allows you to tailor any reporting framework to track data based on specific metrics and timelines. Aligning ESG efforts with broader digital transformation goals can also enhance their impact without requiring additional tech investment, which could otherwise contribute to the perception of ESG as a burden.

Step 2

Use existing frameworks

Before investing in new systems and frameworks, explore whether there are others that already exist that could be leveraged to make data collection and reporting easier. Most enterprises will already have robust data management, compliance, and governance structures that could be adapted or repurposed to process ESG data, too. This avoids the duplication of efforts across the company, saving time and money while aligning ESG to broader organizational goals.

Step 3

Make data
consumable

One of the most cited challenges with complex data analysis is collection across multiple sources of data, structured and unstructured. It’s one thing to aggregate numbers from spreadsheets or databases, but what if that emissions figure you need is hidden in a long, written report? When transparency to regulators is on the line, it’s equally important that the information is accessible and easily consumable, which is more difficult when collating data presented in different formats. Focus on reporting frameworks and tools, that simplify complex datasets and present them in a way that stakeholders — internal and external — can understand. That will help make the regulatory compliance process as smooth as possible, allow company leadership to articulate the impact of ESG initiatives, and communicate progress against goals to customers, investors, and prospective employees.

Step 4

Activate AI

AI has an almost infinite range of use cases, and it's no different with including in ESG reporting. Where there is disparate data that doesn’t line up, AI can stitch it together much more efficiently than traditional manual processes. For example, the information required could be owned by teams all over the business or unstructured formats. GenAI is playing a greater role here, enabling deeper analysis of data that was never meant to be reported. In fact, our GenAI Benchmark Report showed that almost four in five executives have invested in GenAI tools or projects, meaning there is an opportunity for many organizations to apply this to ESG reporting. This would free up employees’ time to deliver action from the insight and accelerate ESG initiatives.

Step 5

Create an ESG
data culture

Embed ESG at the core of your organizational culture. By encouraging all staff to see it as an integral part of their daily roles, leadership can reduce the ostracization of the dedicated ‘ESG team’ that is viewed as creating additional responsibility for employees. Getting buy-in makes ESG a shared objective while fostering greater engagement and accountability. With a data-first culture that recognizes when employees adopt sustainable practices, everyone in the company can feel empowered and motivated to contribute to ESG goals.