Choosing the right ESG reporting system in the Era of Omnibus

Right now, the EU Commision is discussing the so-called ''Omnibus''- aka. the ''simplification'' of CSRD, CSDDD, and the EU Taxonomy. Given the uncertainty of the directives' future, this has left many companies in a bit of a... Limbo.

Do we still have to report?

Will the deadlines be moved?

What is happening with double materiality?

We get it, it is confusing.

However, regardless of the outcome, it is a bad idea to stay on the fence for too long if your sustainability reporting journey is still in its infancy. Regardless of the details, the requirements will come, and it is time to get your ducks in a row. 

A key component here is to choose the right ESG reporting system. Please note: YouSustain is an independent sustainability consultancy, and we will not try and sell you a specific system. ESG systems are not a one-size-fits-all, but there are some things that you should consider when your company is shopping for a system. Choosing the right sustainability reporting software is crucial for ensuring compliance, streamlining data collection, and improving overall ESG performance.

However, finding your way though the ESG reporting software market is hectic (we are speaking from experience). This article therefore provides advice on the strategic steps to take in choosing the best software best suited for your sustainability reporting. Enjoy!

Step 1: Define Business needs and objectives.

Before jumping straight into software selection, it is important for the company to clearly define its reporting requirements and objectives. This is because every company has different obligations based on its size, its location, and even industry. Some of the questions to consider when identifying the individual needs and objectives include:

• What frameworks need to be supported? (GHG, ESRS, EU Taxonomy, TCFD, CDP, etc.)
• How complex is the company’s sustainability data? (single entity vs. multiple subsidiaries, supply chain integration)
• What is the scope of reporting? (carbon emissions, social governance, risk management, etc.)
• How much automation is required for data collection and analysis?

Understanding these elements ensures that the selected software aligns with the company’s sustainability goals and compliance requirements.

Step 2: Compare software and evaluate key features

Next, the company should identify the key features that they are looking for in the software that will help them meet their business needs and objectives. For example, a company looking to report under the CSRD would require software that can handle ESRS regulatory requirements, automate data collection, and facilitate audit-ready reporting.  Some of the key features that we advise companies to ensure that the software has at the bare minimum include:   

A.  Compliance & Regulatory Support

A software that provides compliance and regulatory support inherently streamlines data collection to meet the end goal of meeting the company’s regulatory obligations. This also ensures that the work that companies will have to do is significantly reduced saving time and costs.  

B.  Data Collection & Integration

Data is the holy grail when it comes to sustainability reporting. This therefore should be a central element that the software selected meets. Key features that distinguish top software include:

• Allowing automated data collection from multiple sources. The software should enable seamless data collection from diverse documents, different departments and allow access to the data to several users. (e.g. IoT, ERP, spreadsheets, Finance, HR, ERP, and supply chain systems.)
• Integrates the various sustainability data, that being utility data, social information and governance metrics. The software should also enable the use of the same data for the various reporting obligations under GHG, TCFD, TNFD, CSRD, CSDDD and even EU Taxonomy.
• Enables API integration with existing company tools like SAP and Microsoft.
• Allow the data collection to be scalable for the different levels of reporting based on site, region and even globally and
• Supports the diverse emission factors that include factors from organizations around the globe, for example, eGRID, DEFRA, IEA, and EORA66 ensuring that this can be updated in line with the regulations.

C. Double Materiality & Risk Assessment

Double Materiality is a key component that has been introduced in CSRD. The software should therefore facilitate Double Materiality Assessments, that being financial impact & environmental/social impact and offers scenario analysis tools for sustainability risk management.

 D. Performance Tracking & Benchmarking

Further, the software should provide real-time dashboards for tracking sustainability KPIs. It should have modules that support target setting and tracking, building ratings and benchmarks, surveys and assessments. The software should also provide audit-ready data tracking and verification tools. This is what makes the difference between compliance that entails mere checking of a box and sustainable reporting that allows the companies to use the data to benefit them.

E.  Usability & Vendor Support

This might seem like a trivial feature, but it might be the determinant of how fast implementation takes place. The software should have an intuitive user interface and easy navigation.

It should also offer strong customer support, training, and onboarding services. As a plus it can opt for software that also allow you to add custom factors to the platform and use them in your calculations for more accurate reporting.

Step 3: Test & Compare Software Solutions

Once the company shortlists a few software options, it should then request free trials or schedule live demos with vendors, conduct pilot projects with real company data, gather feedback from internal teams and compare usability, compliance features, and automation capabilities.

Step 4: Consider Total Cost & ROI

It goes without saying that the most expensive software is not necessarily the best software. The goal here is to get the best price for the best suited software. When contemplating the cost of the software, the things to take note of are:

• Pricing model: Subscription-based (SaaS) vs. one-time license.
• Cost per user vs. enterprise package and the
• Long-term value: Potential time and cost savings in reporting, auditing, and compliance risk reduction.

Step 5: Final Selection & Implementation

Finally, after making the selection, the company should then go ahead to assign internal sustainability champions to oversee software adoption and establish a timeline for implementation.

Conclusion

Selecting the right sustainability reporting software is a strategic investment that ensures compliance, enhances ESG performance, and streamlines sustainability reporting. By following this structured approach—from defining objectives to thorough testing and evaluation, companies can confidently choose a solution that meets regulatory requirements while driving long-term value.

Would you like assistance in comparing software tools or developing a customized implementation plan for your organization? Reach out to our sustainability experts today.