The worsening effects of climate change, increasing investor demands, and regulatory changes have contributed to the increasing relevance of corporate sustainability in the last decade. This trend puts a lot of pressure on businesses to seek the guidance of an ESG consultant to improve their environmental credentials.
Data collection and report writing are two ESG areas businesses often struggle with. Navigating ESG-driven demands can be done more easily with an expert’s guidance throughout the sustainability journey. This is where ESG consultant and ESG reporting software come in.
What is ESG Consulting?
Companies are facing growing pressure to enhance the quality of sustainability reports as global and local reporting standards arise. The process of sustainability reporting involves extensive analysis, multiple parameters, and new technologies. As there’s no one-size-fits-all in sustainability strategy and reporting, ESG consulting firms can help identify the best approach for a company.
Traditionally, sustainability consulting focuses on minimising environmental impacts related to topics, such as waste pollution, freshwater consumption, and carbon emissions. However, growing public awareness of sustainability and its interconnection with social and governance thrust consultants into peeking closer to the ESG lens.
Today, sustainability consultants also provide support for different business aspects, such as decreased supply chain risk, stronger governance controls, and better employee management. In fact, new research predicts the ESG and sustainability consulting market will double and hit $16 billion by 2027.
What do ESG consultants do?
A recent research from Boston Consulting Group (BCG) shows that over 80% of companies are looking to invest in sustainability and more than 60% of them prioritise ESG in their digital initiatives. Companies have adopted the strategy of hiring ESG consultants and leveraging their expertise to achieve sustainability and profitability. These professionals go by a variety of names, such as environmental management consultant, eco consultant, and green consultant.
The functions of an ESG consultant are:
- Risk Mitigation and Opportunity Identification: Accomplishing a comprehensive materiality assessment is one of the vital functions of sustainability consultants. They guide internal teams to build risk libraries revolving on environment, social, and governance aspects and determine their prioritisation to devise evidence-based programs.
- Strategic Guidance: Companies seek recommendations from consultants for strategies and policies that will enhance their ESG practices. These data-driven strategies help bridge the gap between the company’s impacts and sustainability initiatives. Teams can rely on their expertise in resource efficiency, stakeholder engagements, and circular economy principles to propel the company to future-proof growth.
- Implementation Support and Monitoring: It is under consultants to oversee the implementations of their brainstormed ESG initiatives. They ensure that programs or improvements are integrated well into operations through coordination and monitoring across departments. Consultants help teams implement policies, set realistic goals, and build systems for data collection and reporting.
What drives the growth of ESG consulting?
As awareness of environmental and social responsibility rises, ESG has become a crucial aspect of business today, which led to a soaring demand for sustainability consultants. The factors that drive ESG consulting are as follows.
Net-Zero Economics
Net-Zero is a global initiative by the United Nations that urges nations to implement strategies that would cut carbon dioxide (CO2) emissions by 2050 and prevent the worsening of climate change. Today, 197 nations have pledged to take part in efforts towards achieving net-zero carbon emissions. This shared ambition drives organisations to adopt sustainable practices and embrace the ESG approach.
Developments in ESG regulations
Along with the shared efforts to reach net zero by 2050, new policies and laws across the world are emerging to regulate ESG impacts and monitor compliance.
The European Union made its pledges public through the EU Green Deal in 2019, a framework that was subsequently formalised into the European Climate Law in 2021. It aims to adjust policies on climate, energy, transport, and tax to push the reduction of net greenhouse gas emissions by at least 55% by 2023.
In July 2023, Singapore’s Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) released a public consultation that included recommendations to require listed companies to report their climate exposure by 2025. Additionally, it also recommended non-listed companies with USD 1 billion or more in revenue to disclose in the same year.
ESG Investing
Investors are increasingly relying on ESG ratings when making investing decisions. Strong ESG performance leads to preferential treatment from investors compared to companies whose environmental or other practices may pose a greater financial risk. Therefore, ESG reporting is becoming a must for businesses to keep track of their compliance with sustainability standards and keep up with their industry peers.
What are the benefits of having an ESG consultant?
Partnering with an ESG consultant offers greater benefits than short-term wins. It is an investment that can yield long-term benefits and help propel a business towards sustainable success.
Gain expertise and experience
ESG consultants are partners for sustainable transformation. They redefine business models through the perspective of environmental, social, and governance topics. As champions for ESG, they are committed to collaborating with business executives to develop greener initiatives from their comprehensive analyses and risk assessments.
Their deep industry knowledge creates transformative insights that companies can use when reducing negative impacts, improving financial well-being, boosting investor relations, and enhancing employee engagement.
Lower operational costs
Companies with sustainability experts are more likely to save resources because they will be guided to the right path immediately. Having consultants allows them to make calculated decisions and conduct more precise analyses, prioritise material issues, and build roadmaps that align with the company’s goals. This saves time and resources while also making them more resilient and competitive.
Resilient compliance
ESG consultants translate complicated and technical developments and regulations into actionable information. This empowers companies to navigate changes in reporting frameworks and adapt to new legislation to enhance compliance.
In doing so, consultants may provide diverse sets of insights, such as continuous regulatory monitoring, scenario planning, and tailored recommendations to minimise risks and develop competitive foresight.
Enhanced reputation
Engaging with ESG consultants sends a powerful message to stakeholders about the company’s commitment to sustainability. It is a strategic decision to not just impact business operations but also enhance stakeholder engagement. With them on board, it builds trust and credibility, attracts or retains talents, and appeals to more investors.
How can consultants help in your sustainability journey?
ESG consultants provide various services, primarily focusing on smarter and sustainable business practices:
ESG and Materiality Assessments
Sustainability consultants are a great help in understanding an organisation’s current ESG maturity and strengths. They can also help determine critical ESG topics, benchmark against peers, and identify the company’s potential for value creation.
They guide teams in identifying material risks related to the company’s supply chain, which may include conditions of employment, occupational health, safety, and modern slavery. Overall, the consultants can help companies to be compliant and versatile when taking action against sustainability risks.
Strategic Program Development and Implementation
Consultants are instrumental in enriching a company’s operational ESG strategy. They are experts who can help a company gain more investments, improve governance, and enhance production line performance. Additionally, they oversee the implementation of strategies by coordinating the initiatives from top-level executives to staff members; breaking down the silos and promoting cross-functional collaboration.
ESG Tax Credit Strategy
Beyond reducing impacts and implementing greener initiatives, strategic ESG unveils financial privileges through green tax credits. ESG consultants can analyse a company’s current operations and uncover opportunities to lessen tax liability. Opportunities vary per company and its area of operation.
ESG Listing Requirements
Sustainability consultants can guide companies in publishing disclosures that align with global and local recommendations from regulatory bodies. These consultants are also well-versed in various frameworks, such as the SASB, TCFD, and GRI, which most companies find too complex to understand fully. They can also recommend the right framework to use for your reports.
ESG Due Diligence
Another common service offered by ESG consultants is the due diligence assessment. They carry out in-depth screening and reviews of a company’s new sustainability investments and current ESG portfolios.
Other services offered by sustainability consultants include ESG communications, climate scenario analysis, ESG strategy and policy development, environmental risk and opportunities analysis, and ESG data management and monitoring.
ESG Certification Guide
Getting verified for ESG commitments can be a tedious and complex challenge, but partnering with ESG consultants can make the process streamlined and easier to navigate. Their guidance and expertise give companies a clearer path when building communication initiatives to publicise a company’s ESG accomplishments for employees, investors, and the community — advancing market eminence.
How to Choose the Right ESG Consultant
Choosing an ESG consulting service is a crucial step for any business that commits to ESG sustainability reporting. Here is a list of qualities businesses should look for from prospects to discern the most fitting consultant.
- Strong experience with ESG — Find out about their ESG specialities and match them with the objectives of the business. It would help to find out if they hold any additional credentials which would make them stand out for the position. Some examples would be the GRI Standards Certification, CSR-P certification, and FSA certification.
- Up-to-date industry knowledge — Get to know their methods for staying well-informed about industry news on global regulations and standards. This reflects their dedication to providing the best possible outcomes for their partners and sustaining their competitiveness.
- Keen to details — ESG sustainability reporting can be intricate, and neglecting some parts can have a great impact on the entire outcome. Assess their attention to detail. Evaluate how they monitor progress, resolve issues, and the quality of their recommendations.
- Research processes — Determine if the consultants have well-established research practices. They must possess the necessary skills and experience to conduct internal and external investigations, especially during data collection.
- Excellent communication skills — An ESG consultant must demonstrate impeccable communication skills — both oral and written. Evaluate their capacity to present findings clearly to the team. Businesses should not neglect this quality because it is essential for teams to collaborate openly and effectively, especially when tackling a multifaceted topic like ESG.
- Holistic thinking — ESG involves more than report writing. It is a demanding endeavour that has multiple processes and material assessments before a company comes up with a comprehensive sustainability report. With that in mind, consultants must have the ability to look at a bigger context from multiple points of view.
ESG Consulting and ESG Reporting Software: Hand-in-Hand in Reporting
As sustainability gains value, companies must solidify their commitment by partnering with ESG consulting firms and investing in ESG reporting software. Convene ESG is a digital reporting software that simplifies sustainability management with its intuitive dashboard and innovative features. Learn in this section how consultants can leverage Convene ESG in transforming the quality of sustainability reports.
Digitalising the ESG reporting process
Convene ESG supports companies and consultants in generating accurate sustainability reports with end-to-end digital ESG processes — from data collection and analysis, to report writing. While consultants can help you determine what data to put into the narratives, a dedicated ESG reporting software can turn those raw data into compelling reports in the most organised way possible.
Acquiring data-driven insights to improve efforts
Consultants can identify ESG opportunities and assess their impacts more precisely if data are presented in a digestible manner. Convene ESG is capable of transforming raw data into simplified graphs and illustrations for the convenience of consultants when doing materiality assessments and maps. It can help in benchmarking against peers and evaluating publicly available data to drive enterprise value and gain a competitive advantage. The software also features trouble-free trend analysis on its disclosure dashboards for smarter reporting and forecasting.
Ensuring transparency and accuracy
The entire ESG process can become complicated and confusing because it involves a series of assessments and data analysis. Consultants can get help from Convene ESG for organised, secure, and transparent sustainability auditing. The software has automated data collection and Optical Character Recognition (OCR) features that eliminate the need for manual encoding of data. By digitising the whole process, Convene ESG not only enhances the efficiency of data gathering but also ensures a more accurate and streamlined approach.
Convene ESG: The Perfect Companion of ESG Consultants
The ultimate goal of Convene ESG is to help companies and their consultants create compliant and future-proof sustainability reports. The software focuses on the advantages of digitisation, allowing companies to centralise data collection, data analysis, materiality assessment, and report writing. It has helped companies in the FMCG, Energy, and Housing industries to jump-start their ESG with its straightforward software interface.
With a lot of data to collect and assess, even an experienced ESG consultant can have a difficult time developing evidence-based strategies. Designed for quality sustainability reporting and assurance, this ESG reporting software can help in capturing extensive sustainability parameters.
Ready to elevate your ESG strategy? Book a free demo to learn more about how Convene ESG can make a difference.
