Sustainability News and More | Locus Technologies

The Past, Present, and Future of EHS & ESG

To celebrate a milestone 25 years of success in EHS and ESG software development, we sat down with Locus President, Wes Hawthorne for a brief discussion. In this post, we ask him a series of questions highlighting the past, present and future of EHS and ESG.

1. What are the greatest challenges that environmental professionals are facing?

One of the persistent challenges we’ve seen for the past 25 years is that the responsibilities of environmental professionals are continually expanding. Previously, almost all environmental work was localized, with facility-level permits for air, water, waste, etc. That has expanded over the years to include new regulations and reporting requirements for sustainability, social metrics, and other new compliance areas, while the old facility-level programs still continue. This has led to more pressure on environmental managers to keep up with these programs, and increased reliance on tools to manage that information. That’s where Locus has always focused our effort, to make that ever-expanding workload more manageable with modern solutions.

2. What are the most interesting trends in EHS and ESG?

The current flood of interest in ESG is certainly notable as far as bringing corporate attention to the environmental field, as well as having requirements originate from the SEC here in the US. We have become accustomed to managing oversight from multiple regulatory bodies at the local, state, and federal level, but SEC would be a newcomer in our line of work. Their involvement will be accompanied by a range of new requirements that are common for the financial world, but would be unfamiliar to environmental staff.

Across other EHS fields, we are seeing increased demand for transparency in EHS functions. Overall, this is a positive move, as it brings more attention to EHS issues and develops a better EHS culture within organizations. But this also drives the need for better tools to make EHS information readily available across all levels of the organization.

3. What are the most disruptive technologies available today?

As far as technologies, the ones most likely to have significant impact in the environmental field are ones that don’t require a significant capital investment. Although there are definitely some practical advantages to installing smart monitoring devices and other new technologies, procuring the funding for those purchases is often difficult for environmental professionals. Fortunately, there are still many technologies that have already been implemented successfully in other fields, but only need to be adapted for environmental purposes. Even simple changes like using web-based software in place of spreadsheets can have a huge impact on efficiency. And we haven’t yet seen the full impact of the proliferation of mobile devices on EHS functions. We are still working on new ways to take advantage of mobile devices for data collection, analysis, and communication purposes.

4. What do you think are the biggest innovations of the last 25 years in our field?

We’ve seen a number of innovation milestones in the past 25 years, and while we didn’t invent SaaS, we’ve been largely responsible for adapting it and perfecting it for environmental purposes. One of the major innovations we’ve integrated into our products include online GIS tools where users can easily visualize their environmental data on maps without expensive desktop software. Another one was our fully configurable software platform with built-in form, workflow, and report builders tailored for environmental purposes, which allows anyone to build and deploy environmental software applications that exactly match their needs. There have been many other innovations we’ve incorporated into our software, but these two stand out as the most impactful.

5. Where do you see Environmental and ESG reporting in the future?

More and more, we are seeing all types of reporting being converted into pure data exchanges. Reports that used to include regulatory forms and text interpretations are being replaced with text or XML file submittals. This transition is being driven largely by availability of technology for EHS professionals to generate and read these files, but it is also promoted by regulatory agencies and other stakeholders receiving these reports. Stakeholders have less time to read volumes of interpretive text, and are becoming more skeptical of potential bias in how facts are presented in text. These are driving the need for more pure data exchanges, with increasing emphasis on quantifiable metrics. These types of reports are also more readily compared against regulatory or industry standards. For reporters, lengthy corporate reports with volumes of text and graphics are becoming less common, and the success of an organization’s programs will be increasingly reliant on robust data sets, since ultimately only the data will be reported.

6. What has been the key reason for Locus’ success for the past 25 years?

There are actually a few that immediately come to mind. One reason is the nature of our continually evolving products. By providing our solutions as SaaS, our software adapts with new environmental requirements, and with new technologies. If our software was still the same as it was 25 years ago, it simply wouldn’t be sufficient for today’s requirements. Since our software is updated multiple times each year, it is difficult to notice the incremental changes, but they can be readily seen if you compare today’s software with the original in 1997. And we’re committed to continuing the development of our products as environmental needs change.

The other primary reason for our success is our excellent staff and the environmental expertise we bring to our customers. We simply could not provide the same level of support without our team of environmental engineers, scientists, geologists, chemists, and an array of others. Having that real-world understanding of environmental topics is how we’ve maintained customer relationships for multiple decades. And our software only has value because it is maintained and operated by staff who appreciate the complexity and importance of environmental work.

Mr. Hawthorne has been with Locus since 1999, working on development and implementation of services and solutions in the areas of environmental compliance, remediation, and sustainability. As President, he currently leads the overall product development and operations of the company. As a seasoned environmental and engineering executive, Hawthorne incorporates innovative analytical tools and methods to develop strategies for customers for portfolio analysis, project implementation, and management. His comprehensive knowledge of technical and environmental compliance best practices and laws enable him to create customized, cost-effective and customer-focused solutions for the specialized needs of each customer.

Mr. Hawthorne holds an M.S. in Environmental Engineering from Stanford University and B.S. degrees in Geology and Geological Engineering from Purdue University. He is registered both as a Professional Engineer and Professional Geologist, and is also accredited as Lead Verifier for the Greenhouse Gas Emissions and Low Carbon Fuel Standard programs by the California Air Resources Board.

Want to discuss EHS and ESG solutions with our product specialists? Contact us today!

The Locus Technologies ESG Survey Tool

The Locus Technologies ESG Survey Tool enables users to email surveys and questionnaires directly from Locus to their supply chain. This is achieved without having to create usernames and credentials those receiving surveys.

When surveys are issued, the tool generates a secure link to each email recipient. Email recipients click the link, respond to the survey or questionnaire (without having to create a Locus username/password), and the data will be captured within Locus software for ESG purposes. Recipients of the link only receive access to their survey form, and nothing else in the system, and the links expire within a prescribed timeframe to further strengthen security.

The survey tool securely streamlines data collection from external entities who would traditionally never be given access to the system, including suppliers, vendors, sales channels and consultants. Once collected, the data can be immediately be used for ESG calculations and reporting.

Want to learn more about the Locus ESG Survey Tool? Reach out to our product specialists today!

Selecting ESG Software? Watch out for these 7 Red Flags

One of the biggest recent trends we have seen with novice ESG providers (both startups and major software providers new to the field) is a lack of substantial software tools presented. What is lacking is covered up by grandiose statements about the efficacy of their options. These statements are so vague that they could cover anything if you switched out references to ESG with any other nouns, since these providers don’t show their tools transparently.

Here are seven red flags to be aware of when selecting ESG software:

These providers prominently share statements and statistics about the current ESG climate, without any offering of how their software fits into the picture. This is a major ‘tell’ that someone is jumping on the ESG bandwagon without adequate expertise or software tools.
There is a lack of explanation about how their tools directly improve your ESG program. There is no mention of their dashboards or reporting options or other integrated tools. A seasoned software provider will happily share the specifics of what they offer.
You’ll find over-the-top flashiness on their website, but there are no software previews to be found. If they’re not showing an example of their software, it may be because it lacks functionality, or is theoretical.
Their site is filled with buzzwords. They will talk about reaching net-zero, about how their software is expert-led and data-driven. They will offer no insight as to how they meet these goals.
They will shy away from offering demonstrations. Instead, they will seek to have conversations where they make lavish promises about what their software will be able to do in the future. They may be quick to offer a PowerPoint presentation, but you’ll find that many organizations are reluctant to show their software in action. You deserve to see the software you intend to purchase.
No case studies or current customers can be found. If there’s not an example of their software in use, then it may not be worth exploring, or it may not exist.
If an ESG software provider has grown by acquisition, there are likely issues with software integration and staffing knowledge/support for the product. And if they’re owned by investors, it’s inevitable that they’re being packaged to sell, and they’ve raised prices to meet the needs of the investor.

So, what should you look for in an ESG Software Solution instead?

When selecting an ESG software solution, don’t waste your time with something that either isn’t functional or doesn’t exist. More importantly, your software should have a long track record of usability and be backed by years of expertise. Locus ESG software is proven and is a vital part of the Port Authority of New York and New Jersey’s Clean Construction Program. It also helps Del Monte Foods meet their sustainability goals by improving analyzation and forecasting.

Want to learn more? See it for yourself. Reach out to our product specialists today.

Don’t Trust Your ESG Reporting to Just Anyone

Is ESG the new gold rush? Some tech giants and startups seem to think so. With each passing day, more and more software providers throw their hat into the burgeoning ESG ring, hoping to cash in. While it’s perfectly reasonable for these companies to seek out profitable endeavors, most of those companies have limited real-world experience with ESG reporting and software. You may want to think twice about trusting your critical ESG reporting to someone looking to ride the wave toward a quick buck.

Locus has been developing and supporting ESG solutions for over two decades, before the ESG acronym ever made its way into headlines and boardrooms. In addition to the years of experience, Locus places great emphasis on domain knowledge, hiring experts in environmental science, engineering, sustainability, and mathematics to name a few. Our solutions are built and supported by these qualified experts, opposed to developers who are frantically cobbling together a solution that they can rush to market.

It takes years to develop a foolproof system for handling massive quantities of complex data. In a recent piece written by President of Locus, Wes Hawthorne, he delves into the importance of having accurate, audit-ready ESG reporting. Data quality and reporting accuracy have been pillars of Locus’ success since our founding in 1997.

Do more for your ESG program than applying a cookie-cutter tool meant to meet the bare-minimum needs of the many or an application that is new and untested, and unfit for your requirements. Our robust solutions help you manage impact, create reports with ease, and meet your ESG goals effectively.

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5 Keys to Navigating ESG

With sustainability practitioners strained to deploy limited resources internally to navigate the myriad of standards and frameworks to meet the growing appetite for environmental, social, and governance (ESG) information, we continue to ask, “Isn’t there an easier way to do this?” Anyone who has worked to align standards and frameworks, corral internal champions around disclosure requirements, and marry quantitative performance data with narratives on management approach, knows that this is no easy feat.

The uphill battle to integrate data and other systems is often complicated by trying to pull others along in the organization—regardless of where their hearts lie.

So how is it that we can focus in on what’s relevant and minimize the reporting burden on others?

At the risk of seeming to oversimplify the process, I’ll attempt to breakdown some of the concepts mentioned here as a means for peering through the gray. The following five points have been central to my years of guiding organizations through this process.

1: Navigating the myriad of standards and frameworks:

Not only are there the long-time warriors (the Global Reporting Initiative, CDP, and the Sustainability Accounting Standards Board now merged with the International Integrated Reporting Counsel labeled as the Value Reporting Foundation), there are also larger north star initiatives, like the United Nation’s Global Compact or Sustainable Development Goals, and even those that are industry specific, like the Global Real Estate Sustainability Benchmark. There are also the investor-driven ratings and rankings, supply chain initiatives, and mandates disclosure requirements that organizations must contend with. Not everyone is blessed with sustainability departments powered by specialists of all types. In fact, most are managed by 1-3 individuals who often juggle multiple roles until they can prove the importance of an integrated strategy and leverage additional support. In the end, standards alignment comes down to one person dropping all disclosure requirements into an excel spreadsheet to make sense of all that is needed. There is no harm in this. It is a recommended first step in trying to better understand the nuances between all that is asked and whether it is possible to pull data to meet various requirements. The goal eventually, of course, is to automate reporting against all applicable requirements. Usually companies start by developing a comprehensive list of all that they can disclose, either initially or in the future. The key is not to exclude areas that the company is unable to immediately disclose on, but to press the “pause” button and keep those items in the horizon as areas that should be revisited in the future. Instead, stating where one is in the journey to retrieve information and manage inherent risks, while providing data for what is possible, is recommended. In that, clear “omissions” or “exclusions to the boundary” should be noted.

2: Determining the qualitative vs. quantitative:

Be it labor standards, human rights, training and education, resource consumption or greenhouse gases, there are both qualitative and quantitative features to grasp and disclose an organizations’ impacts. Granularity is based on what the organization is trying to achieve by pursuing efforts in a certain area. Will the level of detail provide a sharper view of potential risks? Will the data enable decision-making? Will it demonstrate the level of transparency the organization is willing to provide to match disclosure among its peer group? Will it result in greater recognition or even, leadership status? By asking these questions, organizations can determine their priorities and narrow in on data tracking mechanisms to pull, house, and analyze detail. Keep in mind, however, taking inventory always presents surprises. Try not to go down a rabbit hole searching for data that doesn’t exist or isn’t relevant considering the larger footprint. Report on what is available and explain what is being accounted for, what is missing, and why.

3: Pull others along:

Frameworks, data, and the endless requests for disclosure are enough to make anyone question their sanity—let alone the ongoing education that is needed to bring others along the path towards greater sustainability. Up until about five years ago, the role of the sustainability champion was often a lone wolf in the organization who felt committed to the charge. Boards were not involved, and it was because few companies saw sustainability as a strategic imperative. Today, it’s no longer effective to go at this alone. Markets have begun to regulate this space: the fear of shareholder resolutions, and the inability to access capital due to a lack of demonstrated ESG commitments, risk management, and performance disclosure has catapulted the need to activate players across functions. Regardless of standard, framework, or reporting platform, governance is critical to ensuring that sustainability sticks. It’s not enough to simply describe the organizational and leadership structure, but to describe how and where sustainability or ESG risk management sits within and what the role of the Board is. The sustainability coordinator, or Chief Sustainability Officer’s structure the group to facilitate action. Constant education and hand holding is necessary to inform the working group on the rapidly changing landscape and what is needed to maintain a license to operate from the stakeholder perspective.

4: Minimize the reporting burden:

If it’s not clear by this point, all that matters when it comes to reporting is 1) performance data, 2) an explanation of management approach, and 3) a description of your processes undertaken to identify material matters and manage risks. Stories and imagery provide color but not an overview of what the organization is doing to manage impacts. Begin by structuring your website to highlight data. Embedd data from GRI, the SDGs, and/or SASB indexes as companies such as Ball Corporation, BlackRock, and Coca-Cola. All have focused more efforts on tangible reduction and reuse, rather than creating beautiful communication pieces. This allows them to focus time and resources on doing the work that matters.

5: Data collection:

As the saying goes, “what doesn’t get measured doesn’t get managed.” Pulling data from the ESG pillars and across functions often means that the data collection process tends to take shape like a patch work quilt. Utilizing an integrated, configurable system that can extract and consolidate data into a single source of truth allows companies to focus on results, rather than begging for data from sources internal and external to their organization. Where possible, automate the data collection process, and provide decision-making analytics that can be transferred to various disclosure platforms to streamline the process and further minimize the reporting burden.

Hopefully, these points will help reassure you that you’re on the right path. The reality is, there is no easy way. Many of the front movers know this all too well. Their approach has taken years to solidify. In addition to the 5 points listed above, try to remember that it is important to just get started. Improvements can be made over time and lessons aren’t typically learned through perfection.

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About the Author—Nancy Mancilla, ISOS Group

Ms. Mancilla is the CEO and Co-Founder of ISOS Group, a full services sustainability consultancy firm also recognized for its leadership as a GRI and CDP Certified Training Partner in the U.S. Since establishing the company, Nancy has orchestrated 300+ Certified Trainings, co-taught MBA programs, regularly serves as a conference guest speaker and thought leader on the non-financial reporting process. In addition to educational services, ISOS Group provides organizations of all types with sustainability assessments, reporting guidance and external assurance.

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Getting Started With ESG Is Less Daunting Than You Think

One of the most frequent questions we get asked when it comes to ESG is, “Where do I begin?”. For many companies, the process of getting started with a new ESG program is the most difficult step. With nearly 1,700 frequently evolving ESG reporting protocols available, it can be daunting just to determine where to begin. This uncertainty associated with ESG reporting can unfortunately paralyze any progress for several organizations. The good news is that ESG doesn’t have to be an ‘all or nothing’ effort. In fact, getting started is a simple and straightforward process.

Regardless of what ESG reporting program you choose (or eventually choose), there are many common elements that can form the basis of your organization’s ESG program. Although social and governance KPIs have been undergoing rapid evolution recently, environmental KPIs have been comparatively stable. Environmental KPIs tend to be quantitative with established calculation methodologies, whereas the definitions and determinations as to what is important regarding societal and governance factors and how to measure them are still being evaluated globally. Considering this, many companies elect to start their ESG reporting program using monitoring and collecting environmental data.

Additionally, almost all reporting programs include the concept of a baseline, or a time period against which future ESG metrics are compared. Developing the baseline requires a good understanding of your organization’s current ESG performance, which of course requires a good set of data. Universal data that is required for any ESG reporting program includes data on greenhouse gas, water quality and consumption, waste, and energy consumption. The bedrock of an ESG program starts with the collection, management, and reporting of these data. This information can also help to inform further decisions for your ESG program, including which framework is most appropriate for your organization.

As part of this effort, you should make sure you are collecting and calculating your ESG metrics with software that supports the required complexity of environmental data. Often the companies who suggest a turnkey solution to ESG reporting are not only lacking in social and governance data, but are woefully underprepared and unequipped to handle environmental data as well. With over 25 years of experience in creating software for environmental reporting, Locus Technologies is equipped to help organizations collect and report ESG data in a way that others aren’t.

Contact Us to Get Started Today

Combat Green Skepticism with Accurate ESG Data

Greenwashing, or the presenting of misinformation to create a sustainable image, is common among organizations. While many consumers may not be aware with the term greenwashing, they are aware of how common it is. In fact, consumers are so aware of this trend that they’re overwhelmingly skeptical of all organizations presenting themselves as sustainable. Four out of every five consumers have expressed skepticism of organizations claiming to be sustainable. So, how does your company express your sincere desire to take steps that are sustainable for the environment? With accurate and transparent data.

With 2/3 of consumers seeking out companies that emphasize sustainable practices, the temptation to greenwash is certainly enticing. Sometimes it comes in the form of making irrelevant claims, like saying a product is free of something that is banned (like CFCs). Other times it comes in the form of half-truths, like saying that a product is sustainably sourced, despite the manufacture of the product being unsustainable or harmful to the environment. Any way you look at it, the demand for sustainable products is so high, as is the temptation to greenwash. The truest, and least disputable way to combat greenwashing is by collecting and reporting your data accurately.

Sustainability is now a broad umbrella term that encompasses not only environmental practices, but social and corporate governance as well, better known as ESG. This broadness reflects a change in consumer attitudes from generation to generation, perceiving more than environmental practices as important while holding environmental practices to the microscope. In fact, over 75% of Gen X consumers say that they have to trust a brand before purchasing from them, and over 85% of Millennial and Gen Z consumers say they same. This trust encompasses everything from the use of organic ingredients to company wellness practices, and is reinforced with buying practices. To do environmental, social, and corporate governance right, organizations have taken a data-first approach.

With Locus Technologies, you can take concrete steps towards achievable ESG goals. By taking a fully-digital approach, your organization can make the transformation by maintaining full visibility of raw sustainability data, calculations, and other factors, and also keeping data easily accessible and traceable. Reports are fully traceable back to the source, and are indisputable, allowing for increased trust from consumers or anyone else who has a stake in this information. Given that 7/10 consumers are willing to pay a premium to sustainable-minded companies who are fully transparent with their efforts, this move can provide a significant return on investment in the short term.

The benefits of data centralization also go beyond combatting greenwashing. A fully-digital and streamlined process will improve your ability to handle the data appropriately, and will ease any auditing and reporting responsibilities moving forward, making the entire process cheaper and faster.

With brand loyalty and purchasing decisions being reliant on sustainable decisions, the move to accurate and transparent data management is key. By implementing Locus Technologies ESG software, your organization can employ cutting-edge solutions to combat greenwashing by promoting your sustainability goals and actions transparently and accurately.

Request an online demo of our ESG solutions

Adapting to New ESG Roles and Responsibilities

A growth in commitment from proactive organizations towards heightened ESG standards means that many professionals have seen their duties not only increase, but they have been made more diverse than before.

Preparing for Your ESG Audit

Recently, Locus CEO Neno Duplan described the need for credible ESG Reporting, and the evolving corporate, financial, and political drivers leading to the proliferation of ESG reporting. Here, we look at some of the practical aspects of building and maintaining an ESG reporting program. After leading audits for greenhouse gas emissions and other ESG metrics for the past ten years, I wanted to highlight the pitfalls that many organizations face when it comes to supporting their ESG reports, and provide some solutions to improve their auditability.

With the current wave of popularity for Environmental, Social, and Governance (ESG) reporting, many organizations are scrambling to assemble reports that cover these metrics. While a spreadsheet can be readily put together with enterprise-level totals for emissions, resource consumption, community involvement and other metrics, most of those reports won’t stand up to a full audit process. And increasingly savvy investors and stakeholders aren’t necessarily willing to take these reports at face value.

Whether you are getting started on a new ESG reporting program for your organization, or transforming an existing CSR program to cover ESG elements, it is critical to plan ahead for ensuring your final report is audit-ready. That means not only maintaining full visibility for the raw data, calculations, and various factors that went into the report, but also making that data easily accessible and traceable. Consider the case where a stakeholder is comparing two ESG reports where the overall metrics are similar. But one of the reports has a fully transparent data flow back to the source, and the other report can only be verified through a lengthy documentation request to a consultant. Although the final reports may be similar, the stakeholder gains more trust with less effort when the supporting data is readily available.

There is quite a bit of uncertainty over how comprehensive ESG audits should be. Current audit protocols for ESG reporting vary widely. Organizations like the Center for Audit Quality have put forth guidance on how ESG reports could be audited. However, there are no strict requirements and little consensus on what should or should not be included in the audit of an ESG report. Established reporting frameworks like GRI, SASB, and TCFD have programs in place for assurance of those reports, which include a third-party audit for the accuracy and completeness of that data. However, organizations have the choice of achieving either limited assurance or reasonable assurance, and they may choose to have only select metrics or disclosures audited, or they may opt to undergo a more thorough examination that covers the full report. That flexibility is likely to change, however, as stakeholders apply additional pressure for better quality and reliability in ESG reports.

So how do you go about developing an ESG program that can meet current and potential future audit requirements? Based on my auditing experience, here are a few key concepts to keep in mind:

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1. Centralize your data flow

Centralize your data flow, with consistent data quality controls. A unified data collection program is key to streamlining the audit process and having greater confidence in your report. Historically, reporting for ESG has been the responsibility of multiple departments with little intercommunication. The result of that separation is widely different practices when it comes to assuring data quality. Integrations between systems can help and are sometimes the best option to bring together data from different sectors of the ESG report. But ultimately, a consistent approach to the overall data collection and processing effort will result in a much smoother (and cheaper) audit.[/sc_icon_with_text]

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2. Automate data collection

Automate data collection wherever possible. Auditors know that manual data entry or transcription is typically one of the major weak points in any data collection program. We’re trained to focus in on those parts of the process with additional data sampling and review to find errors. If you have any opportunities to collect data through automated tools or direct connections to reliable data sources, those tools are the quickest ways to shore up those potential weaknesses, and also have the benefit of substantially reducing your ESG data collection effort.[/sc_icon_with_text]

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3. Maintain documentation

Maintain documentation throughout the data collection process. During one audit years ago, I asked the reporter for their documentation on their electricity consumption, and they pointed to a scribbled sticky note on their wall. Of course, that didn’t quite suffice for audit purposes, and neither does an email from a co-worker, or any number of other data sources that reporters have tried to pass off as their documentation. For inputs that derive from sources outside your organization, like utility invoices or supplier surveys, data are considered more reliable if they are directly tied to a financial transaction between entities that do not share ownership. The general thought is that if the data quality was considered sufficient to exchange money based on the value, it can be considered reasonably accurate. If that is not the case, ideally an attestation, or at least the source’s contact information, should be maintained for each data source. For data inputs derived from internal sources (e.g. meter readings), the documentation will need to include the data itself, as well as information on the devices used and their maintenance (e.g. calibration records).[/sc_icon_with_text]

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4. Avoid black box calculators

Given the many issues with spreadsheet data handling including lack of unification, security, and error proliferation and persistence, many organizations are correctly concluding that a dedicated software application provides numerous process improvements for ESG reporting. But unfortunately there are many software tools that take the input data and generate an ESG report with little or no visibility into how the input data were processed or calculated. And to an auditor, those part of the process are critical to achieving assurance for an ESG report. Sometimes the data processing steps can be viewed, but they’re buried within the configuration settings and require navigation by a system administrator to extract. In this situation, auditors can try to replicate the calculations from the raw data on their own, and attempt to yield the same results. This approach can work for many accounting metrics, which are largely standardized, and easily replicable from the input data. However, other metrics like Scope 3 emission calculations can follow a number of different methodologies with different factors. Without knowing which methods and factors were used, the auditor is unlikely to yield the same results. Having a transparent calculation engine that can visualize the data flow and processing can make a huge difference when it comes to your audit.[/sc_icon_with_text]

Assembling an ESG reporting program is a significant undertaking, and it may be a monumental effort to simply get the report done, especially if you’re just getting your program started. But to fully set yourself up for long-term success, be sure to assess the audit readiness of your ESG program. Even though ESG auditing is not yet fully codified, more formalized audit protocols are expected soon. Some simple considerations early in your program development will make sure you are prepared for whatever those audit requirements may include.

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About the Author—J. Wesley Hawthorne, President of Locus Technologies

Mr. Hawthorne has been with Locus since 1999, working on development and implementation of services and solutions in the areas of environmental compliance, remediation, and sustainability. As President, he currently leads the overall product development and operations of the company. As a seasoned environmental and engineering executive, Hawthorne incorporates innovative analytical tools and methods to develop strategies for customers for portfolio analysis, project implementation, and management. His comprehensive knowledge of technical and environmental compliance best practices and laws enable him to create customized, cost-effective and customer-focused solutions for the specialized needs of each customer.

Mr. Hawthorne holds an M.S. in Environmental Engineering from Stanford University and B.S. degrees in Geology and Geological Engineering from Purdue University. He is registered both as a Professional Engineer and Professional Geologist, and is also accredited as Lead Verifier for the Greenhouse Gas Emissions and Low Carbon Fuel Standard programs by the California Air Resources Board.

ESG Software

ESG Reporting has Become a Business Requirement

In today’s world, organizations must measure and report their environmental performance and adherence to corporate social responsibility (CSR) and environmental, social, and governance (ESG) principles. Stakeholders, including regulators, investors, customers, rating agencies, research analysts, NGOs, and the public, are all starting to evaluate non-financial criteria in addition to companies’ financial health and performance. Companies also must comply with EHS regulations in the jurisdictions in which they operate. While most environmental regulations have been around for half a century, the gathering and reporting of sustainability, CSR, and ESG data is relatively new and is becoming an essential part of corporate annual reports.

Companies are increasingly discovering that data-driven ESG reporting has gone from a “nice to have” to a business requirement. But it’s challenging to keep up with such reporting when a company’s data is in spreadsheets or numerous unconnected silo applications. Companies suffer when their domain experts and others rely on manual and outdated processes to accomplish ever-increasing reporting requirements.

It appears imminent that the U.S. Securities and Exchange Commission (SEC) will in near future regulate ESG disclosure as a requirement by using some kind of universal reporting framework.

Wouldn’t it be nice to have a single enterprise and cloud-based software system to perform all EHS, ESG, and CSR reporting from a single software platform? That is what this article is about.

Sustainability vs ESG

Until recently, it was common to refer to sustainability and ESG interchangeably. But over time, their meanings have grown apart. Sustainability can mean many different things, depending on the discussion context, whereas ESG has become the preferred term for capital markets and has frequently appeared in the headlines. The transition from sustainability to ESG performance indicates a maturation of business practices leading to more precise measurements of a company’s performance, its impact on the environment, and the risk it carries for investors when there is a low environmental performance or spotty compliance with EHS regulations. As a result, companies need to improve the way they collect and track metrics for ESG reporting.

Holistic Approach

To compare companies relative to their impacts on the planet’s climate or well-being, one must take a holistic approach that includes many factors. Among those to consider when assigning a score to a company are:

The magnitude and quality of its overall and coupled emissions to natural media
The efficiency of its operations in water and energy usage
Carbon footprint
Recycling, waste management, treatment, and disposal operations
The transparency and impacts of its supply chains

This holistic approach requires new, integrated, and interactive software tools. Such software, equivalent to the ERP (Enterprise Resource Planning) software that made its appearance in the early nineties, should provide complex tracking of all kinds of emissions linked to company-owned assets and services in real-time (Scope 1 emissions). It should also include emissions attributable to its supply chain, known as Scope 2 and Scope 3 emissions. Old ERP software applications integrate the processes needed to run a company in a single system: planning, purchasing inventory, sales, marketing, finance, and human resources. However, they do not typically integrate any technical information or activity related to emissions, waste, climate, environmental compliance, etc. Never mind that much of the ERP software in the market today is obsolete, running on the outdated technology of the seventies and eighties, and hard to integrate with anything.

The traditional approach of bolting-on another application to an existing software infrastructure is not the road to go down concerning ESG data collection and to report. Emissions tracking, sustainability, and other environmentally related verticals are typically “heavier” and more resource-intensive than antiquated ERP systems can handle without significant investment. Many legacy ERP systems, caving in under their weight, are hugely and unnecessarily complicated and are slowly being deprecated. New, cloud-based Software as a Service (SaaS) technologies hold more promise as they allow for the fast deployment and easy integration and sharing with third-party applications, suppliers, consultants, and even regulators. One such example is the Locus Platform or only LP. It is a SaaS that automates data collection, management, and reporting. It is of financial-grade, auditable, available, and actionable 24/7 from anywhere. This platform integrates EHS compliance and ESG reporting applications under a single system of record, giving users all necessary tools to optimize their compliance, sustainability management, and reporting.

All-in-one solution for Sustainability, EHS Compliance, and ESG Reporting

To kill two birds with one stone! Or perhaps a friendlier version for bird-lovers is a German version, “mit einer Klappe zwei Fliegen schlagen” – which means to kill two flies with one swat. Or kill two mosquitoes with one slap! This English language idiom is not to be taken literally but instead refers to a single activity or action that accomplishes two (or more) goals or tasks. And that is precisely what any advanced EHS/ESG software should do.

Over the last twenty or so years, companies have spent considerable resources (in both time and money) buying and installing such EHS compliance-related verticals as permit management, waste, incident reporting, water quality, air emissions, greenhouse gases (GHG), sustainability, and so on.

More than one acquisition is often needed to cover their reporting needs, resulting in an assortment of tools that may or may not be compatible with one another.

As I mentioned at the beginning of this blog, a new acronym, ESG, has recently shot to prominence. C-level executives are asking their EHS managers a question “Do we need more software to manage our ESG reporting? Smart companies should not rush and start searching Google for “ESG Software.” Instead, they should take a hard look at what they have on EHS compliance and sustainability management and augment it with ESG reporting. After all, everything that needs reporting or is worth reporting under the ESG acronym probably already exists and is hidden in their EHS compliance software, provided they selected the right one. Companies that have implemented integrated EHS compliance and sustainability management systems may already have most of the ESG data they need to report within their existing applications. If they do not, or if they have a “mutual fund” portfolio of EHS software already installed in unconnected silo applications, this is the time to clean house and switch to a unified reporting platform that integrates EHS and ESG into a single system of record and reporting. Companies that head down this path would not just be “killing two birds” but more: they would lower their costs, meet their new reporting needs, gain a better understanding of their environmental impacts, and potentially enhance their ESG reputation.

Locus Platform

Locus specifically built its configurable Locus Platform to unify many current and future applications on a single SaaS platform. The LP offers a wide range of features and functionality to power sustainability measurement, management, and reporting across the entire corporation. But it also provides a launching pad for EHS-related and unrelated apps that are interoperable and share relevant information, thus avoiding any double input. Among its features are the following:

It offers Integrated IoT streaming of data from sensors, smart meters, mobile phones, or any physical device with an IP address.
It is AI-ready and Blockchain-ready to help with data analyses.
It offers built-in workflows and rules.
It has robust business analytics tools and powerful reporting engines.
It has a fully integrated GIS system.
It has a pre-built library of entities and modules that allows users to quickly assemble all new applications without software developers’ help.

While EHS compliance applications are more comprehensive and dive deeper into the root causes of contamination and emissions, ESG reporting is much less complicated and requires fewer data to report and less scrutiny of such data. For example, federal and state standards such as Discharge Monitoring Reports (DMRs) require detailed water quality reporting, requiring companies to prove that their releases fall within allowable quantities (flow volume) and that chemicals in discharge samples do not exceed regulatory limits for the chemicals of concern. Consequently, the software to manage water quality for EHS reporting needs to provide automated tools to prove that: samples were collected correctly, sample holding time was not exceeded, the receiving laboratory tested samples using proper protocols, lab equipment, etc. Labs also must maintain calibration logs for equipment used in testing, testing details, and so forth.

None of these QC results and associated metadata are necessary for ESG reporting under voluntary reporting protocols such as the Carbon Disclosure Project (CDP), the Global Reporting Initiative (GRI), The Climate Registry (TCR), or GRESB, the leading ESG benchmark for real estate and infrastructure investments. Those protocols mainly require information to be assembled on volumes (quantities) of clean water used, water sources, and contaminated water discharge volumes. They may also include some identification of chemicals in releases but with no details and no testing protocols required. The GRI 303 standard on water and effluents, for example, requires companies to collect information on water use from withdrawal to consumption and discharge and to report on associated impacts on people and ecosystems, including at a local level. This standard enables investors to assess a company’s overall exposure to water risk, as it addresses the whole supply chain.

There are plenty of overlaps in this undertaking. Smart software like the Locus Platform can help avoid any double input between EHS compliance data and ESG reporting. For example, once inputted, facility information is instantly available to all apps, whether the final output of the app is for EHS or ESG reporting. If a spill incident is created and recorded in the EHS Incident App, another app for waste or groundwater contamination can track and manage that spill’s consequential emissions. Even a small spill could become costly if the spill creates long-lasting contamination of soil and groundwater below it. Reporting for spill under EHS compliance regulations is very different from reporting for ESG, yet the two can use the same database. Examples like this are numerous.

Locus continuously adds new features to its Locus Platform to expand EHS, Sustainability, and ESG interoperability and avoid and minimize data’s double input. Companies need a single system of record to house their sustainability data, EHS Compliance, and ultimately report ESG information across multiple reporting standards. Locus’ ESG SaaS delivers in this regard. Moreover, it can grow with customers’ needs thanks to its off-the-shelf configurability.

In short, the Locus Platform is an all-in-one sustainability management software tool that helps companies streamline data collection, improve data quality, benchmark performance, and communicate more effectively with internal and external stakeholders. Locus’s software automates collecting, reducing, and managing data to monitor and track critical metrics around EHS, CSR, and ESG performance. Once the data is in the Locus Platform, the software creates ESG, sustainability, and other reports adhering to multiple reporting standards to improve communications with stakeholders and show greater transparency.

Software Tools for Reporting to Multiple Regulatory or Voluntary Bodies

Many large companies must report to various regulatory or voluntary bodies. A company’s software of choice should support all the major reporting requirements to avoid double input or separate calculations for some jurisdictions. This is particularly true for GHG reporting.

When selecting its software system of record for EHS and ESG reporting, a company should strive to “enter once, report many times.” The gold standard is to have a system configured to report to multiple agencies from a single dataset. Before selecting software, companies should review their reporting requirements to see if their software handles them. Essential reporting requirements include state or federal regulations, internal CSR, and ESG based on whatever standard their organization adheres to, such as CDP, GRI, or more recent World Economic Forum (WEF) attempt to standardize many voluntary standards.

Companies also must consider export formats. For example, when selecting a GHG management software, the company must ensure their software of choice includes exports to XML, a standard format for Environmental Protection Agency (EPA) and California Air Resources Board (CARB) reporting, and an option for reporting to other agencies. Having such outputs easily generated from the software will save time and money during the reporting season. The XML report generation capability allows facilities to directly upload their GHG data instead of completing the complex web forms found in the EPA Electronic Greenhouse Gas Reporting Tool (e-GGRT) and CARB reporting worksheets (Cal e-GGRT).

Locus provides direct XML exports to the GHG application in its Locus Platform software. Locus is the only software vendor that is an approved GHG verifier by the California Air Resources Board (CARB) under AB 32, the California Global Warming Solutions Act of 2006. Since the program’s inception, Locus has performed more GHG verifications than any other company and learned much by observing GHG reporting practices at many companies. As a result, Locus has prioritized enhancing its GHG software to make it easier for customers to manage GHG emission inventory tracking and reporting requirements. Locus’ GHG application is fully integrated with compliance tracking, asset management, and IoT automation (including remote sensing). This ability to generate XML reports further streamlines customers’ report submission process to the EPA and CARB.

For example, data entry for EPA and CARB is consolidated in the GHG application, eliminating the need to maintain separate agency spreadsheets and software. This supports robust trend tracking and reporting, reducing data entry, reporting time, and error opportunities. For many greenhouse gas subparts, including Subparts C, D, W, and NN, the software automatically generates XML reports. These can be easily configured for any greenhouse gas industry segment.

From our experience, many of our customers have experienced frustration with the speed and difficulty of entering their data into the state and federal GHG reporting tools. The Locus Platform XML reporting tool lets customers bypass those clumsy interfaces completely. This saves time, helps companies avoid transcription errors, and ensures consistency with GHG data submitted to multiple reporting programs. As more and more regulatory and voluntary programs embrace automated report submittal through the XML format, Locus continues to expand this functionality to simplify reporting for our customers.

Conclusions

ESG reporting and EHS compliance are inherently cross-functional and coupled activities. Managing them together rather than separately is better. Locus built its platform on a highly secure, scalable, configurable, and efficient multi-tenant software platform. The traditional approaches to using a separate app or a spreadsheet for EHS compliance, sustainability management, or ESG reporting were ripe for digital transformation to a single platform of record. This is the main reason that we built the Locus Platform from scratch to take advantage of the latest cloud technologies and flexible and domain-driven reporting requirements.

Quality of data and standard protocols remain one of the biggest challenges to evaluating companies’ ESG performance. Such data are only credible if they come from the existing sources of EHS compliance data that are much more scrutinized and verified by regulators. Any potential conflict between two sets of the same data can spell disaster for the reporting entity. The perceived value of sustainable investments and practices is inevitably linked to data accuracy, consistency, and reproducibility.

The Locus Platform empowers companies to gain a holistic view of their sustainability performance by providing the means for them to assemble and report their EHS and ESG data from within a single system. Sustainability managers need comprehensive digital tools and real-time, AI-driven insights to keep up with the latest ESG disclosure requirements, trends, and stakeholder requests for information. Whether an organization is just getting started with sustainability initiatives or doing it for a while, Locus Technologies combined EHS and ESG software, explicitly tailored for multi-jurisdictional and multi-media reporting, can help companies make better and faster decisions and reduce the reporting cycle time. By quickly transforming corporate EHS compliance to ESG reporting, companies can improve their ESG score while lowering operational risks and costs. Locus software breaks down silos and provides a stable platform to work collaboratively with diverse teams of experts across the customer organization, its consultants, and its suppliers.

Tag Archive for: Sustainability

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Here are seven red flags to be aware of when selecting ESG software:

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1: Navigating the myriad of standards and frameworks:

2: Determining the qualitative vs. quantitative:

3: Pull others along:

4: Minimize the reporting burden:

5: Data collection:

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1. Centralize your data flow

2. Automate data collection

3. Maintain documentation

4. Avoid black box calculators

ESG Reporting has Become a Business Requirement

Sustainability vs ESG

Holistic Approach

All-in-one solution for Sustainability, EHS Compliance, and ESG Reporting

Locus Platform

Software Tools for Reporting to Multiple Regulatory or Voluntary Bodies

Conclusions

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