How a Cloud-based FP&A solution can satisfy the complexity of ESG reporting
Environmental, Social, and Governance (ESG) reporting will come with strict compliance rules from 2024. As a result, businesses need to have a comprehensive solution to ESG reporting, a responsibility that will fall on the office of the CFO.
In a recent report from Dresner Advisory Services, they deemed Unit4 FP&A as a top three provider of ESG reporting solutions.
In this blog, we will explore how an integrated and Cloud-based FP&A product is key to managing the complexity of ERP reporting, especially with increasing compliance rules set to come.
What is ESG reporting?
Environmental, social, and governance (ESG) reporting provides governing and regulatory bodies an insight into the potential impacts of social and environmental factors on an organization’s finances.
This is becoming a key metric for stakeholders and potential investors and can even affect partnerships between enterprises. Having succinct ESG reporting and visibility across compliance is key to removing obstacles to investment in your enterprise.
The office of the CFO must have succinct methods and systems that can support proper ESG reporting, as ESG reporting will become mandatory for nearly all enterprises by January 2024.
Dresner’s recent report on the increasing compliance around ESG reporting shows that many organizations are not prepared for increased compliance with ESG reporting, and in the worst cases are completely unaware.
They found that ESG reporting is only done by 32% of organizations, with an additional 18% considering it. This means that more than 50% of organizations, of varying sizes, are likely unprepared for coming reporting regulations. Additionally, 75% of respondents state they don’t even know what standards are in use or likely to be used.
How a modern FP&A solution can help
Environmental, social, and governance reporting will, by nature, require monitoring and tracking of financial data alongside other datasets from HR and procurement, etc. It’s clear integrated data and a cross-functional response to ESG reporting is paramount, as concurred in the Dresner report.
Automation and AI can help with complex calculations, gather data across multiple datasets easily, provide advanced reporting capabilities, and update reporting dashboards in real-time.
Cloud systems are key here, to help manage the wide datasets, secure that data in a trusted Cloud platform, allow remote access, and more.
With ESG reporting increasing, it's clear that legacy and on-premises systems will undoubtedly struggle with the data load and can present sustainability issues themselves.
Even those organizations with a digital financial function are still lagging with static reporting tools rather than the proactive management functionality that an ERP suite provides.
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How Unit4’s integrated FP&A product can help with ESG reporting
Unit4’s FP&A for ESG reporting is a solution designed to assist organizations in analyzing and reporting their ESG data.
Many capabilities of our Cloud-based FP&A product can make ESG reporting easy, succinct, and comprehensive.
Integrated data
Our ERP suite provides the single source of truth, and integrated data, that makes data analysis and reporting much easier, with the data you need at your fingertips. This is key when gathering data across multiple departments and data sets.
Dresner’s market study highlights the importance of this capability: “Eleven percent of vendors do not support the use of enterprise performance management functionality (such as planning and forecasting) with ESG data, making their solutions static reporting tools rather than proactive management capabilities.”
Automation
A Cloud-based FP&A solution can also allow seamless integration with existing data sources, enabling automatic retrieval via APIS, and reducing manual entry efforts.
AI automation reduces data entry greatly allowing the office of the CFO to forecast data and create strategies to make ESG compliance better, which will become a measure for investment in the future.
Automation like this can also satisfy complex report creation; intelligent AI can simply generate these reports automatically, reducing time spent on data consolidation while also ensuring accuracy.
Reporting frameworks
Reporting frameworks and financial disclosures are identified as key capabilities by Dresner: “Twenty-two percent of vendors do not currently support multiple ESG reporting frameworks, while 33 percent do not currently support linking ESG narrative reporting with financial disclosures.”
Unit4’s FP&A for ESG products has comprehensive support for global reporting frameworks such as GRI, SASB, TCFD, and CDSB, with customizable reporting templates and KPI scorecards, aligned to UN SDGs - both create transparent stakeholder communication.
Our product can link and share ESG and sustainability narrative reporting with financial disclosures, providing more transparency to partners and stakeholders.
Importantly, Dresner identifies this as a key capability for growing and large-scale enterprises, those with more complex reporting requirements: “Data leaders need to assess ESG reporting needs against both current capabilities and future road maps to ensure vendors will meet their organization’s requirements.”
Monitoring and Goal Tracking
Another key capability is being able to monitor ESG data through dashboards, enabling goal tracking. For those organizations that have a lot to improve in terms of ESG compliance, having this functionality ensures staff can be informed and united with internal reports and analysis.
Unit4’s ESG reporting solution provides interactive reporting dashboards and visualizations that help monitor and track sustainability performance across key ESG indicators.
Moreover, goal setting and tracking functionalities can align with ESG targets and frameworks, providing recommendations to drive continuous improvement and achieve sustainability objectives. These insights are made practical with recommendations to drive continuous improvement and sustainability.
Risk management
Risk management is also a key tool to identify and mitigate ESG-related risk, partly through monitoring and analysis itself.
Scenario modeling capabilities present in all our products are a clear advantage for ESG reporting, allowing organizations to anticipate growth and the potential effect of growth on sustainability and ESG-related strategies.
Yet, risk management tools can help catalyze growth; opportunity identification features can leverage sustainability initiatives for growth.
By leveraging sustainability initiatives, you can get a foot in the door with investors where other organizations are further behind in their ESG compliance may struggle. This is clear in the enhanced transparency our product creates, enabling data sharing and disclosure which will drive trust and accountability.
Why Unit4 is the vendor for you
Unit4’s ERP suite enables organizations to monitor their sustainability performance, support compliance with statutory reporting requirements, and make more informed decisions to drive positive environmental and social impacts.
Dresner ranked Unit4 as the 3rd highest vendor, out of 10 surveyed, due to its ERP cross-functionality and integrated FP&A solution. Consult our blog on Dresner’s report to see how ESG reporting will affect your organization and read the report yourself.
The Unit4 FP&A solution is designed to assist organizations in analyzing and reporting their ESG data. It supports compliance and regulatory reporting. The model includes calculations and business logic (such as KWh, m3, kg CO2, and km conversions) but is not an out-of-the-box solution including standards data for GRI, TFCD, SASB, or IFRS S1 and S2. This requires the collection of data and a vendor partnership, which we can support.
