You've probably heard the terms ESG (Environment, Social, and Governance) and sustainability within a few sentences of each other, and we wanted to shine a light on how this relates to your business. These topics are gaining steam and articulate where corporations and environmental sustainability intersect. For this reason, it's worth taking a closer look at what each solution offers in the ESG space for organizations concerned with corporate governance and social responsibility.
What is ESG software?
ESG software is generally designed to help track and report environment, health, regulatory, social, and safety management initiatives. This software is typically designed to support corporate leaders by facilitating data aggregation across organizations or portfolios for actionable insights and streamlined reporting.
Effectively communicated policies and procedures can fuel positive ESG initiatives that impact revenue, company valuation, and brand perception.
ESG software market size
The software industry within the ESG sector is expected to reach $571.74 million by 2028. The market is expected to only accelerate in the next few years.
Reasons for this are new regulations, governmental pressures, and increased scrutiny as shareholders, investors, and regulatory bodies look closer into sustainable corporate practices and compliance standards. However, since the ESG software space is still relatively new, there's plenty of space for growth and investor participation.
Key Features to Look for in ESG Software
ESG reporting is still an emerging software category and each day, you can use new tools to record footprint data, create reports, and ensure compliance across an organization.
Yet not all ESG software is built equally. While some advertise an end-to-end approach to sustainability reporting, management, and analytics, each tool has its own unique strengths. As you look through potential ESG software to onboard, these are some of the fundamental features worth considering:
1. Overall product strength: Looking at specifics like time in the market, leadership, historical performance, or even market share can give you a better idea of how well ESG software delivers on its promise. What mix of solutions does it offer?
Was it built for ESG governance specifically, or was it created as an appendage to an adjacent tool? Questions like these can reveal the true nature of a solution and whether it’s software you can onboard that’s flexible enough to scale with your organization's needs.
2. Data processing: Your ESG software should be able to process large amounts of data, especially because ESG reporting can be complex with many data points. It’s worth considering the specific data points the ESG software successfully collects and reports on. Consider any needs for:
- Sector benchmark reporting
- Supply chain emissions coverage
- Materiality assessments
- Mileage records
- Financial reporting
- Energy consumption rate data
- Gender pay gap reporting
- Workers demographics data
- Freedom of association data
- Accident and injury records
- Modern slavery risk analysis
- Governance body data
- Corruption reporting
3. Collaborative tools: The need to access specific features that ease the collaboration process will highly depend on how sustainability management is handled internally. Working cross-functionally between teams is made easier with built-in features that enable teams to work on data and create reports from a central source of truth.
4. Reliable support: The best ESG software solutions come with a reliable support team that can walk you through the nuanced needs of your organization. The team should be knowledgeable in emissions management and reporting—often in real-time.
The 9 Best ESG software in 2024
1. Novata
Novata is an ESG solution specializing in the private markets, giving general partners and portfolio companies a clear, simple, customized technology platform for seamless data collection, reporting, and insights.
Offering a fully customizable experience across the full spectrum of ESG metrics, Novata allows its customer base to design a full-service experience to make their ESG journey accessible and achievable.
2. Proof
Proof, formerly Proof of Impact, is an end-to-end solution for collecting, verifying, and visualizing comprehensive ESG and impact data. Through their purpose-built API, the Impact Catalyst® engine.
The Impact Catalyst® engine takes disparate ESG and impact metrics and puts them through a seven-step filtration process, to ensure data reliability and accurate insights. Proof allows users to move away from the status quo of one-time, costly, annual ESG reports, to shareable digital dashboards providing real-time insight for enhanced visibility of ESG performance at any point in time, including historical data.
3. Novisto
Novisto empowers you to track, improve, and measure your ESG data and reporting. As an all-in-one sustainability management platform, it equips companies with quicker data collection capabilities and improves data quality.
Much like other ESG software, Novisto presents itself as a single source of truth where all your ESG data can live. It makes it easy to oversee the impact of your most important ESG data and get a handle on financial performance.
4. Benchmark ESG
Through a series of APIs and remote collaboration features, Benchmark ESG connects teams and frameworks across organizations to ensure reporting quality and build trust with stakeholders.
When it comes to accessibility, Benchmark ESG makes sure it compiles and showcases data to users according to their organizational level. The reporting process becomes easy with its drag-and-drop functionality. Teams and organizations looking to improve the transparency and accuracy of their reports can consider a tool like Benchmark ESG as a possible solution.
5. Diligent
Simplifying your ESG reporting and ensuring you're tracking your best data against competitors are some of the capabilities Diligent offers. As a sustainability management solution, Diligent acts as a unifier of your data.
That's to say, it automates the process of gathering your best data from spreadsheets, surveys, and other applications you use to keep track of data points like greenhouse gas calculations, global waste, disposal rates, and transport and commuting data.
If you're an organization mainly looking for a suite of tools that ease the data collecting and reporting tasks, then Diligent is a solution worth considering, However, for more complex tasks that go beyond the basics, it may take consideration of more robust management options.
6. Workiva
Workiva is a leading financial and ESG reporting platform, providing user-friendly drag-and-drop capabilities that enable teams to create data sets and reports quickly. It also emphasizes automation by allowing teams to set up and automate task assignments, management approvals, and updating data.
Workiva focuses on making ESG management and reporting easy and accessible, not so much on complexity or the use of AI for advanced reporting. It can be a great tool for teams that struggle with disjointed data, time-consuming manual processes, and data assurance. For example, in terms of data connectivity, Workiva connects cloud and on-premise data sources to ensure organizations see the complete picture.
Workiva and Persefoni have partnered to integrate their platforms, enabling seamless carbon accounting and ESG reporting, thereby enhancing efficiency, transparency, and compliance by automating data transfer and reducing manual tasks. This collaboration boosts confidence in managing scope 1, 2, and 3 emissions data and ensures adherence to evolving regulatory requirements.
7. Locus Technologies
Locus Technologies combines ESG reporting and EHS compliance under one centralized data system. It offers features like KPI dashboards, customizable review workflows, survey tools, GHG reporting, compliance calendars, and even the ability to create annual corporate CSI reports.
Locus Technologies is a viable financial-grade solution for sustainability management that automates the often time-consuming data collection, reporting, and management process.
8. Sametrica
Sametrica takes an AI-fueled approach to ESG data collection. Designed for investment firms, it comes with features to map and measure their environmental impact and optimize their investments.
Sametrica makes the process of handling automated analysis, benchmarking, and report creation a highly visual one. If you're a small team that’s looking for a solution that includes logic model building and automated calculations, this is a tool worth considering.
9. Impact by Mesa
Impact is an ESG solution offered as part of a larger suite of tools by Mesa, a digital transformation technology group. Much like other ESG software options in the space, Impact offers solutions for strategy and sustainability planning, materiality analysis, ESG rating, and environmental reporting and analytics.
Easily one of its most standout features is its emphasis on stakeholder engagement tools. Impact can be accessed through a smartphone or a PC by any stakeholder in an effort to educate, support, and involve them in sustainability efforts. Additionally, Impact's application makes it easy to collect and record stakeholder feedback, for a collective approach to ESG goals.
Do more with ESG software
Regulatory institutions, key stakeholders, and data providers increasingly demand transparent ESG data and reporting. Some of the necessary carbon accounting solutions focus holistically on ESG disclosures, providing resources and a platform that covers a range of ESG-related metrics. Others focus specifically on the niche and complicated process of measuring GHG emissions.
Integrating carbon accounting software, such as a Climate Management and Accounting Platform (CMAP), with a broader ESG-related offering, would allow companies to get a much more granular look at their GHG emissions. The additional insights that CMAPs can offer companies enable them to create carbon reduction strategies, make ambitious decarbonization targets, and track progress toward them far beyond the capabilities of a pure-play ESG software platform. Persefoni's CMAP is a good option for companies that need help navigating the complex world of carbon accounting standards and disclosures and would like to develop a deeper understanding of their emissions.
Frequently Asked Questions (FAQs)
What is the purpose of ESG software?
ESG software serves as a centralized solution for organizations to track, manage, and report environmental, social, and governance data effectively. It helps businesses ensure compliance with regulatory standards like the EU's CSRD. Beyond regulatory compliance, ESG software drives transparency and accountability in sustainability initiatives, aligning businesses with stakeholder expectations and global sustainability goals. It also provides actionable insights by aggregating data across various operations, enabling companies to identify risks, measure impacts, and implement strategies that contribute to long-term financial and environmental performance.
How does ESG software differ from carbon accounting platforms?
While both tools are essential for sustainability management, ESG software offers a broader focus on environmental, social, and governance metrics, encompassing areas like workforce diversity, ethical governance, human rights, and more. In contrast, carbon accounting platforms specialize in measuring, managing, and reducing greenhouse gas (GHG) emissions.
Can small businesses use ESG software?
Yes, small businesses can use ESG software, especially as many platforms now offer scalable solutions tailored to smaller organizations. For small businesses, ESG software simplifies compliance with customer or investor requirements, such as answering ESG questionnaires or meeting disclosure standards. Additionally, these platforms:
- Provide cost-effective features for tracking essential metrics without overwhelming resources.
- Help smaller firms compete for contracts or funding by demonstrating ESG compliance and transparency.
- Offer templates and guided workflows that make ESG reporting accessible, even for businesses with limited expertise.
Modern ESG platforms are often cloud-based, meaning small businesses can start with core functionalities and expand as their needs grow.
What is the ROI of investing in ESG software?
The return on investment (ROI) for ESG software extends beyond financial gains to include strategic, operational, and reputational benefits:
- Operational Efficiency: Automates data collection, reporting, and compliance tasks, saving time and reducing manual errors.
- Compliance Confidence: Ensures adherence to local and global regulations, avoiding costly penalties or missed deadlines.
- Enhanced Stakeholder Trust: Demonstrates a commitment to sustainability, boosting confidence among investors, customers, and employees.
- Access to Capital: Attracts ESG-focused investors and opens doors to green financing opportunities.
- Brand Value: Positions the company as a leader in sustainability, improving public perception and customer loyalty.
- Risk Mitigation: Identifies and addresses ESG-related risks proactively, minimizing disruptions or reputational harm.
In monetary terms, companies often report that ESG improvements, supported by software, can lead to cost savings through energy efficiency, waste reduction, and operational optimization, while also unlocking revenue through new market opportunities.
