ESG is not a compliance checklist anymore—it’s the new business performance and value creation operational requirement. Turning away from look-back reporting towards real-time, forward-looking steering is an absolute necessity for companies faced with the evolving regulatory landscape, especially the Corporate Sustainability Reporting Directive (CSRD).
Key Takeaways of the Strategic Change From Reporting to Steering: ESG must be utilized proactively to drive long-term growth, not just comply. Adopting Dual Materiality means having a more integrated view of financial and non-financial risks and opportunities, requiring continued, operational transparency of data—so much more than contained within annual reports.
The Mandate for Real-Time Data: The same strict treatment of ESG performance is required to manage it effectively as for financial management. This means bringing ESG data infrastructure to the same level of timeliness, automation, and reliability. Real-Time Data, i.e., for Carbon Accounting (RTCA) is necessary for operational decisions like Load Shifting to reduce CO₂ emissions proactively.
ERP as the Single Source of Truth: To ensure auditability and CSRD compliance, ESG information must be captured at the transaction level. Next-generation ERP systems (e.g., SAP, Dynamics 365) must become the single source of truth, bringing together financial measures with ESG KPIs from IoT sensors, energy management, and supply chains.
Meeting the Scope 3 Challenge: Scope 3 emissions comprise up to 90% of a company’s footprint but suffer from low data quality (often based on dodgy spend-based estimates). Compliance with legislative needs like the CSDDD demands a transition to reliable, activity-based data and deep supplier integration.
The Value Proposition: Robust operating ESG creates a real ROI. Smooth strategies can provide high EBITDA upside potential (up to 33% according to analysis) and earn a premium from the investor crowd. Good, hard data is an insurance policy against reputation loss and a force for higher company value.
The successful implementation requires more than new tools—it demands an ESG mindset with the corporate culture and operating teams.
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