ESG data collection is shifting from manual to automated systems. Here's what you need to know:
- Manual methods (like spreadsheets) are slow, error-prone, and hard to scale
- Automated systems offer real-time updates, fewer errors, and better compliance
- 87% of business leaders plan to increase ESG investments
Key benefits of automation:
- Faster data processing
- Higher accuracy
- Real-time insights
- Better regulatory compliance
- Resource efficiency
| Aspect | Manual Collection | Automated Collection |
|---|---|---|
| Speed | Slow (days/weeks) | Fast (minutes/hours) |
| Accuracy | Low (high error rate) | High (low error rate) |
| Updates | Infrequent | Real-time |
| Compliance Risk | High | Low |
| Resource Use | High | Low |
Despite benefits, 55% of public companies still use spreadsheets for ESG data. Companies embracing automation now will be better prepared for future reporting demands.
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Manual ESG Data Collection
Many companies still use old-school methods for ESG data gathering. Let's see why this is becoming a problem.
Spreadsheets: The Old Faithful
47% of companies use spreadsheets for ESG data management. It's like using a bicycle to deliver cross-country packages - it works, but it's not efficient.
Spreadsheet shortcomings:
- Time-consuming
- Error-prone
- Hard to scale
Real-World Impact
Here's what manual data collection looks like:
| Task | Time Spent | Potential Issues |
|---|---|---|
| Data gathering | 40 hours/month | Inconsistent data formats |
| Data entry | 20 hours/month | Typos and calculation errors |
| Report creation | 30 hours/quarter | Outdated information |
These hours add up fast, especially for larger companies.
Why Companies Stick to Manual Methods
- Cost: New tech can be expensive
- Familiarity: People know spreadsheets
- Inertia: Change is hard
But things are changing. KPMG found 90% of companies plan to increase ESG investments, including data management tools.
Hidden Costs of Manual Collection
1. Data silos: Information gets stuck
2. Lack of real-time insights: Data becomes outdated quickly
3. Compliance risks: Hard to keep up with changing regulations
Rob Fisher, KPMG U.S. ESG Leader, says:
"The organisations that view new reporting requirements as more of an expansion of their broader sustainability strategy and who continue to invest in the right people and technology to make progress on that strategy will be better positioned to both realise and communicate the full value sustainability initiatives can bring to their business."
Moving Forward
Manual methods aren't cutting it for modern ESG needs. Companies should consider:
- Centralizing data collection
- Training staff on ESG importance
- Exploring automated solutions
Bottom line? Manual ESG data collection is like using a map and compass in the age of GPS. It works, but you're missing out on tools that could make your journey smoother and more efficient.
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2. Computer-Aided ESG Data Collection
Computer-aided ESG data collection is changing how companies report. Here's why it's better than manual methods:
How It Works
These systems use APIs to connect to a company's ERP and other tools. This means:
- Data flows automatically into a central warehouse
- Information updates in real-time
- No more manual data entry
Speed and Accuracy
| Task | Manual | Automated |
|---|---|---|
| Data Collection | Hours or days | Minutes |
| Error Rate | High | Low |
| Data Processing | Slow | Fast |
Real-World Examples
1. Sensefolio
Uses NLP to analyze 20,000+ companies across 150 ESG metrics.
2. Arabesque
Processes 50,000+ news sources in 20 languages for ESG scoring.
3. RepRisk
Screens 500,000 documents daily for ESG risks using machine learning.
Why It's Better
- No more typos or calculation mistakes
- Frees up staff for strategic tasks
- Consistent format and centralized storage
- Immediate access to updated information
But Watch Out For
- Data quality depends on input sources
- AI models need careful training
- Ethical use of AI is crucial
The Future
As ESG reporting gets more complex, automated systems will become the norm. Companies that invest now will be ready for future requirements.
"Organizations that view new reporting requirements as part of their broader sustainability strategy and invest in the right people and technology will be better positioned to realize and communicate the full value of sustainability initiatives." - Rob Fisher, KPMG U.S. ESG Leader
Good and Bad Points
Let's compare manual and computer-aided ESG data collection:
| Aspect | Manual Collection | Computer-Aided Collection |
|---|---|---|
| Speed | Slow (hours or days) | Fast (minutes) |
| Accuracy | Low (high error rate) | High (low error rate) |
| Data Processing | Slow | Fast |
| Real-time Updates | No | Yes |
| Resource Intensity | High | Low |
| Customization | High | Limited |
| Data Security | Varies | Potential concerns |
| Learning Curve | Low | High |
| Cost | Low initial cost | Higher upfront investment |
Manual collection is slow and error-prone, but it's cheap to start and easy to customize. Computer-aided collection is fast and accurate, but it costs more upfront and has a steeper learning curve.
Here's the kicker: 55% of public companies STILL use spreadsheets for ESG data. That's like using a horse and buggy in the age of electric cars.
Why does this matter? Let's break it down:
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Speed: Automated systems process data in minutes, not days. That's HUGE for quick decision-making.
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Accuracy: Computers don't make typos. More reliable data = better ESG reports.
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Resource Use: Automated solutions free up your team for more important work.
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Real Impact: Companies using automated ESG data collection see real benefits. Just ask Colgate-Palmolive:
"Saving energy through airflow monitoring is just the tip of the iceberg." - Warren Pruitt, VP of Global Engineering Services
They cut energy use by 15% in some packaging lines. That's not just good for the planet - it's good for the bottom line.
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Data Quality: You can't manage what you can't measure. Automated systems give you data you can trust and act on.
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Long-term Savings: Yes, automated systems cost more upfront. But they save time and money in the long run.
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Future-Proofing: ESG reporting is getting more complex. Automated systems can handle whatever comes next.
Bottom line: If you're serious about ESG, it's time to ditch the spreadsheets and embrace automation.
Wrap-Up
Automated ESG data collection isn't just a trend. It's a must for companies that want to lead in sustainability reporting.
Why automation matters:
- It cuts down on mistakes
- It's fast - think real-time updates
- It helps meet new rules like the SEC's climate disclosure requirements
- It saves money over time
Let's compare manual vs automated collection:
| Aspect | Manual | Automated |
|---|---|---|
| Errors | Many | Few |
| Reporting Speed | Days/Weeks | Minutes/Hours |
| Updates | Sometimes | Always |
| Compliance Risk | High | Low |
The numbers don't lie. 74% of public companies plan to invest in sustainability reporting tech soon. They know it's key for meeting expectations and following rules.
But here's the shocker: 55% of public companies still use spreadsheets for ESG data. That's not going to cut it anymore.
Good ESG data does more than check boxes. It:
- Builds trust
- Helps make smart choices
- Keeps you ahead of new rules
Boris Khazin from EPAM Systems says:
"By deploying automation tools, companies can significantly reduce the risk of manual errors and decrease administrative labor and time commitments."
The future of ESG reporting is automated, accurate, and quick. Companies that jump on board now will be ready for tomorrow's challenges and opportunities.
