Enterprise resource planning (ERP) systems are instrumental in automating data collection and analysis for Environmental, Social, and Governance (ESG) reporting, offering a streamlined approach to managing sustainability-related information. Despite the existence of specialized ESG software, many organizations already possess relevant data within their legacy systems, with ERP being a key contributor. However, the challenge lies in the fact that ESG data is distributed across various enterprise systems, necessitating a disciplined approach to data collection and management.
ESG Data Challenges and Mapping:
ESG data is scattered across different enterprise software systems, prompting organizations to undertake the crucial first step of mapping out the sources and storage locations of this dispersed information. This mapping process is intricate and involves identifying where the ESG data is generated and stored, providing a foundational understanding for a company’s sustainability journey.
Data Sources in Enterprise Systems:
Several enterprise systems house ESG data, making it imperative to explore and utilize these diverse sources:
ERP Systems: Contain resource management and financial data related to an organization’s sustainability initiatives.
Human Resource Management Systems: House metrics pertaining to diversity, equity, and inclusion.
Transportation and Logistics Systems: Log information on vehicle and fuel usage, including electrification of fleets.
Product Lifecycle Systems: Handle ESG information relevant to circular development, particularly in IT asset management.
Standalone Supplier Management Systems: Track scope 3 emissions of a company’s suppliers.
Inventory and Warehouse Management Systems: Assist in optimizing stock management, reducing waste, and minimizing the environmental footprint.
Building Management Systems: Track energy usage within facilities.
CRM Systems: Offer utility in ESG endeavors, serving as a valuable source of relevant data.
Streamlining ESG Data Collection:
Given the dispersed nature of ESG data, a systematic approach to data collection is essential.
- Map Out ESG Information Sources: Identify and document systems containing ESG data.
- Create a Data Lake: Establish a centralized repository for all ESG data to flow into.
- Use “Last-Mile” Reporting Software: Assemble data into the required reports using specialized reporting software.
Additionally, the importance of employing orchestration or workflow data tools to enhance organizational understanding of data quality levels. These tools provide information on data origin, touchpoints, verification, and other essential details, ensuring accuracy and reproducibility for future reporting periods.
Gathering Scope 3 Data and Role of AI:
As companies face increasing pressure to account for scope 3 emissions along the value chain, a strategy for collecting this challenging data is crucial. Following the 80/20 rule, prioritizing focus on the largest suppliers first. Supplier data, a combination of internal sources (such as the supplier management system) and external datasets (e.g., S&P Global, Carbon Disclosure Project), informs decision-making on emissions reductions and supplier choices based on ESG and sustainability factors.
While acknowledging environmental concerns associated with AI, some experts foresee AI evolving into a key tool for scope 3 reporting. AI tools evolving to sift through supplier annual reports, providing audited data for more reliable reporting. However, this transformation requires investments in AI technology, databases capable of receiving such information, and proactive efforts to drive sustainability changes based on the captured data.
In conclusion, ERP systems, alongside other enterprise systems, play a pivotal role in facilitating ESG reporting by centralizing relevant data. A disciplined approach to data collection, mapping sources, and leveraging technology, including AI, is essential for organizations committed to meeting their sustainability commitments and navigating the complex landscape of ESG reporting.
YGL ERP helps organisations meet Sustainability and ESG Goals
YGL NERVO ERP software is a key technology in Industry 4.0, as it provides a centralized platform for managing all aspects of warehouse operations, from inventory management to shipping and receiving. By integrating YGL NERVO ERP software with other Industry 4.0 technologies such as IoT sensors, AI algorithms, and robotics, warehouse managers can create a highly efficient and connected system that can adapt quickly to changes in demand or supply chain disruptions.
Overall, the use of YGL NERVO ERP software is a key component of Industry 4.0, and is critical to creating a more connected and efficient system that can meet the demands of modern supply chains and ESG requirements.
We look forward to hearing from you. Contact us today so that we can help you with our YGL ERP which is strategy Industry 4.0 ready implementation needs heading towards Industry 4.0.
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