As more ESG and climate-related disclosure regulations come online, companies are spending significant time and money to meet reporting expectations. ESG reporting and disclosure presents an entirely new compliance challenge for large companies — and the requirements are only growing.
Yet more than half of companies are still managing ESG data, both qualitative and quantitative, in spreadsheets, costing them hundreds of thousands every year and introducing enormous room for error. Beyond spreadsheets, companies are wasting valuable resources engaging humans (often expensive third parties) to produce static reports and analyses that could be conducted in minutes (and remain continuously up-to-date) with the right platforms.
Will 2024 be the year that companies recognize the need for something more comprehensive than a spreadsheet and an email inbox to manage climate data and disclosure analysis? Deloitte predicts that this will be the year that companies begin to automate this typically manual process. But whether companies follow through on this prediction is yet to be seen.
In the meantime, here are seven reasons why climate reporting and disclosure software is the best ESG investment you can make in 2024.
1. Climate reporting is extremely complex and requires equally sophisticated software.
The climate disclosure landscape is getting more complicated by the day. Many companies are now subject to multiple disclosure requirements from their investors, stakeholders, and governments/regulators. It’s difficult for management teams to catch up with this growing compliance burden, and it’s even more difficult when relying on outdated tools.
Where finance teams have long relied on sophisticated, purpose-built software to handle financial reporting requirements, the needs of their colleagues in the sustainability department are arguably even more complex — and the days of manual data entry and analysis are numbered.
Manually conducting disclosure analysis against a single standard is difficult; conducting multiple is exhausting. It’s virtually impossible to see where various disclosure requirements overlap and where they differ, and it’s hard to know how you’re performing on each one.
In contrast, purpose-built software like Manifest Climate allows finance, compliance and sustainability teams to understand their climate disclosure performance in context and achieve cross-functional alignment. Purpose-built by climate experts, our Summary page and Disclosure Index reveal how your company’s disclosures compare to best practices for the standards you’re reporting to, while our Tracker compares your climate disclosures to those of your peers and industry leaders.
| People or platform? To accelerate climate action, should you hire more people, engage external consultants, or invest in the right software? We’ve got your questions answered. Read now > |
2. The consequences of inadequate reporting are rising.
The stakes for climate data accuracy have never been higher. Consumers, investors, governments, and regulators are highly sensitive to the potential for corporate greenwashing, and any whiff of doubt can send a company’s reputation plummeting overnight.
Even reports that are free of errors but are simply inadequate or incomplete are a problem. Companies that fail to comply with new regulations such as the EU’s CSRD or California’s SB-261, or the SEC’s Climate Disclosure Rule could face dollars in fines, and even those figures pale in comparison to the reputational damage of noncompliance.
Beyond introducing enormous room for error, a key failing of spreadsheets in particular is their inability to highlight where you’re falling short on your climate disclosures. Software offers a solution. Platforms like Manifest Climate use powerful AI assessments to show you what’s lacking in your climate disclosures, and where to turn your attention to next. This helps to ensure that you are complying fully with regulatory and investor requirements.
3. Reporting requirements change frequently.
Meeting disclosure requirements and keeping on top of climate risk is not a one-and-done activity. Now that large companies are often subject to multiple climate disclosure regulations, reporting season is expanding. Adding to this complexity is the fact that disclosure requirements are changing frequently in light of public consultations and various bodies and standards becoming consolidated.
While simple spreadsheets and consultant reports may demonstrate your company’s climate disclosure performance at a single point in time, these need to be manually updated any time a disclosure requirement changes. And that’s assuming your team actually caught the update, and managed to wade through the pages and pages of legal jargon to understand the new expectations. Not exactly a climate team’s dream!
In contrast, ESG reporting and disclosure software is designed to keep your team up to date with regulatory and standard changes. For example, Manifest Climate’s methodology analyzes hundreds of data points which are mapped to regulatory standards. When these regulatory standards change, so do our data points — and so does your view of your disclosure performance. There’s no need for team members to re-create spreadsheets or consultants to prepare new reports.
4. Manual management seems cheaper in the short-term, but will cost you far more in the long run.
At first glance, simple tools like spreadsheets — or engaging consultants on a one-off basis — appear to be the cheaper alternative. But as more team members get involved, and as your disclosure requirements become ever more complex, working from spreadsheets and outdated report decks can set your team up for failure. Trying to manage disclosure requirements in a spreadsheet leads to countless human hours lost, data needing to be manually re-entered, and inboxes that need to be searched to find the right information. Even simple tasks like sharing peer data or disclosure performance with executives and boards become a time-consuming manual task when your disclosures live inside a spreadsheet.
Currently, companies are spending approximately $533,000 annually on climate disclosures. With more than half relying on spreadsheets, it’s no wonder it’s costing so much.
We propose a more strategic alternative: invest in the right software now to start giving your climate team their time back and stop your company from wasting human resources on data-heavy tasks that are better suited to software and automation. Software like Manifest Climate is highly intuitive and easy to use, meaning it won’t take long for team members to find their way around the platform. Investing in the right software gives your team back hours of time every week — not just in the short term, but hereafter.
5. Spreadsheets and humans can’t compete with the sheer processing power of AI.
When it comes to collecting and processing information, your human team simply cannot match the power of an AI-driven platform. Where a human might make it through a handful of competitor climate disclosures in a day (and record just a few of the relevant insights and data points), AI can process thousands of competitor data points in minutes.
In the climate space, data is king. The more data points you have, both internally and from your peers and industry, the more comprehensive you can make your disclosures, and the more informed your climate strategies and transition plans will be. Software that integrates AI, like Manifest Climate, can analyze thousands of qualitative data points instantly, providing a much more comprehensive picture of how you measure up to your peers and industry, and, more importantly, freeing up your team for more important tasks. The right software can conduct disclosure analysis and produce results that are ‘faster, cheaper, and deeper’ than humans and spreadsheets can produce. What’s not to love?
6. Software makes next steps clear.
Spreadsheets and one-time reports can capture past data or offer a brief snapshot in time, but they rarely offer clarity for the future. Yet hidden in your data are the insights your team needs to truly improve its climate risk management. The answers to questions like Where are we falling behind our competitors? and Will this satisfy investor needs? exist within your existing climate data and disclosures, but if your team only ever works from a spreadsheet or a year-old disclosure analysis, they will never see the light of day.
A platform like Manifest Climate puts your climate data and past disclosures in context with your industry, your relevant regulatory requirements, and investor expectations. Gaps in your reporting are uncovered immediately, and your most pressing next steps are recommended to you through our Climate Actions feature, helping inform your climate strategy and climate transition plan. This is what makes reporting software far more actionable than static spreadsheets and reports — and sustainability teams, more than anyone, understand the importance of action.
7. Software sets your team up for the long term.
The problem with spreadsheets and reports created by individual team members and consultants is that these documents tend to come and go with their creators. Turnover in the sustainability field is high, and without a centralized, single source of truth for your climate data and disclosure management, it’s difficult to achieve institutional continuity over the long term. Even engaging external consultants typically results in a final report being shared, but not the information and knowledge that was gathered throughout the report-creation process.
A centralized platform like Manifest Climate ensures your data is recorded for posterity, your team has a single place to go to for climate data, and key information doesn’t walk out the door with departing staff members. The right platform will also help your team handle scale as your climate investments and data/reporting needs grow in volume and complexity.
Reporting software is the best ESG investment you can make in 2024
Climate disclosure requirements make life for reporting teams difficult enough already. Relying on limited tools like spreadsheets and manual assessments makes life even harder. In 2024, the best finance and sustainability teams will be thinking not just about the next reporting season, but about the next decade and beyond. Investing in robust disclosure and reporting software is the first step toward long-term, effective climate disclosure management.
Close your disclosure gaps with Manifest Climate
Manifest Climate is an AI-powered platform that helps companies close disclosure gaps and supercharge their climate strategies. Our platform is the world’s best at assessing climate disclosures. We help to highlight your climate disclosure and management gaps across multiple standards and frameworks and provide data-driven recommendations for improvement. Our technology also helps your team reduce time spent on manual research by +75%.
