Today, more and more companies are putting effort into meeting their Environmental, Social and Governance (ESG) goals. But why is this important?
Strong ESG practices help protect the environment, support people and communities, and improve how a business operates. These efforts also attract investors, partners and customers—especially those who care about sustainable and ethical investments.
Why ESG Is a Big Deal in Business
Investors and stakeholders are looking closely at how companies handle ESG issues. They want to reduce risks, stay within the law, and make decisions that match their values. As a result, ESG data is becoming a big focus in the financial world. It now plays an important role in helping companies follow rules and make smart, forward-thinking decisions.
At the same time, companies are facing challenges. Gathering ESG data and making sense of it isn’t always easy, especially as the rules continue to change which is why ESG data management software is critical.
What Is ESG Data?
ESG data includes all the information a company shares about how it runs its operations in a sustainable and responsible way. This data helps investors and stakeholders decide whether a company aligns with their goals and values.
In the European Union, rules like the Corporate Sustainability Reporting Directive (CSRD) now require companies to share detailed ESG information. Other laws like the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR) also aim to make ESG data more clear and useful. These laws push companies to be more open about their impact on the world and to drive long-term growth in the economy.
What Does ESG Cover?
Environmental – This includes things like carbon emissions, how a company manages waste, its energy use and how it uses natural resources.
Social – This covers labor conditions, employee well-being, diversity, how the company connects with the community and how it treats customers.
Governance – This relates to company leadership, how decisions are made, ethics, transparency, board structure, shareholder rights and any history of misconduct or corruption.
How Companies Collect ESG Data
Collecting ESG data is a key part of managing it well. Here are a few steps that help companies build a solid process:
- Understand what data is needed and where it will come from
- Check what ESG information is already available
- Keep records safe and well-organized
- Make sure all departments understand why ESG matters and what’s required
- Review the process regularly to make sure everything is accurate and up to date
Technology can make data collection easier. Today’s ESG software tools can automate much of the process, collect information from different apps, and reduce errors. These tools also help companies store data, control access and generate reports more easily.
Tools That Help Collect ESG Data
While ESG reporting is not as strictly controlled as financial reporting in many places, companies still need to aim for high-quality data. Poor data can lead to confusion or even mislead decision-makers.
To improve ESG data quality, companies should:
- Follow a clear and consistent process for collecting and sharing data
- Test the data for accuracy, completeness and reliability
- Apply the same checks and internal reviews used in financial reporting
Reliable ESG data is critical not just for investors and regulators—but also for company leaders who want to make smart decisions.
Common Challenges with ESG Data Collection
One of the biggest problems with ESG data is that there’s no universal way to measure it. Different companies and data providers use different methods, making it hard to compare results.
Other challenges include:
- Lack of standard rules for collecting and reporting ESG data
- Varying benchmarks used by ESG rating providers
- Difficulty in getting reliable information from partners or portfolio companies
These problems can make it hard to trust ESG scores or to use the data effectively in decision-making.
Managing ESG Data the Right Way
The companies that lead in ESG performance are often the ones that use smart technology and have strong internal processes.
A few tips for good ESG data management:
- Start by auditing what data you already have
- Build a strategy for gathering high-quality, relevant data
- Set up clear processes that teams can follow and repeat
- Keep improving your workflow based on what you learn
- Use tools that are flexible, transparent and up to date with current rules
Your ESG data system should be easy to understand and able to grow with your company’s needs.
Best Practices for Different Investment Types
The Luxembourg Sustainable Finance Initiative (LSFI) brought together a group of experts who gave practical advice for handling ESG data, based on different types of assets:
Private Assets – Work closely with the companies you invest in, create clear ways to evaluate data, and regularly review key metrics.
Listed Assets – Carefully choose data providers, keep the process transparent and use a central system that includes audit trails and a history of changes.
Debt Instruments – Use shared or custom surveys to collect ESG data from borrowers, and look at a range of data providers to make sure the information is trustworthy.
Indirect Investments – Match your fund goals with a proven framework, align ESG goals with your products, and keep your process consistent across the board.
ESG and Real Estate or Crypto
Real estate investments require detailed ESG data. But gathering this data can be tough. To succeed, companies must invest in good tools, have strong systems and know exactly what they want to achieve.
As for crypto and blockchain, some companies are exploring blockchain as a way to store ESG data because it’s decentralized and secure. But there are downsides—especially the energy used by some cryptocurrencies. Any company considering blockchain should weigh the pros and cons carefully.
Making ESG a Company-Wide Effort
In many companies, ESG reporting is handled by separate teams like HR, investor relations or corporate responsibility. But this creates silos, and ESG issues don’t always get the attention they deserve from top management.
Today, regulators, customers and investors want to see ESG included in a company’s big-picture strategy. That’s why ESG data management needs to be taken seriously at every level of the business.
How We Can Help
At Bolder Group, we help companies turn ESG challenges into opportunities. Our experts provide insights and services that make ESG reporting easier and more effective.
Our ESG Services Include:
- Helping you gather and manage high-quality ESG data
- Making sure your ESG goals align with current regulations
- Guiding you through the ever-changing ESG landscape
- Offering governance and compliance solutions so you stay in control
We’re committed to helping your business grow sustainably while keeping up with legal and stakeholder expectations.
