The systems and processes companies need to measure sustainability effectively

As a rapidly evolving area, environmental, social and corporate governance (ESG) requires a proactive approach, especially as the likelihood of mandated ESG reporting grows. And as the age-old business adage goes, “If you can’t measure it, you can’t manage it”, which is particularly true for the sustainability components of ESG. For businesses to proactively measure sustainability, they need systems and processes that capture how their operations are improving.

Those companies that establish robust systems to measure sustainability now will be better placed to attract investment in the future and ensure a strong long-term reputation remains intact. According to EY, asset allocation under ESG strategies has grown, with 75 per cent of wealth clients looking to use ESG parameters in their portfolios. Similarly, investors, from retail to institutional, want transparency and detailed information covering sustainability and other ESG factors to make more informed decisions.

Businesses must back up their words with numbers

Assets under management in ESG-focused investment funds are expected to reach $53 trillion by 2025. Many organisations are capitalising on the opportunity from growing investment appetites for ESG-focused companies, with some companies communicating a commitment to sustainability despite not acting in alignment with its espoused values. In short, greenwashing. To effectively measure sustainability, companies can use their existing systems or introduce new systems to optimise how their assets are sustainably managed.

Start with high-level frameworks to establish your sustainability measurement processes

The journey to creating an ESG framework that allows companies to measure their actions toward better sustainability outcomes effectively doesn’t need to be complicated. Generally, the components of a company’s ESG framework will fit into three categories:

• Baselining, which allows companies to identify their biggest ESG risks and how these might be mitigated. If a company doesn’t yet have an ESG framework, taking steps to meet regulatory requirements and basic hygiene factors is a good place to start. At this point, it’s also worthwhile analysing what similar organisations in similar industries are doing to address ESG issues.
• Reactive responses when a company addresses issues that may have already incurred penalties or identified immediate risk exposures are identified.
• Proactive responses, which are best implemented once a company has established an ESG framework, that drive philanthropic initiatives driven by employee interest or pressing broader social issues in the community.

Lease optimisation delivers meaningful sustainability data

Suitable for organisations of all sizes, a lease management system helps companies proactively manage their leases while making IFRS 16 compliance simple and easy. A robust lease accounting and optimisation platform enables all of a company’s leases to be managed in one portfolio. And with the ability to view high-level analytics in real-time across all asset classes from properties through to fleet or smaller leases such as devices and point-of-sale equipment, you are able to collate any ESG data you need for corporate reporting, such as CO2 emissions, data erasure certificates, and the percentage of devices reused, recycled, e-wasted or donated to digital inclusion programmes.

Make your sustainability activities measurable with LOIS and Quadrent’s Green Lease

Companies that establish systems and processes to measure sustainability effectively will build stronger reputations, attract more capital investment, and be prepared to meet changing regulatory requirements in ESG. With lease accounting software such as LOIS, and Quadrent’s Green Lease, companies can thoroughly measure sustainability now and use the growing pool of data for stronger commercial decision-making in the future.

Quadrent works with organisations helping them to accurately manage their leases, improve IFRS 16 compliance data inputs and proactively manage their ESG risk. With a team that has in-depth leasing knowledge and specialised accounting backgrounds, we’ll help you get the most value out of your assets while addressing growing ESG requirements.

Start your ESG journey simply and effectively with Quadrent. Click here for more information.