The gap between perception and reality in ESG data management
However, the perception of the organizations themselves seems to be different from reality: the83% believe they are performs better than its competitors in terms of ESG reporting. In fact, according to the Rate the Raters report 2023, created by Sustainability Institute, Publicly listed companies invest on average between $220,000 and $480,000 per year in ESG ratings and related services, as do private companies, which face expenditures of between $210,000 and $425,000 each year. Furthermore 90% of organizations involved in the study of KPMG stated that it intends to increase its investments in sustainability over the next 3 years. “These data demonstrate how much organizations consider the ESG area a strategic priority” – he comments Bruno Natoli, CEO of Mia-FinTecha consolidated Italian fintech company specialized in accelerating the digital transformation of banks, financial institutions and other players in the financial services ecosystem – “However, building a credible ESG program requires verifiable, accurate and high-level datacapable of satisfying the needs of stakeholders and regulatory bodies. A goal that becomes difficult to achieve when the majority of ESG data is stored in disconnected and separate reporting systems or even in spreadsheets.”
ESG software market growth: the numbers and forecasts
It then becomes the use of technology is fundamentalwhich allows you to collect, analyze, report and ensure the accuracy of verifiable ESG data. Not surprisingly, the global ESG software marketwhose value was $838.6 million in 2023, is destined to grow significantly: is expected to reach 2.7 billion by 2032, with a compound annual growth rate of 14.3% between 2024 and 2032 and an increase of approximately 222% in 9 yearsaccording to a very recent report by Global Market Insights.
A growth driven mainly by ever-increasing pressure linked, on the one hand, to the attention of companies and investors towards sustainability and, on the other, to regulatory compliance, especially in Europe, where the ESG software market is strongly influenced by legislation like the Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD)That require companies to implement detailed and transparent ESG reporting practicesencouraging the growth in demand for advanced technological solutions in this sector.
“Legacy systems make it difficult to address these challenges because they lack the flexibility and integration capacity needed to collect and manage data from multiple sources. Today, to overcome information silos and facilitate effective communication with stakeholders, companies need scalable and rapid solutions that allow you to aggregate sustainability data in a centralized way. This approach not only improves operational efficiency, but also guarantees greater transparency and the ability to respond promptly to the needs of regulators and investors” – concludes Natoli – “Collecting and making data accessible to banks, institutions, companies and citizens implies the creation of a «Data Hub», a system that allows you to aggregate the data from different sources, displaying them so that they can be easily consulted and used. This process supports quick and informed decisions, as well as facilitating the initiation of automated processes in real time, thus improving overall efficiency. With the “Fast Data” approach, this data is processed immediately, allowing organizations to respond promptly to market and user needs.”
The benefits of adopting integrated ESG software
In particular, the adoption of ESG software integrated with a Data Hub offers numerous advantagessecond Mia-FinTech:
- Simplified ESG rating: allows you to define a score aimed at creating a rating that the company can then spend with the various actors, from a social, banking or communication point of view.
- Better data sharing and internal collaborationfacilitating the collection and sharing of data between different company teams and ensuring alignment with the main reporting standards, such as European and international regulations.
- Reduction of manual workload and margins of errorcentralizing and verifying ESG data from numerous sources across the organization and eliminating repetitive and time-consuming tasks.
- Greater operational sustainabilitymaking it easier to plan and implement strategies to reduce emissions and costs, thus optimizing energy consumption and improving economic efficiency.
- Better governance of ESG processes and software: through the use of composable applications, by splitting complex applications into independent units it is possible to promote the modularity, reusability and interoperability of existing assets, helping to improve software governance.
Press release by Espresso Communication Srl.
