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Credible ESG Reporting

Climate change is about to upend the corporate world. Companies that fail to address their impacts on the environment are likely to face a backlash as their lack of effort will not sit well with the public, particularly as climatic changes become ever more severe and prominent. Firms need to react quickly if they want to be “on the right side of history.” The reinstatement and enforcement of canceled or ignored regulations and new standards in many countries will force more firms to report their emissions. But what reporting standards should they use? And how will they compile and aggregate their emissions data to provide credible and verifiable accounts of their activities?

Figure 1: Companies brace themselves for new ESG regulations

These are timely questions to address with the expected renewed focus on the Paris Agreement accords as the United States re-engages with the rest of the world. One place to start is with better carbon-emissions data. Today, few companies even know how much greenhouse gas they or their suppliers emit, making it difficult for them to assess their products or operations’ full environmental impact. Where data does exist, it is often self-reported, inconsistent, or too out of date to be useful. Efforts are underway to fix this, mostly coming from an unexpected source–the push to incorporate environmental, social, and governance (ESG) reporting in evaluating companies’ creditworthiness by financial institutions. Many shareholders and professional investors now believe that investors who are not considering possible impacts related to climate change could be exposing themselves to serious risk.

While climate-related issues are a key component of the E in ESG reporting, it encompasses much more and is measured by various means. Some examples are GHG emissions, water use, generated waste, land usage, and so forth, both in a firm’s direct operations and along its supply chain. In this paper, I intend to focus on the problems and issues associated with such measurements.

Post Covid-19 Economy

In the post-Covid economy, many investors will want to align their investment strategy with accepted science. Many companies, countries, cities, and politicians have pledged to have net zero emissions before 2050 or some other year in the distant future (when those making the proclamation most likely will not be alive). However, to better manage and account for climate change risk and help keep global warming from rising to dangerous levels, investors are increasingly asking whether their portfolios are climate-change friendly in the short term. Pledges where a company hopes to be in 2030, 2040, or 2050 mean little to them.

Far from turning investors away from ESG investing, the pandemic has heightened interest in sustainable portfolios. I expect ESG scores will become as important to investors as financial performance indicators in the coming decade. According to several research analysts, at least $3 trillion of institutional assets now track ESG scores, and the share is rising quickly.

To stay relevant and attractive to investors, companies will urgently need to step up their efforts to minimize their impacts on the climate. Climate change is already causing both severe physical damage and harmful effects on the biosphere. Pushed by mainly younger voters, governments around the world are introducing ever-tougher regulations. Many expect the U.S. to do the same now that Biden has taken office.

ESG Scores as Important as Financial Performance

In the developed economies of North America, Asia, and Europe, there is a movement among some politicians, corporate executives, and investors to shift away from measuring corporations based solely on their financial performance. They want to incorporate climate change as another catalyst — a shift that would involve assessing which firms are “dirtier” than others. This effort’s success will depend on firms providing accurate and verifiable data on their emissions and related discharges.

Data from Morningstar, a research investment firm, show that in the first nine months of 2020, climate-aware funds attracted almost 30 percent of all investments in sustainable fund inflows.

In 2019, this proportion was just 15 percent. Climate change has never been so prominent in the minds of the financial community. But while awareness of climate change issues is rising within financial institutions, interest and concern in the U.S. have been suppressed in recent years by the very regulatory agencies that are supposed to be managing it. But more on that subject later.

Figure 2: Climate change risks are real.

To attract capital, many companies will have to adjust their reporting to this new reality. Voluntary reporting of relevant key performance indicators (KPIs) will not be enough as governments develop more and better standards. “Markets need high-quality, comparable information from companies to enable informed capital-allocation decisions in the face of climate-related risk,” said Mary Schapiro, a former U.S. Securities and Exchange Commission (SEC) chairwoman. we can predict where we will be 20 or so years from now, we need to know where we are today. Only reliable, verifiable, and normalized data across industries can tell us that.

How To Measure Companies’ Sustainability Performance?

Measuring companies’ performance relative to climate change or sustainability is a challenge even with a set of agreed-upon standards. However, no such meaningful and accepted standards exist, let alone reporting rules or data interchange specifications. Some measures are slowly emerging, such as carbon emissions equivalents, energy consumption per something, water consumption, and type and quality of discharges. More effort is needed to standardize reporting and compare climate risk for companies in different industries. Besides the lack of standards, there is also a lack of unified enterprise software tools to make the reporting job easier.

Figure 3: Energy consumption reading, real-time upload and reporting to Locus Platform

In the absence of such standards and guidance, I expect some investors to place their bets on the least polluting steel manufacturing company or the traditional car manufacturer that has invested the most in electric vehicles. Or they may invest in companies that have set ambitious (future years) emissions targets, i.e., committing to become carbon neutral by some year in the distant future. While an improvement, all of these do not provide a clear picture of the risk associated with an investment. Who will be around 20 to 30 years from now to hold companies, individuals, or politicians accountable for “future-looking statements and predictions” that they are making today? Certainly not the people making those announcements. Moreover, at that time, a new generation will be focused on solving their own unimaginable or unpredictable problems today.

Since President Nixon’s 1974 State of the Union — where he made energy independence a national goal — a bipartisan procession of presidents has regularly made similar declaration calls to reduce America’s dependence on foreign oil. None of them was correct when or how the country would reach that noble goal, and nobody ever held them accountable for their failures. I expect the same will happen with today’s predictions on carbon neutrality by so many CEOs.

ESG Standards

One of the most problematic ESG reporting issues is that there are no globally enforced reporting and compliance standards for ESG and other sustainability information. For financial reporting, at least, there are standards in the form of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Nowhere is corporate “book-cooking” more on show than in firms’ sustainability reports. Today, 58 percent of companies in America’s S&P 500 index publish one, up from 37 percent in 2011, according to Datamaran, a software provider. Among the photos of pollution-free blue skies, blooming red flowers, and smiling children of all races, firms sneak in such ESG data as their carbon footprint, waste generation, and water usage. As expected, all charts showing these data trend downwards, like an inverse hockey stick. But the information in the sustainability reports differs wildly from firm to firm, making it impossible to draw comparisons based on their ESG data. Unlike financial data that are audited and include the familiar balance sheet, income statements, and cash flows, there is nothing similar on the ESG side. This situation arises from the absence of widely adopted standards for ESG reporting. The most obvious sign of this mess is that, unlike financial statements, ESG scores assigned by different rating firms poorly correlate with each other, rendering their ratings useless for smart investors.

With the U.S. EPA missing in action over the last four years, five voluntary ESG standards have come to dominate the scene. The Global Reporting Initiative (GRI) focuses on metrics that show firms’ impact on society and the planet. The Dow Jones Sustainability Indices (DJSI), launched in 1999, are a family of indices evaluating the sustainability performance of thousands of companies trading publicly. By contrast, the Sustainability Accounting Standards Board (SASB) includes only ESG factors that have a material effect on a firm’s performance. The Task Force on Climate-related Financial Disclosures (TCFD) and the Carbon Disclosure Project (CDP) is chiefly concerned with climate change. They specifically focus on companies’ exposure to climate change’s physical effects and potential regulations to curb carbon emissions. There are still other regulatory standards worth mentioning: AB32, the California Global Warming Solutions Act of 2006, and the EU emissions trading system (EU ETS) that is a cornerstone of the EU’s policy to combat climate change and is its essential tool for cost-effectively reducing greenhouse gas emissions.

GRI is the most popular of the voluntary standards, in part because it is the oldest, founded in 1997. It has been embraced by about 6,000 firms worldwide. However, all these standards are based on voluntary reporting and have no teeth. Absent real climate change regulations and standards, many financial institutions promote one of these standards.

To further complicate matters, the number of ESG standards in the world has grown from around 700 in 2009 to more than 1,700 in 2019. That includes more than 360 different ESG accounting standards set primarily by various financial institutions or rating agencies. To say the situation is chaotic is an understatement. Last September, the World Economic Forum (WEF) announced a new set of ESG metrics for firms to report, making the current state of affairs even more confusing. These new metrics have received the backing of four large accounting firms. The Davos agenda for 2021 is: “How corporate leaders can apply ESG tools to help overcome global challenges.” Let’s hope they make some progress between their martinis and skiing.

The WEF stressed that this is not yet another new standard but a collection of useful measures picked from other standards. The intention, they claim, is to simplify ESG reporting, not to add to the confusion. But that is exactly what this mixture of standards does.

The IFRS Foundation, a global financial-accounting standard-setter, is considering its ESG standard. Moreover, the EU is planning rules that will force big companies to disclose more ESG information; as of the beginning of 2021, it is still thinking about which measures to use.

These efforts fuel demand for normalized ESG ratings and a uniform set of reporting standards. The goal is to create a single score from disparate non-financial indicators, such as a firm’s carbon emissions. The proliferation of standards hinders comparability. Simplification is needed. Many complain that voluntary reporting lets companies cherry-pick positive results by taking reporting numbers out of context.

Some have pushed for an ESG equivalent to the GAAP used in financial reporting. But these took years to agree on, and there are still sizable differences between the U.S. and the EU in applying them. Before regulators can establish any accounting-like standards, they must first base them on pure science and scientific calculations. Many such standards already exist in various U.S. EPA environmental compliance reporting requirements such as the Clean Water Act, Clean Air Act, or California AB32 for greenhouse gas emissions.

Instead of aggregating many voluntary reporting standards developed by non-scientists, lawmakers should aggregate the existing reporting requirements that have been developed by federal and state agencies under existing programs over the last 50+ years. A unified reporting schema and associated enterprise, cloud-based software to aggregate it should be the ultimate objective. We do not need to create yet more regulations to institute climate change regulations. What we need to do instead is synchronize, unify, and coordinate existing rules. Almost every current environmental law already has built-in components that relate to climate change. For example, many voluntary reporting programs like GRI or CDP require companies to track waste or water consumption and discharges or air emissions. And all of these are already regulated by EPA.

Figure 4: Water discharge reporting. Under President Biden, companies may face new water discharges, carbon emissions, and other sustainability measures.

Voluntary standards reporting requirements lack the rigor and comprehensiveness of waste management requirements developed under the EPA RCRA program, water quality management under the EPA Clean Water Act, or air emissions management under the Clean Air Act. Why duplicate efforts if they do not bring added value? The EPA’s cradle-to-grave hazardous waste management system, for example, provides the critical foundation needed to keep America’s land and people safe from hazardous materials. Added reporting on waste under GRI or CDP brings no additional value. The Resource Conservation and Recovery Act (RCRA) passed in 1976 to set up a framework for properly managing hazardous waste is far superior to any voluntary reporting programs of recent years.

Likewise, Title V of the 1990 Clean Air Act Amendments requires all major sources and some minor air pollution sources to obtain an operating permit. A Title V permit grants a source permission to operate. The permit includes all air pollution requirements that apply to the source, including emissions limits and monitoring, record keeping, and reporting requirements. It also requires that the source report its compliance status concerning permit conditions to the permitting authority. None of the voluntary programs has similar requirements.

How are Firms Rated on their Climate Change by Financial Analysts?

Many would-be investors are confused because there is no standard terminology for describing and defining sustainability and other ESG reporting components. The resulting variability in the quality, quantity, and relevance of disclosures prevents investors and stakeholders from getting the information they need. Rating firms use teams of analysts, AI-driven software algorithms, and scattered data from companies to collect and massage ESG information. They then convert this information into a single score. And how is this score used? Some customers of these rating firms seek to gain an investment edge; others want their money to benefit society and themselves. But the ratings are not yet ready for the critical role they are being asked to play.

A recent report by the Governmental Accountability Office (GAO) in July 2020 emphasized that ESG disclosures and reporting are not always clear or helpful for decision making. If reported information is not useful for decision making, we must ask, what purpose does it serve in its current state?
As government regulations on heavy polluters and heavy emissions emitters get stricter and companies see their business models under threat, it only makes good financial sense to implement a system that aggregates all their emissions data (to air, water, or soil) and present it to regulators and investors in an organized, transparent, credible, and defensible way.

Just as the Sarbanes-Oxley (SOX) Act of 2002 provided unexpected drivers for reporting the environmental liability on the balance sheet of publicly traded companies, ESG reporting drivers may help standardize EHS reporting.

U.S. EPA: Missing in Action

The U.S. conversation about protecting the environment began in the 1960s. Rachel Carson had published her attack on the indiscriminate use of pesticides, Silent Spring, in 1962. Concern about air and water pollution had spread in the wake of disasters. An offshore oil rig in California fouled beaches with millions of gallons of spilled oil. Near Cleveland, Ohio, the Cuyahoga River, choking with chemical contaminants, had spontaneously burst into flames. Astronauts had begun photographing the Earth from space, heightening awareness that the Earth’s resources are finite.

In early 1970, due to heightened public concerns about deteriorating city air, natural areas littered with debris, and water supplies, and navigating bodies of water and beaches contaminated with dangerous chemicals, President Richard Nixon sent Congress a plan to consolidate many environmental responsibilities of the federal government under one agency. A new Environmental Protection Agency (EPA) was born. For most of its existence, the EPA fulfilled its mission to deal with environmental problems in a manner beyond the previous capability of government pollution control programs.

The EPA is best positioned to lead the development of reporting standards for climate change that financial institutions can incorporate in their reporting. The SEC regulates the securities markets and facilitates capital formation, helping entrepreneurs start businesses and companies grow. The EPA should do the same to activities that have harmful effects on the climate. The current trend of using voluntary reporting programs gets it all wrong, letting financial institutions determine how best to assess a firm’s environmental impacts. What does the financial sector know about the setting limits for the concentration of toxic chemicals in discharge water or the potential effects of specific air emissions?

Unfortunately, in the last several years, the U.S. EPA has drifted away from regulating climate change. Just last week (January 12, 2021), the agency set higher barriers for controlling the emissions that contribute to climate change, setting new rules that effectively block the federal government from imposing new restrictions on several heavy industries. The regulations establish new criteria for entities that are significant contributors to greenhouse gas emissions. The agency claimed that the law requires determination of who these entities are. With unmatched chutzpah and antipathy toward environmental controls, the agency declared that oil and gas producers, refiners, steelmakers, and other heavy industries don’t meet the criteria. As such, the hamstrung EPA is ostensibly prohibited from regulating these industries’ emissions under the Clean Air Act.

This abrogation of EPA’s role in protecting the environment has never been seen in any other administration. Programs and agencies elsewhere in the federal government have had their missions bent to serve polluters’ sole interests or had their scientific research halted, and their reporting suppressed. Please make no mistake about it. The Trump administration has been quite successful in some of its efforts. Fortunately, though there are anomalies, as is the case with Trump, the overall direction of our attitudes toward the environment in the last 60 years is one in which reduced emissions and sustainability have taken on ever greater importance. In future years, the EPA will hopefully once again assume its leadership role in promoting best practices and the promulgation of meaningful ESG reporting.

As of the writing of this paper, there is already some good news: A federal appeals court today, the last full day of Trump presidency, vacated the Trump administration’s rules that eased restrictions on greenhouse-gas emissions from power plants, potentially making it easier for the incoming Biden administration to reset the nation’s signature rules addressing climate change.

Until the EPA reenters the climate change business, expect that the SEC will follow the European lead and impose enhanced ESG disclosure requirements on public companies.

Software to Organize and Report ESG

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

The magnitude of its overall and coupled emissions to natural media
The efficiency of its operations in water and energy usage
Its carbon footprint
Waste treatment operations
The transparency and impacts of members of its supply chains

This holistic approach requires new, integrated, and interactive software tools. Such ESG software, equivalent to the ERP (Enterprise Resource Planning) software that made its appearance in the early nineties, would provide complex tracking of all kinds of emissions linked to assets in real-time. We need an equivalent of the balance sheet, income statement, and cash flow (emissions flow) across all aspects of companies’ assets and activities.

Ironically, although the term ERP includes “Resource,” it has little to do with real natural resources being affected by its operation. Instead, ERP refers to companies’ software that is used to manage and integrate the critical parts of their businesses but mainly focuses on financial, human resources, and physical asset management to satisfy financial reporting, not asset emissions. ERP software applications integrate the processes needed to run a company with 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.

Figure 5: Traditional ERP software is siloed and applications are pigeon-holed. ESG requires an all-new approach.

The traditional approach of bolting-on another application to an existing software infrastructure will not work to integrate emissions tracking, sustainability, and other environmental and sustainability-related verticals. Many ERP systems are caving in under their weight and are hugely and unnecessarily complicated. New, cloud-based Software as a Service (SaaS) technologies such as the Locus Platform are promising as they allow for the fast deployment and sharing of input, storage, and reporting tools among all key players: companies, investors, and regulators in a single system of record. One new software technology, Blockchain, is up-and-coming.

Blockchain for ESG

Though created as the digital ledger underpinning bitcoin, Blockchain has since been adopted by various industries for applications outside the realm of finance and cryptocurrency. But the potential for this technology far eclipses its current uses. Alongside the growing expectation for better ESG reporting, blockchain technology has the opportunity to enable ESG reporting to become more transparent, secure, consistent, standardized, and useful.

At first glance, the convergence of Blockchain with ESG reporting might seem to be contradictory, but a more in-depth analysis of trends shows its value. Blockchain has rapidly transformed into a financial reporting and attestation tool that has caught the attention of many key decision-makers and technology drivers. At the same time, the importance of ESG has never been more pronounced. Combining the two could be the key to making ESG reporting more straightforward and more meaningful. The broader trends of both are alike: each has been steadily making inroads into organizational management and the reporting landscape. The difference is that now, with accelerated digital transformation and automation, both broader trends have moved into a much sharper focus.

Blockchain technology is ideally suited for the complexities of tracking a global supply chain. Improving the traceability of supply chains is old news in terms of goods, but supply chains are much bigger than that. Securing the information that drives business decision making is where Blockchain can deliver significant value. Blockchain for ESG purposes is gaining traction already, with many pilot platforms being launched and tested in the last year. For example, two hospitals in the U.K. are actively using blockchain technology to help maintain the temperature of coronavirus vaccines before administering them to patients. Several off-the-shelf blockchain ledgers can provide authentication and corporate oversight systems. You can read more here: Blockchain Technology for Emissions Management.

Blockchain technology will allow companies to track resources from the first appearance in their supply chain, certifying their products’ compliance with regulations and their quality. Blockchain technology would enable government agencies to effectively aggregate emissions quantities and origins across geographies, industries, and other criteria. More importantly, all parties would need only one software system of record to avoid constant synchronization, submittals, and reporting requirements. The open question remains: Who will run it, and who will pay for it?

Though their data may be more transparent, corporations stand to benefit considerably from adopting a technology in which all their emissions and other data reside in a single system of record. Star performers, as well as laggards in their factories and supply chains, could more easily be identified.

Along the way, companies would undoubtedly lower their operating cost and, at the same time, reduce the dizzying number of unconnected, heavily supported, siloed software applications they currently operate to keep in compliance with existing environmental regulations.

Figure 6: Blockchain and ESG, a powerful combination to tackle climate change.

Contact us to learn more and get a quote on Locus ESG solutions

Top 10 Enhancements to Locus EHS Compliance Software in 2020

Let’s take a look back on the most exciting new features and changes made in Locus Platform during 2020!

Sustainability is More Important Now Than Ever

The global economy is currently being tested on a magnitude that we have never witnessed before. The effects of COVID-19 have pushed the limits of individuals, and the organizations that they run. As we collectively face short-term problems related to the pandemic, long-term effects of climate change have, in some ways, been magnified. When the dust settles, and we tackle COVID-19, we will still be facing the consequences of climate change. It is now, however, not after COVID-19 is controlled, that organizations must make steps towards tackling environmental issues. On a positive note, there is a return on investment in sustainability, and there are pragmatic ways of achieving sustainable goals.

The connection between saving money and resources and investing in sustainability is well known. Year after year, sustainable projects result in billions of dollars in savings for the companies investing in them. By 2030, return on investment in sustainability will be $26 trillion. And while those companies investing in sustainability have better numbers, they’re continuing to push for higher sustainability goals, as are government agencies. Companies not making these investments are not only missing out financially, but they are falling behind when it comes to long-term preparedness. Without a doubt, the organizations who are acting first have the leg up. When it comes to sustainability, two proverbs attributed to Benjamin Franklin are as true as when he first said them. “An ounce of prevention is worth a pound of cure”, and “a penny saved is a penny earned.” Pair those variables with the ever-growing awareness and importance of sustainability by the green investor and the green consumer and you have a powerful combination.

Nearly 80,000 emission-reducing projects by 190 Fortune 500 companies reporting data showed nearly $3.7 billion in savings in 2016 alone. – WWF | worldwildlife.org

With climate-related issues comprising the top five long-term risks in terms of likelihood, the need for investing in sustainability becomes all the more apparent. This sentiment is mirrored in a recent Bloomberg article, where Bill Gates suggests that the most difficult long-term problem facing the world today is climate change, and the effect it has on the environment. While outlining several difficulties, he points to one shining light in the fight to sustain a healthy climate: the acceleration and innovation of technology over the past two decades created to tackle the problem. Not many understand more than Locus the fight to maintain, and reduce, and use resources wisely. Locus has, for over two decades, provided advanced tools to improve sustainability on a grand scale.

Several organizations have taken advantage of the sustainability software solutions Locus provides. One example is Del Monte Foods, one of the largest producers of food in the world. They partnered with Locus for sustainability data management, eliminating errors in old data and better monitoring resource usage and cost. They also use Locus’ sustainability app to visualize and report data on the fly. They are tackling sustainability from a practical standpoint, addressing real data, not a nebulous idea. And they have been better off for acting early instead of waiting.

In the end, we must address the problems that face us. We need to tackle COVID-19 and how it affects our organizations, but be mindful that every quarter and every year that sustainability goals are pushed back, there are dollars being lost seeking out attainable improvements to our environment. Not only that, but every step that isn’t taken towards sustainable goals is a step behind other organizations making practical investments in their future and the wellbeing of everyone.

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The Expertise Behind the Software

When choosing Locus, you can be confident that your EHS software is built and supported by the experts. Our team holds degrees and certifications in environmental engineering, mathematics, computer science, and beyond. We understand the challenges of EHS compliance and build our solutions with those in mind.

Have Questions? Contact us to learn more.

Top 8 Things to Look For in Sustainability Software

Sustainability is a corporate necessity, and finding the right software to support company-wide sustainability goals and initiatives is imperative to streamlining this time-consuming activity. This is especially true if you are managing inputs from many facilities/locations or have required or optional reporting requirements. Not to mention, most corporate annual reports demand a summary of key sustainability initiatives as part of the corporate annual reporting process.

Here are some features to look for when selecting a sustainability software—to make sure your new software will actually help your company track and report its sustainability initiatives more accurately and efficiently.

1. Make sure software is accessible to everyone who needs to input data

It is very important that data owners/data collectors throughout your facilities can directly enter their own relevant Key Performance Indicator (KPI) and greenhouse gas data—no more searching for data from disparate company groups, or searching through email for spreadsheets or invoices, and no more tracking down the field technician for the field log, or hunting for other assorted documentation.

This is especially important when dealing with company locations in various geographic regions. A well-designed software system can solve this most vexing problem: finding the relevant data.

Check for the following features in any sustainability software you’re considering:

Data stored in one managed location
All sustainability data should be stored in one place—whether text or numeric, and whether from an automatic data acquisition system, external database, hand-written field logs, or third-party documentation (e.g., air permits).
Streamlined reporting from centralized data
Reporting is streamlined because all input is consolidated in one managed location.
Standardized terminology and units
A centralized system enforces common terminology, units, and values (numbers vs. text) that are so important for final reporting. No one wants to get energy data from 10 different sources, all in different units, formats, and terminologies.
Built-in notifications and workflows
Also, look for built-in reminders, notifications, and escalations to ensure the inputs are completed in a timely manner, and if deadlines are missed, you know exactly what is missing and who to contact.

Data can come from multiple sources, and your sustainability software should be able to handle them all—then consolidate this data into a single source of truth.

2. Make sure the software application includes quality assurance and third-party review tools

Any decent software can make data collection easy, but to truly improve your company’s sustainability initiatives, it must also have tools for quality assurance reviewers and third-party verifiers to easily review the information, track the reported values to source data, and understand how the data were processed. Ultimately, the software also needs to allow the reporter to easily make updates or corrections as needed. Because these data are reported to regulators or shareholders, accuracy is paramount.

Look for the following features to support transparency and auditing:

Visible and accessible calculations
All embedded rules, queries, and calculations should be visible and traceable to anyone reviewing so they can check the calculations and raise a flag if issues are found.

Your sustainability software should make it easy to see and understand the formulas that produced any calculated data values.
Accessible and auditable source data and final values
All source data and final reported values should be visible, traceable, and tracked. Watch out for “black box” calculations that will confound auditors and cost you in labor hours while you are determining how the reported value was obtained, what the data inputs were, and where the source data originated.
Complete audit trails
Ensure audit trails are present for any changes in key data. You should be able to find out exactly who entered a value or who changed it. Be sure the software is keeping track and that everything is recorded and traceable to ensure the integrity of the process and reports. Good software will have an audit tool that tracks who did what, who is responsible for which datasets, and who changed which values and how.

3. Make sure the software includes tools for reporting to multiple regulatory or voluntary bodies

Many companies report to various regulatory or voluntary bodies, and the software you select should support all the major reporting requirements to avoid the need for separate calculations for some jurisdictions.

Enter once, report 10x
Look for the concept of “enter once, report many times” when reviewing software applications. The gold standard is the capability for reporting methodologies and calculations configured for reporting to multiple agencies from a single dataset, all in a single tool.
Check support for your actual, specific needs
Review your reporting requirements to see if the software handles them. Key reporting requirements include state or federal regulations, internal corporate social responsibility (CSR) and other sustainability reporting, the Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI), and The Climate Registry (TCR).
Consider export formats
Ensure the software includes exports to XML, which is a common format for EPA and ARB 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.

Find out what formats you need for regulatory reporting, and make sure your software supports exporting in these formats.

4. Look for data verification flags so you don’t spend time fixing obviously bad data

If you normally report 500 metric tons of GHG per year and you are finding entries of 500,000 metric tons per year in your data, chances are, it’s just simple data entry errors. However, no one wants to track these down months after the data entry event. Look for software that will flag these anomalies on entry and force the user to fix them before you ever get to the data review step.

Ability to set validation rules
Look for software that allows you to set rules to flag data entries that fall outside of expected thresholds, catching errors before they make it to QA personnel or auditors.
Options to specify acceptable ranges and add comments for unusual values
Look for features that will help you avoid last-minute questions about the validity of your data. Look for the ability to specify an outlier range to flag values so that you can address them immediately before the report is due. Allow for the opportunity to enter a comment right alongside the flagged value, providing a record that the value was double-checked and is correct for a specified reason.

Immediate, inline alerts about outlier data values help prevent last-minute surprises.

5. Look for user-defined workflows to help you and your users step through sustainability reporting and tracking process

The sustainability software you select should help simplify data entry and reporting by supporting your preferred workflows. Software with configurable workflows can be a huge help for both data entry personnel and managers reviewing data, by making the status of all data entry and reporting business processes abundantly clear.

Options for lockdown after manager review
Look for the ability to include manager overrides to data entry and workflows that will lock the data entries to editing once reviewed. This will help ensure others are not modifying data while you are in the report preparation process.

Options for managers to lock down data are important for preventing edits to data that is being prepared for reporting.
Quickly identify current workflow status
Check for easy visual indicators of workflow status to ensure the process is on track to be completed by the reporting deadline.

There should be an easy way to see the current workflow status of any data in your system.
Easily modify workflow along the way
Also look for the ability to easily modify the workflow if your original configuration was not optimal. Not everyone knows the best workflow for new software when they initially start using it. The ability to modify the workflows—without needing a software developer—is an important feature to consider when choosing a sustainability software solution.

6. Look for robust audit trails to help solve “whodunit” issues

All software that handles critical or regulatory data should provide auditing on key data fields. Find out the details of what is audited and how you will be able to access the audit information.

Full history of all changes
Software should retain a history of values with every report change.
Who, when, what
Look for a complete audit trail of who did what, and what was changed, and when. Tracking any modifications to values supports a rigorous audit and is sure to make your QC staff really happy.

Your software should be automatically recording a history of all changes at each step of your workflow.

7. Look at out-of-the-box data outputs—but also consider how easy (or hard) it will be to create specific reports for your corporate needs

Every software has built-in report and dashboards, but they may not meet all your needs out-of-the-box. Assume some reports will need to be configured, and review the software accordingly.

Tracking specific KPIs
Does the software provide an easy way to track year-to-year KPIs for internal evaluation or for preparation of public-facing sustainability reports?
Consider future reporting and visualization needs
If you need a new report, chart, or other visualization of your data, will this request incur a custom software development charge, or is it an easy configuration?
Adapt dashboards to your needs
Can you easily customize the software’s default dashboards?

Look for options to easily configure reports, charts, and other visualizations that help you easily review summaries of your data.

8. Make sure the software has a robust notification engine

Software can shoulder the burden of getting people to do what they are supposed to do (reminders), alerting people to when an action is needed (notifications), sharing information (messaging) and sending them information (report notifications). Be sure to review the strength of all notification features of the software, as this can be a huge help during reporting season—and it can lighten the burden on your inbox as well.

Multi-purpose notifications
Look for routine workflow notifications to ensure you are notified when a workflow step is completed AND if a workflow step is ignored beyond the due date.
Actionable notifications
Look for reporting notifications that will send the link (URL) to applicable users so they can quickly jump to the information in the software. No one likes knowing a report is ready, but then having to log in and search for it.
Group and individual notifications
Ensure you can send notifications by individual user OR to user groups. It can be very tedious to select large numbers of individuals for routine notifications—it is much easier to select “all Facility XYZ EHS staff”.
Decide where to receive notifications
Consider in-app messaging to keep important information in front of the users and spare their inbox.

Final thoughts: Imagine what implementation success looks like

While you are evaluating software options, use these points as a guide to make sure you choose a solution that will truly make a difference for your organization’s sustainability initiatives and reporting goals.

As more sustainability software solutions appear in the marketplace, it can be difficult for a company to discern which features really matter for its workflow. Try a simple exercise—imagine what a perfect sustainability management business process would look like if you found the perfect software solution. Consider the challenges you face now, and what it would look like if those problems were handled by your software.

Then, ask how well the sustainability software you’re considering will make this dream a reality. The right software selection can help reduce operational risk, fulfill regulatory reporting requirements in less time and with less effort, and provide safeguards against bad data and missed deadlines. All you have to do is ask the right questions.

Get more tips for what to look for when evaluating EHS&S software!

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When it comes to EHS&S, the “&S” shouldn’t be an afterthought

Locus Technologies is proud to have attended this year’s NAEM EHS&S Forum in Toronto. We were represented by Wes Hawthorne, President of Locus, and forum first-timer, Aaron Edwards, Marketing Associate at Locus.

The forum gave us the opportunity to learn, both from our peers in discussions about EHS&S goals, and from the diverse lineup of respected speakers and presenters. You spoke and we listened. This year, the prevailing topic of discussion was the growth of expectation surrounding sustainability in organizations.

Sustainability initiatives are rapidly moving to the forefront of institutional policy at leading organizations. As consumers, investors, and shareholders are increasingly supporting more sustainable organizations, executives are expecting more impactful sustainability initiatives from their EHS&S departments. Not only that, but executives inherently expect sustainability initiatives to positively affect the bottom line. This means that today’s EHS&S professionals have to manage sustainability initiatives that are vital to company success as well as regulatory management and reporting, often with limited resources.

Our conversations at the NAEM Forum often revolved around the time-consuming nature of regulatory compliance interfering with the escalated focus on sustainability. Many of the professionals we spoke with are dealing with multiple EHS&S platforms, each used for a specific function. Time management is increasingly more essential to EHS&S managers, and juggling between uni-tasked platforms is detrimental to effective sustainability efforts.

Locus developers have designed our software to reduce the labor-intensiveness of regulatory compliance. We offer a configurable single-platform solution for decreasing the amount of time you spend managing KPIs. From available modules in waste management, audit tracking, GHG reporting, and more⁠—our configurable software allows more time to improve your company’s sustainability initiatives.

Sustainability is no longer an afterthought in the eyes of executives, consumers, investors, or shareholders. Having one robust software platform can greatly help EHS professionals integrate that “&S” seamlessly with their other responsibilities.

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5 time-saving tools for EHS compliance

We all know the struggle of getting things done with shortened staff without compromising the quality of our work, especially in EHS. Locus Technologies’ Locus Platform (LP) offers multiple options to ease your complexity by providing a truly SaaS platform packed with some nifty apps. Here are some tools in LP that can help you utilize your workforce much more efficiently:

1) Dashboards tailored to your needs

Every software has built-in report and dashboards, but they may not meet all your needs when purchased off the shelf. If you need a new report, chart, or other visualization of your data, it usually incurs a custom software development charge, but not with Locus Platform (LP). LP allows you to assemble the information you want in your chosen format (bar or line charts, maps, tables, treemaps, diagrams, etc.) and share your custom dashboards and real-time information/data with your team. In addition, the views and dashboards export to Excel, so you can easily integrate with commonly used tools and further mine the data. At the enterprise level, powerful dashboards will help you understand the status of each facility based on a matrix you design. With the LPs flexibility, facility information can be automatically populated based on the user credentials, saving your team time and frustration.

2) Simplified Sustainability Reporting

Locus Platform’s Sustainability application and calculation engine support simultaneous calculations using multiple methods for various reporting programs including EPA, California ARB, CDP, TCR, DJSI, and others. This allows users to input data only once and utilize it to report to multiple federal, state, and voluntary reporting programs, according to their required format. The application will also support direct electronic reporting formats for many reporting programs, so that additional manual transcription and submittal of data are no longer necessary. This is a very powerful tool and a huge advantage to customers in terms of improving efficiency, while reducing costs.

3) Integration

Integration, if done correctly, can save you a great deal of time and headache during some of the most tedious and cumbersome tasks in EHS data management. Locus Platform (LP) has built in a unique point and click integration application to enable connection with major databases or third-party systems that have open API (Access privileges). Some integration, database, and communication standards and methods that are supported include OLE compliance, SOAP, COM, Java, XML, web services, ODBC/ODMA/SQL/Oracle, VIM, and MAPI. LP also works well with MS Excel and provides a powerful two-way synchronization allowing users to download parts of the database to Excel, then work, edit, and verify or append data on their local copy of Excel where they have no internet connection. Any revisions they perform to the downloaded data in Excel can be automatically synchronized back to the Locus Platform application. During the process, a complete audit trail will be preserved. This can be a great time saver especially when you are sending large volumes of valid values in a database or if you are migrating any historical data.

4) Mobile

Locus’ Mobile application allows you to sync with your server to create data collection profiles on a mobile device, whether it’s your phone or a tablet. It will allow you to click through and enter data on the device even when you are offline. Data validation is performed in real time and is stored locally on the device, once the phone reaches an internet signal, it will sync with your server, and the data will automatically be updated in Locus’ cloud-hosted solution. What’s more, Locus Mobile works seamlessly with both EIM and Locus Platform.

Using Mobile you receive the benefits of data entry directly on the mobile device, with immediate data availability on the cloud when you reach an internet signal. Other advantages of using Mobile include location metadata and mapping integration, bar-code/OR code scanning, voice recognition, and form customization. If you’d like to know more about the Locus Mobile application, check out the Top 10 cool features in Locus Mobile.

5) XML Exports

Locus has prioritized enhancing its GHG application in Locus Platform to make it easy to manage GHG emission inventory tracking and reporting requirements. Locus Technologies is the only software vendor that is a certified GHG verifier under the State of California’s AB32, and has performed the most GHG verifications in California since 2015. The State and Federal eGGRT web portals are notoriously cumbersome and require a significant amount of your time to input all the required data and generate your report. But with XML support, you can bypass almost the entire data entry process, and complete your submittal within a few minutes. XML reports support many greenhouse gas subparts, including EPA GHG Subparts C, D, W, and NN. And because data entry for EPA and CARB is consolidated in the XML GHG application, it eliminates the need to maintain separate agency spreadsheets and software. Additional reporting programs are also adding support for XML submittals, such as EPA’s eManifest. This functionality can be a huge time saver for anyone working with these online regulatory reporting tools.