Why does sustainability matter?
Transitioning to a net zero world is nothing if not challenging, yet global commitments to cutting greenhouse gas emissions mean decarbonization is a must.
Right now, the world is struggling to limit global temperature increase to 1.5°C as set out in the Paris Agreement, however, as pressure mounts for change, it’s clear that governments across the globe are constantly looking at new ways to meet the target.
Achieving the goals set out at the latest COP26 will call for a complete transformation of how we produce, consume, and renew resources – a strategy that will require all businesses to take a long hard look at their overall sustainability.
What is ESG reporting?
Environmental, Social and Governance (ESG) reporting offers a useful way to visualize sustainability, helping businesses to understand, record, and improve their role in the emerging circular economy.
As the OECD’s Resource Efficiency and Circular Economy (Re-Circle) project highlights, there are both risks and opportunities involved in the transition. Its work to identify and evaluate the impact of resource-efficient policies is therefore a useful starting point for any strategy on sustainability.
But as companies seek to minimize waste, preserve resources, and promote sustainable practices, it’s also essential that they measure and manage their own performance in a quantifiable way.
To help drive this initiative, the EU introduced the Corporate Sustainability Reporting Directive (CSRD) in January 2023 which will apply to the first set of companies in 2024. Under this legislation, the EU requires large companies, as well as listed SMEs, to publish regular ESG reports on the social and environmental risks they face, and on how their activities impact people and the environment.
Of course, different EU countries also have their own regulations regarding ESG and sustainability reporting led by national goals and strategies, but the underlying principle remains the same across the board. Namely, ‘if you can’t measure it, you can’t manage it.’
5 ways ESG software can improve sustainability
So, as companies across the globe look to promote sustainable practices within their organization, here are five ways that ESG software such as the AMCS Quentic ESG solution can support the transition to a circular economy:
- Measurement and Tracking: ESG software allows you to track and measure your environmental impact, resource consumption, waste generation, and emissions. By accurately quantifying these metrics and identifying key performance indicators, organizations can earmark areas for improvement and set measurable goals to drive circularity. To help users monitor their progress, allows Quentic Environmental Management software module you to compare actual and target results as well as benchmarking different sites or locations. This data-driven approach, combined with the software’s clever filter functions, provides vital support to evaluate the effectiveness of circular initiatives.
- Risk Identification and Mitigation: Identifying and managing the risks associated with shifting to a circular economy is key to a successful transition. ESG software enables organizations to assess potential risks according to standardized or individual indicators, helping to evaluate problems such as supply chain disruption, regulatory non-compliance, or reputational damage. With tools to proactively identify and address these risks, as well as to harness opportunities, ESG software can help to build resilience in the circular economy.
- Supply Chain Transparency: Achieving a circular economy requires collaboration and transparency across the supply chain. To help build this capability, ESG software enables organizations to easily collect and analyze data from suppliers, subcontractors, and partners to assess their environmental performance. This visibility helps identify opportunities for collaboration, as well as highlighting inefficiencies and promoting responsible practices.
- Compliance and Reporting: Many regulatory bodies and investors now require companies to disclose their ESG performance, and it’s a trend that is only going to grow. By automating data collection, analysis, and disclosure, ESG software streamlines and simplifies this process. To help you navigate a path through the maze of legal texts, the Quentic Legal Compliance module support to make legal requirements for your company more visible so it’s easier to assess the need for legal action in terms of EHSQ and sustainability. Complete, audit-proof documentation and simplified contract management also help ensure compliance with relevant standards, frameworks, and guidelines for a simpler approach to sustainability.
- Performance Optimization: Insights and analytics provided by ESG software can play a vital role in optimizing resource utilization. By optimizing processes and improving resource management, this can help to reduce costs and increase efficiency, as well as enhancing your contribution to a more circular and sustainable economy.
Why digitalization is key to a circular economy
For most companies, creating a fully circular business model requires leaders to act and implement drastic change. Not change for the sake of it, but effective improvements based on a sound knowledge of your existing ecosystem.
ESG reporting is a key part of this process, with the right software solutions providing instant feedback on sustainability progress.
More than this, however, ESG software is also part of the overall digitalization that businesses must embrace to create a truly circular economy. This digital infrastructure is vital in supporting companies to:
- use renewable energy and materials
- reduce demand for finite resources
- facilitate resource recovery through collection, sorting, and processing
- provide recycling facilities, remanufacturing services, or reverse logistics
For these initiatives to work, businesses will rely on digital solutions to connect, automate, and optimize activities. All of which makes digitalization an essential part of the quest for sustainability, ultimately supporting circular ambitions with innovative ways to add value, increase profit, and reduce waste.
Learn more about the AMCS Quentic ESG solution here.