With ESG regulations accelerating across the UK, Europe and beyond, many business executives see sustainability reporting as a costly compliance exercise. They only see the burdens of continuous regulatory updates, like the CSRD and the SRS (UK Sustainable Reporting Standards) that’s recently gone through consultation, and the cost that accompanies the effort. But there’s another side to the story.

Limiting the scope of ESG’s role across the business hugely underplays the value this function can bring to growth strategies. The key lies first and foremost in shifting focus from reactive compliance to proactive data management. In fact, even with just a little more control, ESG data can become a true strategic asset for driving business growth. We see five crucial steps to this journey.

Streamline ESG data into a single source of truth

For many companies, the biggest problem is poor data integration. Sustainability teams struggle with accessing siloed data from multiple internal departments, like finance, HR, procurement and production, as well as their third-party suppliers. Such embedded siloes make reporting especially challenging, as sustainability teams rely on each department sharing the necessary information upon request – which is hardly ever a quick process. Considering this exercise has to then be repeated several times in a year, frustration levels across the business can skyrocket very quickly.

Instead, organisations need a complete system of record for all their data. Giving the sustainability teams everything they need at their fingertips – without relying on input from outside departments – takes away the relentless headaches of ESG data management and reporting. It gives teams greater control, thereby empowering them to make proactive, informed decisions aligned with their business growth strategy.

Connect sustainability metrics to business performance

As with most business functions, ESG teams are constantly under pressure to demonstrate genuine business value, or otherwise be labelled a cost centre. To truly embed sustainability into core business strategy, it’s essential to connect sustainability data with financial data, which starts with better alignment between departments.

Opening up clear communication channels between finance and ESG teams is a fundamental evolution that needs to take place. It’s actually one of the most important dynamics for businesses to get right, if they are to be commercially successful. This shift makes demonstrating the ROI of sustainability initiatives far more achievable as it will get the necessary stakeholders bought in from the very beginning.

Use AI and automation to reduce costs

The existence of data chaos can usually be linked back to the tech stack. For too long it’s been the standard practice to layer tool upon tool whenever a new requirement surfaced. Before they know it, teams are left with tens of tech platforms all supposedly doing a different job, none of them talking to each other, coupled with a cascading list of inefficiencies and an extortionate management bill. Unsurprisingly, this tool creep is a huge pain point for the ESG team and those who control budgets and IT infrastructure – the CFO and CTO, respectively.

Consolidating the tech stack and deploying the capabilities of AI and automation can quickly reverse these challenges. The obvious benefit is smoother data ingestion from different workflows and departments, but it also helps create that easily accessible system of record for ESG teams to extract the necessary data for their various reporting requirements. They save time, the CFO and CTO save money – it’s a win-win.

Build stakeholder trust through traceable, auditable data

As we know, having stakeholder buy-in from the start is absolutely crucial for sustainability teams to shift outside perceptions from cost centre to driver of business growth. But building this trust requires value quantification through traceable, auditable data.

Integrating a powerful platform with built-in ownership and data governance is a great way to maintain data credibility. Having full transparency of where datasets come from and who owns them helps drive accountability across the different departments, so that ESG teams are given the confidence that the data used for reporting against regulatory requirements, such as for the CSRD, robust enough for auditing and empowers them to communicate effectively with stakeholders.

Reframe sustainability as an engine for innovation and competitive advantage

The people on the ground are the key drivers of making sustainability a source of true business growth, and they’re doing so in the middle of an increasingly shifting market that demands specialised knowledge of complex protocols, like the Greenhouse Gas Protocol.

Empowering this wealth of expertise with a system of record arms teams with the tools to change the way ESG contributes to overall business strategy. Given that ESG requirements are taking up more paper space in public and private contracts – sometimes as much as 10–20 per cent – there’s a real opportunity for businesses to differentiate themselves from competitors and gain an edge when it comes to winning new business. Organisations demand greater transparency and evidence of regulatory adherence, so those who weave ESG metrics into business strategy will be in a stronger position to respond.

Following through on this mindset shift will help ESG teams shake off the image of a compliance-focused function – where they are hugely undervalued – and adopt the perception of business champions delivering invaluable contributions to strategic business growth.

Juanjo Mestre, CEO and co-founder of Dcycle.

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