The increasing awareness of modernity and its impact on people, the planet and profit have seen a greater market pull for sustainability or ESG reporting, especially by the finance sector seeking to reduce the risk of its financial investments. This need has resulted in a proliferation of voluntary disclosure standards to meet this burgeoning need. Examples include the UN Global Compact and the Global Reporting Initiative. However, there is also a regulatory push to mitigate climate and other risks in the form of the Task Force on Climate-related Financial Disclosures (TCFD) and the Corporate Sustainability Reporting Directive (CSRD). Although the scope of the reporting differs by standard and sector, there is some convergence around standardisation as the reporting area matures and seeks to allay fears of greenwashing. At the heart of the disclosure report is a firm’s need to determine its impact on socioenvironmental and governance indicators and prioritise the most significant ones. Considering historical and future impacts and embracing universal principles, sector-related risks and firm-specific activities, the report aims to provide the foundation for acting and reporting on these impacts.
What is the problem?
As part of the CSRD, large European-based or operating firms are regulatory obliged to submit and publish sustainability reports by January 2025. For now, disclosure is voluntary for SMEs but will also become obligatory by 2028. Large firms may have the resource capabilities to undertake such a venture. Still, whether the market pull comes from financial investors or other stakeholders, firms have various hurdles to overcome, including financial, capability and other resource constraints.
Reporting and audit fatigue are real dangers. A firm can easily assign too many resources to constantly update and generate different reports to meet its stakeholders’ needs.
The opportunity
DE LA TIERRA is taking on a new approach to ESG reporting aimed at shaking up the market. Based on the current limitations and pain points, The new software solution in development aims to address the current limitations, namely:
- The need for a modular system to address the diverse demands of disclosure standards and reports,
- Provision of a white-label solution to allow boutique firms to support SMEs,
- The democratisation of the risk mitigation and management process by engaging in qualitative stakeholder engagement with civic organisations and affected communities into the materiality impacts of operations, and
- A tailored and improved UX/UI.
DE LA TIERRA operates in this space and continues to provide support on ESG reporting until the new software solution becomes available.
