Sustainability has become a business imperative. Growing environmental impacts and resource constraints, coupled with constantly shifting technology and regulatory landscapes, mean that organizations must report on an ever-increasing range of sustainability performance metrics.
Companies that improve their sustainability performance benefit from improved long term financial performance, less risk, better corporate social responsibility and enhanced reputation.
In this page, we explain how you can improve your organization’s environmental, social, and governance performance with sustainability reporting software.
Table of contents
- 1. What is sustainability reporting software and what can it measure?
- 2. Sustainability reporting challenges
- 3. How sustainability software improves data management, tracking against sustainability targets, and reporting to sustainability benchmarks
- 4. Benefits of sustainability reporting software
- 5. Sustainability reporting case studies
- 6. How sustainability software supports Net Zero, GRESB, DJSI, NABERS, NGER, ENERGYSTAR, CDP, SECR, SASB and TCFD reporting
What is sustainability reporting software and what can it measure?
Sustainability software enables you to automatically capture and consolidate key environmental and emission-related data into a single system.
This data can help your organization measure and reduce its environmental impact, communicate key ESG measures to investors and other stakeholders, and report to voluntary or mandatory sustainability reporting frameworks.
The ESG metrics captured to report sustainability performance generally include energy, Greenhouse Gas (GHG) emissions, environmental (water, waste, pollutants), corporate responsibility and supply chain, as well as key business metrics used for internal KPI reporting.
One of the key functions of sustainability software is to calculate GHG emissions. GHG emissions are standardised as CO2 equivalent and weighted according to their Global Warming Potential. To facilitate accurate accounting of GHG’s the World Resources Institute and World Building Council for Sustainable Development developed a number of GHG accounting standards under the umbrella of the GHG protocol. Businesses will typically use the GHG ‘Corporate Standard’ when accounting for emissions. Under the Corporate Standard, emissions are classified into scopes for measurement and reporting:
Source: GHG Protocol
SCOPE 1 EMISSIONS
Emissions released to the atmosphere as a direct result of an activity or series of activities at a facility level constitute Scope 1 Emissions (also referred to as ‘direct emissions’). Examples include emissions produced from manufacturing processes, fugitive emissions such as methane emissions from coal mining, or the onsite production of electricity by burning coal.
SCOPE 2 EMISSIONS
Emissions released to the atmosphere from the purchased electricity, steam, heating and cooling are categorized as Scope 2 emissions (also called ‘indirect emissions’).
SCOPE 3 EMISSIONS
Scope 3 emissions are indirect greenhouse gas emissions other than scope 2 emissions that are generated in the wider economy. They occur as a consequence of the activities of a facility, but from sources not owned or controlled by that facility’s business.
Some examples include emissions from employee business travel and contractor-owned vehicles.
There are different methodologies used to account for Scope 2 emissions. Prior to 2015, the Greenhouse Gas Protocol recommended using location-based (also referred to as ‘grid-based’) emission factors to calculate Scope 2 emissions. In 2015, Scope 2 Guidance was revised to recommend that both a location based (grid based) and market based approach is used to calculate emissions. Read more: Scope 2 emissions calculations and how they differs from the traditional location-based method.
Sustainability reporting challenges
Sustainability reporting requirements are becoming ever-more complex and demanding, particularly for organizations that report to multiple stakeholders and report under multiple reporting framework.
Environmental, social and governance metrics such as carbon, energy, waste, water and social indicators can be difficult to track and report, which makes it difficult to meet compliance and voluntary reporting requirements, and puts your organization’s reputation at risk.
Manual sustainability reporting is challenging because:
Metrics for carbon, energy, waste, water and social indicators are captured from different sources, making them difficult to access in a consolidated way for reporting and decision making.
Producing financial grade reports requires confidence in the data and auditability at every step in the process, from collection at the source data through to the production of reports. Data captured manually increases the likelihood of inaccurate or incomplete data due to manual errors.
The process to capture the metrics required to calculate emissions is time and labor intensive when managed manually with spreadsheets.
Without access to consolidated, accurate data, it can be difficult to monitor and manage your sustainability performance on an ongoing basis, and track the effectiveness of your sustainability projects.
How sustainability software improves data management, tracking against sustainability targets, and reporting to sustainability benchmarks
Greenhouse gas accounting and sustainability reporting is a complex process that requires access to accurate, real-time and historical energy data that can be traced back to billing data, and independently audited for compliance. Data captured on energy must reflect the complexity and hierarchy of the organization so that emissions can be traced back to their source. Data should be regularly updated to allow comparisons across reporting periods to that organizations can benchmark their performance against their targets. Lastly, the approach to data collection and emission calculations should be rooted in internationally accepted standards.
The following sustainability software features can greatly improve the process of measuring and reporting sustainability performance.
Benefits of sustainability reporting software
With sustainability reporting software, you can automate collection of the data you need to report on your organization’s performance and consolidate it into a single system of record, allowing you to generate important insights and deliver results.
Sustainability reporting software can help your organization to:
Sustainability reporting case studies
For real life examples of organizations have used sustainability reporting as a lever for financial success, view a case study from Metcash (retail/manufacturing), St. Vincents Health of Australia (healthcare) or the Royal Bank of Scotland (financial services).
How sustainability software supports Net Zero, GRESB, DJSI, NABERS, NGER, Energy Star, CDP, SECR, SASB and TCFD reporting
Globally, there are many different sustainability reporting standards used to benchmark different aspects sustainability performance. Sustainability reporting software can not only speed the time to report to common sustainability frameworks, and also improve overall performance and ratings by enabling ongoing measurement and verification that improves focus, accountability and continuous improvement.
Net Zero is a global initiative run by the World Green Building Council and calls on businesses, organizations, cities, states and regions to operate efficient buildings run on renewable energy. Net Zero encourages organisations to set targets to reach net zero carbon operating emissions within their portfolios by 2030 (or sooner), and advocates for all buildings to be net zero carbon in operation by 2050.
How Net Zero works
The WorldGBC Net Zero initiative encourages organizations to pledge to achieve net zero operating emissions in order to help stem global climate warming to below 2 degrees Celsius, as recommended by the IPCC. To do this, they encourage deep energy efficiency and buildings run on renewable energy.
Net Zero is a global initiate that aims to have organizations measure and disclose how each building achieves a carbon balance and promotes continuous improvement in the building sector. Certification is done at a local level (for example, in Australia through NABERS or the Green Building Council of Australia).
Net Zero encourages and allows for renewable energy purchasing and by requiring a market-based method for Scope 2 accounting., This allows energy attributes such as RECs to be allocated, and Net Zero has established a hierarchical preference for on-site renewable energy, off site renewable energy, and then offsets to achieve net zero emissions.
How sustainability software supports Net Zero reporting
Net Zero signatories will be required to track and report their GHG emissions to understand their current performance, identify emission sources and zero in on the best strategies to cut emissions in their organisation. A sustainability software program can help track emissions by source over time and enable close measurement and verification of identified energy efficiency strategies.
Sustainability software that can track energy performance an an equipment level, such as Envizi, can enable organizations to achieve deeper energy efficiency, reducing the amount of renewable energy required to offset their grid electricity use.
Net Zero requires that market based emission factors are used to calculate Scope 2 GHG emissions. Emission factors may be provided by the retailer, and allow companies to use an emission factor based on renewable energy contracts and/or PPAs to apply proportionally across their portfolio to more accurately account their GHG emissions. Sustainability software can help companies track energy attributes such as renewable energy certificates (RECs) and associated emission factors to help calculate emissions against the market-based method.
Because Net Zero is a global initiative that is certified locally, measuring and reporting emissions may become especially challenging for global, multisite organizations, as regulations and emission factors vary by region. Global sustainability software such as Envizi can help by supporting both location and market based GHG accounting methods and maintaining carbon emissions factor data tables such as the Australian National Greenhouse Accounts, DEFRA (UK), US EPA (Climate Leaders), e-GRID USA, IEA National Electricity Factors, NZ Ministry for the Environment, and IPCC.
Global Real Estate Sustainability Benchmark (GRESB)
GRESB is a tool used predominately by investors to assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide.
How GRESB Works
GRESB Assessments are guided by what investors and the industry consider to be material issues in the sustainability performance of real asset investments and are aligned with international reporting frameworks such as the Global Reporting Initiative (GRI) and Principals for Responsible Investment (PRI). Assessment participants receive comparative business intelligence on where they stand against their peers, a roadmap with the actions they can take to improve their ESG performance and a communication platform to engage with investors. Investors use the ESG data and GRESB’s analytical tools to improve the sustainability performance of their investment portfolios, engage with managers and prepare for increasingly rigorous ESG obligations.The GRESB Assessment is structured into seven unique sustainability Aspects: Management, Policy and Disclosure, Risks & Opportunities, Monitoring & EMS, Performance Indicators, Building Certifications, and Stakeholder Engagement.
How sustainability software supports GRESB reporting
The GRESB Real Estate Assessment requires companies to report environmental performance data at the asset level and are required to compile asset level data such as green building certification, stakeholder engagement, and automatic asset categorization. Sustainability software helps manage the compilation and data quality of performance indicator data for energy, emissions, waste and water.
Sustainability data management and reporting systems that are GRESB data partners such as Envizi can aggregate and extract energy, emissions, water and waste data that are required to submit the GRESB – Asset Level Data Spreadsheet.
This will speed and simplify the submission of this GRESB data that is required to compile the Performance Indicators portion of the GRESB Assessment.
Dow Jones Sustainability Index (DJSI)
The Dow Jones Sustainability Index family tracks the performance of the world’s leading companies in terms of economic, environmental and social criteria and is used by investors who wish to jointly assess financial and ESG aspects of company performance.
How DJSI works
The DJSI applies a transparent, rules-based component selection process based on the companies’ Total Sustainability Scores resulting from the annual SAM Corporate Sustainability Assessment (CSA). The CSA compares companies across 61 industries via questionnaires assessing a mix of 80-100 cross-industry and industry-specific questions. Companies receive scores ranging from 0 to 100 and percentile rankings for approximately 20 financially relevant sustainability criteria across economic, environmental and social dimensions. Only the top ranked companies within each industry are selected for inclusion in the Dow Jones Sustainability Index family. Investors in these indices gain exposure to the performance potential of well-known common factors – low volatility, dividend yield, value or momentum – while avoiding ESG-related risks in their portfolios by directing their investment towards more sustainable companies.
How sustainability reporting software supports DJSI reporting
Companies who report to DJSI will be required to respond to a variety of financially relevant economic, environmental and social dimensions dependent upon what is relevant to their industry. DJSI may ask companies to disclose to their scope 1, 2 and 3 to greenhouse gas emissions, their total energy consumption (renewable and non-renewable), their water and waste use, and climate related targets such as energy intensity. DJSI respondents are now allowed to calculate Scope 2 emissions using a location based or a market based method.
Reporting sustainability dimensions and tracking their progress over time requires access to consolidated, auditable data, which can be more easily achieved with sustainability reporting software.
National Australian Built Environment Rating Scheme
Using a 6 star scale, NABERS helps Australian building owners understand how their asset impacts the environment, and helps prospective tenants understand how energy efficient their leased space is.
How NABERS works
NABERS compares the performance of a building or tenancy to benchmarks that represent the performance of other similar buildings in the same location. NABERS scores are calculated by an independent assessor using 12 months of real, measurable information about a building or tenancy, such as energy and water bills or waste consumption data as the basis of their rating. NABERS ratings are currently available for Commercial Office Buildings, Tenancies, Hotels, Shopping Centers, and Data Centers. NABERS announced in 2019 a plan to expand to all major building types. Under Australia’s Building Energy Efficiency Disclosure Act, all buildings for sale or under lease over 10,000 sq ft must receive a NABERS rating. Governments are required to lease space in buildings with ratings of 4.5 or higher.
How sustainability software supports NABERS reporting
NABERS Energy and Water ratings rely on verifiable data from a building or tenancy, such as energy or water bills.
Sustainability reporting software that is ‘NABERS Equipped’ such as Envizi and has obtained a license from NSW OEH to capture all accredited NABERS rating information and auditing documentations in a centralized place for a portfolio of buildings and locations and allow you to view and calculate indicative NABERS Office Energy and Water ratings using the official NABERS algorithm.
NABERS Energy and Water ratings rely on verifiable data from a building or tenancy, such as energy or water bills. Sustainability reporting software that is ‘NABERS Equipped’ such as Envizi and has obtained a license from NSW OEH to capture all accredited NABERS rating information and auditing documentations in a centralized place for a portfolio of buildings and locations and allow you to view and calculate indicative NABERS Office Energy and Water ratings using the official NABERS algorithm. NABERS Equipped software can also track and monitor the trend of NABERS Office Indicative ratings month by month, and compare with latest accredited rating, review consumption trend month-by-month and consumption intensity by rated area, store and review NABERS related consumption and building data in a centralized place for easy access by NABERS Assessors, and allow stakeholders to review and report NABERS Portfolio Average accredited ratings. These features can help companies monitor their historical performance and better ensure they meet or exceed their previous ratings.
Streamlined Energy & Carbon Reporting Framework (SECR)
The Streamlined Energy and Carbon Reporting framework is the UK government’s guidance for organizations required to disclose their energy use and and greenhouse gas emissions and related information. The SECR was introduced to take effect from 1 April 2019 as the previous Carbon Reduction Commitment (CRC) Energy Efficiency Scheme came to an end. It builds on and extends the previous reporting requirements faced by quoted companies while adding new mandates for large unquoted and limited liability partnerships (LLPs). It can also help all organisations with voluntary reporting on a range of environmental subjects, including greenhouse gas reporting and the use of key performance indicators (KPIs). The SECR is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide emissions, as set out in the Climate Change Act 2008. It is expected that an estimated 11,900 companies incorporated in the UK will need to report on their energy and carbon emissions under the new framework.
How the SECR works
Quoted companies who report to SECR will be required to disclose their energy use, their global scope 1 and 2 greenhouse gas emissions in tonnes of carbon dioxide equivalent, and at least one emissions intensity metric of their choosing for current and previous financial years. Scope 3 emissions remain voluntary but are recommended for emissions sources considered material. Unquoted large companies and LLPs will also need to reoprt as a minumum their UK energy use and associated GHG emisssions from electricity, gas and transport fuels as well at least one intensity metric. Reporting each of these sustainability dimensions and tracking their progress over time requires access to consolidated, auditable data, which can be more easily achieved with sustainability reporting software.
How sustainability software supports SECR reporting
Reporting key environmental impact dimensions and tracking against targets year on year will be essential to reporting to SECR. Sustainability software can help you to maintain boundaries of your organization, time periods to collect data for, and key environmentatl data to measure and report over time. We recommend you develop and report at least 3 KPIs associated with your key environmental impacts.
You should consider actions 1-7 (below) which provide you with information to help you develop your environmental strategy.
- ACTION 1 Intensity ratios
- ACTION 2 Setting a base year
- ACTION 3 Setting a target
- ACTION 4 Verification & assurance
- ACTION 5 Your upstream supply chain
- ACTION 6 Downstream impacts
- ACTION 7 Business continuity and environmental risks
National Greenhouse and Energy Reporting (NGER)
The National Greenhouse and Energy Reporting (NGER) scheme is the Australian national framework for reporting and disseminating company information about greenhouse gas emissions, energy production, energy consumption. It was established by the National Greenhouse and Energy Reporting Act 2007 (NGER Act) and is monitored by the Clean Energy Regulator.
How NGER works
NGERS collects emissions related data about greenhouse gases such as carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6) and specified kinds of hydro fluorocarbons and perfluorocarbons. Records of activities must be adequate to enable the Clean Energy Regulator to ascertain whether the corporation or the person has complied with its obligations under the NGER Act.
This includes information that can be used to verify the relevance, completeness, consistency, transparency and accuracy of reported data during an external audit.
How sustainability software supports NGERS reporting
NGER compliant sustainability software helps to automate the capture of relevant data, assist with meaningful GHG emission calculations (linking back to the source) and helps to organize this data into categories for submission direct to NGER Emissions and Energy Reporting System (EERS).
CDP – Climate Change
CDP is a framework for companies to provide environmental information to their stakeholders (investors, employees, and customers) covering governance and policy, risks and opportunity management, environmental targets and strategy and scenario analysis.
How the CDP works
Investors and/or customers can request a company, city, state or region to complete a CDP questionnaire. CDP currently offers 3 questionnaires (Climate Change, Water, and Forests), each of these is scored using different methodology and has general questions alongside sector-specific question aimed at high impact sectors. The scoring of CDPs questionnaires is conducted by accredited scoring partners trained by CDP. CDP’s internal scoring team coordinate and collate all scores and run data quality checks and quality assurance processes to ensure that scoring standards are aligned between samples and scoring partners.
How sustainability software supports CDP reporting
Software can help you respond to the CDP – Climate Change questionnaire by simplifying emission calculations, particularly in calculating Scope 2 emissions using the now-required market based method. Software can help hold a library of emissions factors used and be used to calculate emission intensity, absolute emissions (Scope 1, Scope 2 LB, Scope 2 MB and Scope 3, can separate emissions by country/region, group, facility and activity and identify total energy consumption across the organisation and by site.
Energy Star is a nationally recognized energy rating and benchmarking mechanism in North America that incorporates commercial buildings across a diverse group of building use types.
How ENERGYSTAR works
ENERGY STAR is a U.S. Environmental Protection Agency (EPA) voluntary program that helps businesses and individuals save money and protect the climate through superior energy efficiency. Rankings compare a building against others within its peer group. Buildings can benchmark their performance internally across their portfolio and externally among similar sectors. ENERGY STAR scores are based on data from national building energy consumption surveys, and this allows Portfolio Manager to control for key variables affecting a building’s energy performance, including climate, hours of operation, and building size. What this means is that buildings from around the country, with different operating parameters and subject to different weather patterns, can be compared side-by-side in order to see how they stack up in terms of energy performance. The specific factors that are included in this normalization (Hours, Workers, Climate, etc) will depend on the property type. The 1-100 scale is set so that 1 represents the worst performing buildings and 100 represents the best performing buildings, with 50 representing the average.
How sustainability software supports ENERGYSTAR reporting
Sustainability reporting software can support the ENERGY STAR rating standard by allowing you streamline and integrate with ENERGY STAR Portfolio Manager (ESPM) to get real-time and official ENERGY STAR(R) Score result for your buildings or locations. This centralized approach minimizes the need to manage two systems at the same time, so that you can focus more on what you need to do rather than spending time on additional data stewardship work.
Sustainable Accounting Standards Board (SASB)
How the SASB works
The Sustainability Accounting Standards Board (SASB) is an ESG guidance framework that sets standards for the disclosure of financially material sustainability information by companies to their investors. In total, SASB Standards track ESG issues and performance across 77 industries. SASB’s framework is built to support companies in sharing their outward ESG impacts through the language of investors, debt holders, and internal financial stakeholders.
Of the other ESG reporting frameworks, the Global Reporting Initiative (GRI) is most similar to SASB, but supplies more broadly material information for reporting to stakeholders who are not just financial.
Asset management companies, like BlackRock, Goldman Sachs, and Morgan Stanley, manufacturing giants, like GM and Nike, and even specialized industries with companies like Merck and JetBlue use SASB’s Standards to disclose ESG metrics. SASB also supplies resources to explain how investors across multiple asset classes use the standards. These tools allow organizations to be specific and report with a system that allows for transparency and relevancy with their investors.
How ESG + sustainability software supports SASB
SASB’s Environmental Reporting covers a variety of quantitative metrics within GHG Emissions, Air Quality, Energy Management, Water & Wastewater, Waste & Hazardous Materials, and Ecological Impacts. Each category gets specific, asking for disclosure of data points in Scope 1, Scope 2, and Scope 3 emissions, measured on a company-wide portfolio level. Sustainability and carbon accounting software like Envizi can simplify carbon accounting for ESG by automating collection of utility and meter data from across an organization with traceability through to the source and audit trails to track any changes subsequently made to that data. Hierarchy management tools help to adjust boundaries when organizations change, and an emission factor and GHG calculation engine helps derive accurate calculations for each scope.
Task Force for Climate Related Disclosures (TCFD)
How the TCFD works
The Task Force was created in December of 2015 after the G20 Finance Ministers asked the Financial Stability Board to evaluate the connection between climate-related issues and the financial sector. The FSB is an international body that makes recommendations to the global financial system, so the push towards climate-related finance was significant.
Now under the guidance of Michael Bloomberg, as Chairman, the TCFD is made up of 31 Task Force Members across the G20, and represents a global perspective on finance. Broken into four pillars, TCFD addresses disclosure requirements related to:
- Governance: How does the organization’s governance structure address climate-related risks and opportunities?
- Strategy: What is the tangible material impacts of climate-related risks and opportunities on the whole business, including strategy and financial planning?
- Risk Management: How does the organization define, assess, and manage climate-related risks?
- Metrics & Targets: What are the measurements in assessing material climate-related risks and opportunities?
TCFD is explicitly designed to address climate risks to the business, falling squarely within the ‘E’ of ESG reporting.
How ESG + sustainability software supports TCFD reporting
Like TCFD, SASB is also a ESG guidance framework for financial stakeholders such investors, insurers and debt holders. However, SASB focuses on quantifying and reporting the outward environmental impacts and risks of an organization’s performance across 77 different industry standards, while TCFD addresses how climate change might impact the organization’s ability to create value. Therefore, ESG and sustainability software is most applicable to SASB to understand a company’s ESG performance, while TCFD helps to articulate how ESG performance is most likely to materially impact future financial performance and value creation.