"ESG Factors: Executive Briefing Insights"

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What are the Top Ten Issues Businesses Face in Achieving ESG Goals?


Ten of the top issues businesses face in achieving their ESG goals are regulatory compliance, supply chain complexities, greenwashing, culture change, investor expectations, forming partnerships, data availability, limited resources, governance, and ESG reporting. Details regarding these issues have been provided in the following brief.

Regulatory Compliance

  • The regulatory landscape surrounding ESG compliance is intricate and constantly evolving. Therefore, it is imperative for corporations to be updated with any amendments to regulations and industry standards.
  • Government authorities around the world have published several ESG regulations focusing on issues such as climate change, diversity, and human rights. For instance, the PRI Association reports that about 1,000 ESG-related regulations were published for the investment industry.
  • The recurrent modifications in ESG regulations can lead to confusion and uncertainty. This dynamic regulatory landscape presents a formidable challenge to corporations striving to remain compliant.
  • The continuous transformation of the regulatory environment, coupled with the diverse stipulations across different jurisdictions, pose considerable challenges to enterprises endeavoring to execute ESG initiatives.
  • According to the directors of Regnology, Klaas Van Imschoot, Bodo Windmöller, and Erik Becker, "Overall, we have seen significant developments in the ESG regulatory landscape over the past 12 months, with many countries such as the US, Canada, Japan, Europe, and China introducing new regulations and requirements."

Supply Chain Complexities

  • Maintaining adherence to ESG objectives within intricate and international supply chains can pose a challenge, as corporations may require enhanced transparency and governance over the operations of their suppliers and subcontractors.
  • Many obstacles may arise when integrating ESG into a supply chain, however, managing Scope 3 emissions could arguably be the most intricate task to handle.
  • According to Emir Sassi, the Global Head of Procurement Sustainability at Novartis, scope 3 emissions constitute over 90% of the total GHG emissions. Elements such as employee vehicle travel and emissions from factories and offices, which typically account for less than 10% of the total GHG emissions, are often simpler to monitor. The remaining emissions originate within the supply chain.


  • Some businesses participate in greenwashing or propagate deceptive assertions regarding their ESG accomplishments. Such actions can potentially erode the trustworthiness of ESG initiatives.
  • It is common for organizations to claim they are monitoring ESG factors, yet they often fall short in implementing the process. Simply issuing marketing and public relations statements about achieving goals and aiming for net-zero emissions is not adequate.
  • A survey by Google Cloud that interviewed 1,491 executives from 16 countries found that 58% of them noted that their companies had overstated their sustainability efforts.
  • For effective ESG monitoring, it is imperative for companies to establish a robust employee culture, well-defined policies, and have pre-existing software systems. These systems should be fully integrated, or ideally, housed on a single software management platform. This approach facilitates a comprehensive understanding of the company's value chains and the entire organization. .
  • According to the VP of the digital supply chain at SAP, Richard Howells, “Sustainability is a hot topic - great in theory, but hard in practice.”

Culture Change

  • Integrating ESG objectives into a company's central business strategy can pose significant challenges. This is primarily because it often necessitates a fundamental transformation in the company's operations, culture, and core values.
  • Incorporating ESG factors into an organization and its value chain is not solely about the utilization of tools for measuring effectiveness. The mindset and values of the employees also play a significant role.
  • It is imperative that the senior leadership sets a precedent by exemplifying the company's high-value culture. This can be achieved through transparency regarding the company's objectives, requirements, policies, and its commitment to ESG principles. It is crucial for employees, customers, and stakeholders to understand the company's ethos and the significance of sustainability in its endeavors.
  • According to the CEO of Castolin Eutectic, Patrick Fetzer, "You can put a lot of policies in place, but you cannot make each of these decisions yourself, and you cannot check them all the time. This is where culture comes in."

Investor Expectations

  • It can be a complex task to align ESG objectives with the varied expectations of investors.
  • Some investors may place a higher value on financial returns rather than sustainability, while others may favor specific ESG elements over the rest.
  • According to LEK’s Global Corporate Sustainability Survey 2022, 87% of businesses “feel pressure from investors for increased ESG reporting.”

Forming Partnerships

  • ESG is a vast domain to oversee, particularly for larger corporations, and numerous businesses are unable to manage or measure it independently. This is where alliances become crucial. Without maintaining ongoing communication with both suppliers and customers within their supply and value chains, companies will never be able to accurately determine their metrics or achieve ESG objectives.
  • To enhance visibility and comprehension of ESG factors, it is essential for companies, agencies, employees, stakeholders, and investors to collaborate, increase communication, and engage in open, candid discussions about climate and ESG factors. By uniting efforts, greater accomplishments can be made, and long-term sustainability goals within organizations can be actualized.
  • According to the Head of ESG at Hermes, Nancy Hobhouse, “Where we are with ESG, whether you are looking at the E’, the ‘S’, or the ‘G’, the whole point of it is that you can’t fix it all by yourself.”

Data Availability

  • The requirement for uniform, dependable, and comparable ESG data across various companies and industries presents a challenge in measuring progress and maintaining transparency in meeting ESG objectives.
  • The CBRE Global ESG Survey in 2022 found that limited availability and poor quality data is one of the key challenges for investors when it comes to implementing ESG goals. In the survey, 53% of the respondents noted data availability and quality as their biggest challenge.
  • The primary reason investors consider data availability as their foremost challenge is due to their significant concern about returns, capital protection, and disclosure regulations. These factors underscore the importance of access to high-quality data.

Limited Resources

  • The execution of ESG initiatives frequently necessitates substantial allocations of time, financial resources, and human resources. This can pose a considerable challenge for companies that are constrained by limited resources.
  • Establishing a corporate program demands considerable financial resources, which could potentially affect a company's profit margins. These resources can be directed towards the creation of innovative technologies, enhancement of existing infrastructure, employee education, and partnerships with suppliers and stakeholders to bolster sustainable practices.
  • These financial demands can be challenging to small and medium businesses with limited resources.


  • A recent collaborative research conducted by the INSEAD Corporate Governance Centre (ICGC) and BCG revealed that 91% of board members expressed a desire to dedicate more time to strategic contemplation on sustainability. Despite this, 70% noted that their boards were not effective in incorporating ESG into corporate strategy and governance. In addition, 43% of the directors identified the company's capability to implement ESG strategies as one of the major obstacles in achieving ESG objectives.
  • Governance is considered to be a pillar of ESG. Companies that fail to comply with ESG regulations, policies, and legislation may experience reputational damage, difficulty in hiring top talent, and potential losses.
  • According to the Vice President for Strategic Investments at Abu Dhabi National Oil Company, Noora Al Marzooqi, “We need a mindset shift and see ESG not as a risk to be mitigated, but an opportunity.”

ESG Reporting

  • ESG reporting is a challenge to businesses because of complex ESG data management and multiple ESG frameworks and regulations.
  • In the 2021 PWC Global Investor ESG Survey, 83% of respondents acknowledged the importance of ESG reporting. However, out of all the respondents, only one third were satisfied with the current state of ESG reporting.
  • Seventy-four percent of the respondents noted that their decision making would be more informed if businesses used ESG reporting standards.
  • According to the Global Climate Leader at PricewaterhouseCoopers, Emma Cox, Demonstrating ESG commitment and performance also requires a holistic approach to reporting, with sustainability, risk and financial reporting teams working together.

Research Strategy

For this research, we leveraged the most reputable sources of information available in the public domain, including media and industry sites, such as PwC, Agility PR, and CBRE. We selected the top ten issues based on multiple mentions by credible sites such as BCG, Ethics, and SG Analytics and expert opinions.
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What are the Current Trends in ESG Reporting Globally?


This research provides four current trends in ESG reporting globally. The trends analyzed include standardized ESG reporting, ESG-focused regulatory developments, multi committees/boards involved in ESG, and ESG data quality and analytics. For each trend, we have provided a description, an explanation why it qualifies as a trend, and examples of companies/thought leaders/industry experts that have discussed the trend. Below are more insights into the trends and our 'Research Strategy'

Standardized ESG Reporting

ESG-focused Regulatory Developments

  • ESG regulatory frameworks are coming into focus as governments push for ESG-related legal obligations. The rules and regulations being proposed are intended to standardize disclosure, increase transparency, and enhance accountability for environmental matters and to human capital, etc. Companies operating globally will be subject to different ESG regulations that might cause compliance challenges.
  • Compliance regulatory requirements and ESG developments across the EU and the UK have largely contributed to expanding ESG-related regulatory developments. Last year, the U.S. Securities and Exchange Commission (SEC) proposed new ESG rules with new climate related disclosure requirements. These new changes come at a time the SEC’s Division of Enforcement has not enforced ESG actions.
  • Some proposals by the SEC would see funds disclosing details about their votes on ESG issues at annual meetings. It made other requirements for issuers regarding cybersecurity risk management, strategy, governance and incident disclosure. The SEC proposal also touched on erroneous incentive-based executive compensation versus performance-based.
  • ESG-focused regulatory developments qualify as a trend because it is mentioned in multiple reports and discussed by different reports, such as — here, here, and here. The trend affects jurisdictions globally, from the U.S. to China, and will directly impact ESG reporting once the new requirements are implemented.
  • However, these proposals did not sit well with the Financial Services Committee Chair Rep. Patrick McHenry who said, the SEC is focusing on “non-material, environmental, social, and political issues, instead of sound financial regulation. These politically motivated regulations discourage private companies from going public and hinder the competitiveness of American public companies.”

Multi Committees/Boards Involved in ESG

  • Research by Deloitte covering S&P 500 companies uncovered that there is no single committee that oversees ESG, but a multi committee approach. In their findings, 51% of S&P 500 reported that the full board combined with a committee(s) or multiple committees oversee ESG activities.
  • The multi committee approach is an indicator that ESG activities overlap with many committees. According to the research, the nominating and governance committee and the ESG/sustainability committee acted as the primary committees 59% and 18% of the time, respectively. Some company boards create one or more committees with hybrid ESG responsibilities, such as environmental, health, innovation, safety, sustainability, and technology.
  • The audit committee was included as part of ESG activities 52% of the time. The committee was responsible for tasks like overseeing “climate and sustainability disclosures, reporting, and assurance; related financial reporting matters; ESG processes and controls; enterprise risk management; cybersecurity; environmental and safety matters; and corporate ethics and standards.”
  • In the consumer industry, the primary committee overseeing ESG activities is the nominating and governance committee 63% of the time, the ESG/sustainability committee 17% of the time, the full board 11% of the time, and multiple committees 6% of the time. In the financial services sector, the nominating and governance committee manages ESG activities 69% of the time, the ESG/sustainability committee 9% of the time, the full board 6% of the time, and multiple committees 9% of the time.
  • Ashok Leyland, Bharat Forge, Hindustan Zinc, Hitachi, Infosys, and Vedanta are examples of Indian companies that have constituted ESG committees, either at board level, or management level, or cross-functional ESG committees.
  • Multiple committees' approach qualifies as a trend following numerous mentions in reports discussing ESG and ESG related trends, such as here, here, and here.

ESG Data Quality and Analytics

  • ESG data quality, quantity, and analytics are transforming fast as ESG requirements become more stringent. Investor appetite for accurate and reliable ESG data has increased to help portray a company’s financial performance across all ESG domains, including assessing the social impact of investments.
  • Poor quality data can lead to inaccurate reporting, which hinders transparency. As such, investors are demanding data transparency as a way to ensure that the ESG data provided is accurate and not misleading. Moreover, they are demanding reliable data-backed analysis to allocate ESG investments.
  • The importance of data in ESG reporting cannot be taken for granted now that jurisdictions across the world are implementing some sort of ESG reporting guidelines. Moreover, investor decisions also leverage rich data, technology, and analytics.
  • ESG data quality and analytics qualifies as a trend following mentions in many ESG lists — here, here, and here. The trend is also discussed in detail by leading industry and market research reports — here, here, and here.
  • Thought leaders discussing the trend include two directors of finance consulting at EY Finland. Riku Piipari acknowledges that "Many organizations today use point-based ERP reporting solutions but are moving towards an ESG platform tailored to their needs. While Jarkko Virranta notes that there is a huge opportunity for innovation when it comes to the potential of technology application in ESG reporting today."

Research Strategy

For this research on what are the current trends in ESG reporting globally, we leveraged the most reputable sources of information available in the public domain, including ESG reports by leading consulting firms like Deloitte, KPMG, PWC, and EY. Other reports consulted include Thomson Reuters, Corporate Knights, Ibanet, SEC.gov, Harvard, CNBC, IR Magazine, BQ Prime, Mondaq, Silver Regulatory Associates, Sustain It Solutions, Green Stone Plus, Version1, and Landytech. The analysis includes examples from across the world, providing a global perspective of ESG reporting trends. We also searched through reports discussing ESG and the developments around ESG to uncover more details about the trends. The trends include both current and emerging trends, along with ESG and ESG related developments currently transforming the industry.
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What are the Best Practices for Companies Collecting Supplier Data for Scope 3 Emission Reporting? (with success metrics)


This report explores best practices surrounding data collection for Scope 3 emissions reporting. With the growing emphasis on sustainability and increased disclosure regulations in the EU, UK, and US, organizations are facing a shift towards mandatory emissions reporting and external data assurance. To meet these demands and ensure accurate and traceable data, companies must establish robust data collection strategies, leverage standardized frameworks and tools, and embrace technology-driven solutions. Additionally, the report provides examples of how companies like Apple and PepsiCo have approached Scope 3 emissions data collection, and the benefits of adopting advanced carbon accounting technology, such as Persefoni's Scope 3 Data Exchange module, to streamline the process and ensure data quality. As available, we have provided success metrics to support the best practices we identified.

Define a Strategy for Collecting GHG Emissions Data

  • The accumulation of valuable emissions data affords (Page 7) opportunities to acquire insights into the greenhouse gas (GHG) inventories associated with diverse categories of commodities and services, as well as the capability of various segments within the supply chain to furnish GHG inventory data. This knowledge empowers companies to identify which segments of the supply chain require support in collating their GHG inventories and guide them towards suitable resources that can aid their emission 3 reporting effectively.
  • However, gathering GHG inventory data (Page 1) from suppliers can pose significant roadblocks and often pose formidable challenges when conducting scope 3 GHG inventories. Consequently, it becomes imperative for organizations to formulate a comprehensive approach/strategy internally to gather GHG emissions data from their value chain collaborators.
  • The Greenhouse Gas Protocol, an industry resource with established global standards for organizations to measure and manage emissions across value chains, recommends following the following four steps when developing a strategy to engage value chain partners for GHC emissions data collection, including
    • 1). "Identify the internal departments responsible for data collection, 2). Select suppliers and identify supplier information, 3). Engage the procurement staff, and 4). Develop a method for managing supplier data."
  • To do this, companies should assess if they are already surveying their supply chain through existing environmental or social responsibility initiatives, and utilizing the data management plan and screening exercises from the Scope 3 Standard and Product Standard, companies can identify key areas where supplier data would be beneficial.
  • Additionally, the procurement staff should evaluate the chosen suppliers for appropriateness and applicability, and subsequently oversee the effective management of supplier data involving the data collection process, quality assurance, and reporting functions.
  • In a recent survey conducted by PwC, involving 325 investors with $14 trillion in assets under management, it was revealed that 34% (Page 2) of them have prioritized the reduction of Scope 3 emissions, highlighting the growing importance of addressing emissions beyond a company's direct operations.
  • As a consequence, prominent companies, including Amazon, Apple, Google, Levi's, Netflix, Unilever, and Walmart took substantial steps toward combating climate change as they set emissions reduction targets and embarked on sustainability measurement initiatives, with a specific focus on addressing Scope 3 emissions in 2022.
  • In Apple's partnership with Fraunhofer IZM, they found that 98% of their carbon footprint is attributed to Scope 3 emissions arising from the entire life cycle of their products, including creation, usage, and disposal.

Establish Clear Communication and Engage with Suppliers

  • Gathering Scope 3 emissions data typically necessitates broader engagement within the reporting company, extending beyond the boundaries of the organization to involve suppliers and external partners (Page 67). Unlike Scope 1 and Scope 2 emissions data collection, which primarily focuses on internal operations and direct emissions, Scope 3 emissions involve a more extensive value chain, encompassing indirect emissions from activities such as purchased goods and services, transportation, and the use of products by end-users.
  • Beyond strategy, one of the first steps to acquiring supplier data (Page 9) entails establishing transparent channels of communication and working with suppliers. This involves clarifying the purpose of data collection, its intended utilization, and the advantages of their participation. Establishing clear communication channels creates room for open and transparent communication with suppliers to gain insights into their data inputs. This is achieved by clearly articulating your requirements, expectations, and the significance of accurate and comprehensive data.
  • Collaboration plays a pivotal role in this context, as suppliers are more inclined to furnish precise and prompt data when they comprehend the rationale behind the request and perceive themselves as integral contributors to the process. Fostering collaborative relationships with suppliers encourages their active participation and cooperation in improving data inputs. Engaging in dialogue, sharing best practices, and providing support and resources to enable suppliers to enhance the quality and relevance of their data submissions are crucial.
  • Experts at Deloitte suggest recommends that "to collect Scope 3 emissions data, companies must work together across the value chain," encompassing vendors and suppliers.
  • According to Brightest.io, a tech-based data science and sustainability measurement and reporting company, "Where you can, work directly with your vendors to collect data, ideally digital data you can easily integrate into your carbon accounting tools, rather than paper or document invoices and order forms that require manual input. Again, this is another place to focus and prioritize. Start with your most strategic Tier 1 relationships, and gradually work your way down your supply chain."
  • For instance, Abengoa, a renowned global technology and engineering firm with a presence in more than 70 countries, places significant emphasis on environmental responsibility within its supply chain. To achieve this, Abengoa mandates that all suppliers implement a greenhouse gas (GHG) reporting system for the products and services they provide to the company (Page 18).
  • Furthermore, Abengoa enforces the verification of supplier emissions' data through an independent third-party or requires suppliers to provide transparent documentation of the data used in calculating their GHG inventories. These stringent requirements ensure accountability, accuracy, and transparency in GHG emissions reporting, reflecting Abengoa's commitment to sustainable practices and environmental stewardship.
  • PepsiCo and Walmart are companies that have successfully engaged suppliers and value chain vendors to measure and report emissions.
  • According to PwC, obtaining accurate data for scope 3 emissions may require companies to financially or otherwise incentivize suppliers in four ways, including leveraging decarbonization-embedded procurement processes, building capability through sharing practices and learnings on carbon-reduction initiatives, rewarding progress for achieving decarbonization, and ensuring performance (an expanded framework is in the graphic below).

Use Standardized Frameworks and Tools

  • The accuracy and reliability of the Scope 3 inventory and reporting (Page 76) hinge on the quality of the data utilized for emissions calculation. To ensure the inventory adequately represents the greenhouse gas (GHG) emissions of the company and aligns with its objectives, companies must collect data of sufficient quality. This entails obtaining data that supports the company's sustainability goals and satisfies the informational requirements of both internal and external stakeholders, facilitating well-informed decision-making processes.
  • Companies should establish robust data collection formats that comprehensively document the data sources. These formats should be designed to facilitate data collection in an approved and consistent manner. Employing standardized formats minimizes the risk of errors and enables transparent documentation, which is vital for consistent recalculations. By implementing such formats, companies can maintain data integrity, enhance transparency, and enable accurate and reliable comparisons over time and across partners.
  • Employing standardized reporting frameworks, such as the Greenhouse Gas Protocol's Scope 3 Standard, is highly recommended. These frameworks offer explicit guidelines regarding the data to be collected, methodologies for emissions calculation, and reporting protocols.
  • By ensuring consistency in data collection and reporting practices, these frameworks facilitate seamless comparisons of data across suppliers and enable longitudinal analysis. Embracing such standardized frameworks enhances transparency, reliability, and coherence in the reporting process.
  • While companies may leverage one of four methods to calculate scope 3 emissions, including Average data, Supplier-specific, hybrid, and Spend-based, one of the best practices for overcoming data collection challenges is by using average figures or large assumptions.
  • Experts at PwC opine that "as you build capabilities around data collection and reporting, a key focus will be on creating a data model so that you can assess how changes in materials, suppliers or locations affect a product’s emissions."

Leverage Technology for Data Collection and Analysis

  • The evolving disclosure regulations in the European Union, United Kingdom, and the United States are driving a significant change toward compulsory emissions reporting and external data assurance. As a result, companies are required to maintain traceable, high-quality data, along with verification-ready documentation.
  • With the enhancement of data quality, the volume of data points to be managed can quickly become overwhelming if done manually. Therefore, there is a pressing need to adopt automated and technology-driven solutions to efficiently handle the increasing data complexity while ensuring compliance and accuracy in emissions reporting.
  • This trend could lead to improved sustainability practices across industries, as organizations can leverage advanced technology to enhance their environmental impact assessment and make informed decisions to mitigate greenhouse gas emissions in their supply chains, especially for monitoring, detecting, modeling, and reporting scope 3 emissions.
  • According to a recent study by IBM IBV, business leaders are not anticipating rapid growth in sustainability initiatives over the next three years, as only 45% (Page 21) expect to reduce greenhouse gas (GHG) emissions through monitoring, detection, modeling, and action planning by 2025, representing only a modest increase of 5% compared to current levels.
  • Harnessing technology for data collection and analysis can yield significant benefits. Manual data collection, with its inherent time consumption and error-prone nature, can be mitigated by leveraging technological solutions. This approach not only streamlines the process but also enhances accuracy and enables real-time insights.
  • Introducing an automated or web-based system for data management (Page 4) presents substantial advantages for both the reporting company and its suppliers. Collaborating with suppliers and customers to adopt a shared system empowers companies to collect data once and utilize it for multiple reporting instances, thereby optimizing the data collection and analysis process. This streamlined approach enhances efficiency, accuracy, and consistency in data management, leading to improved reporting practices and facilitating effective collaboration across the supply chain.
  • Deloitte's Peter Vickers, Carlos Sanchez, Dennis Schulz, and Samuel Hawkins in their publication titled 'Using technology to get on top of Scope 3 emissions,' add that "technology inevitably plays a major role in the supplier engagement process as it provides the means to collect and monitor data while providing information to understand and evaluate progress."
  • According to the Science Based Targets Initiative (SBTi), "Fourth Wave technologies such as data analytics, smart sensors, and blockchain will help companies manage their Scope 3 impacts by offering powerful insight into complex, global value chains and will help reduce emissions in new ways. These technologies are playing an increasingly important role in business innovation, and business executives agree that implementing new technologies will not only improve their company’s environmental footprint, but also its bottom line."
  • Leveraging advanced carbon accounting technology, such as UL Solutions and Persefoni's Scope 3 Data Exchange module, presents a valuable opportunity to collect reliable data efficiently and address any data gaps that may exist.

Research Strategy

To examine the best practices surrounding data collection for Scope 3 emissions reporting, our research team utilized a comprehensive approach to identify relevant and reliable sources. We began by conducting searches on reputable research and industry sources like PwC, Deloitte, 3 Degrees Inc., and McKinsey. Additionally, we explored industry-specific sources like the Greenhouse Gas Protocol and sustainability-focused organizations such as CDP (formerly the Carbon Disclosure Project), the US EPA, Persefoni, Position Green, Echo Chain, Source Intelligence, and Green Biz. To gain insights into corporate practices, we examined sustainability reports and publications by companies known for their robust sustainability efforts, including Apple, PepsiCo, and others mentioned in the provided information. Furthermore, we selected our best practices based on citations from leading industry protocols and multiple citations across the sources used for this research.

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