A buyer’s guide to ESG

data management
software
Preparing your organization for
today’s sustainability and ESG
data reporting challenges
Table of contents

1. Leading from the front on environmental, social 3

and governance issues

2. Flexibility 5

3. Major ESG standards 6

4. Data collection 7

5. Effective reporting 8

6. Driving value across the organization and with 9

external stakeholders

7. Functionality for climate and sustainability 10

8. Functionality for executive compensation 12

9. Service and support 13

10. Diligent ESG 14

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 2
Leading from the front on
environmental, social and
governance issues

Environmental, social and governance (ESG) issues Organizations need quality data to benchmark their
have become more complex and multifaceted than ESG activities and monitor progress, particularly
ever before. At the same time, they continue to with shareholders, investors and regulators who are
ascend on board and leadership agendas. keeping a closer eye than ever before. Yet today’s
manual processes are prone to data gaps and
On the environmental side, organizations must errors,and unable to keep up with the rapid pace
accelerate their response in areas from water of change in and around ESG. Nor are they able to
and fossil fuel consumption to environmental deliver a panoramic view of the current landscape,
waste and climate change, all while navigating or provide insight into what lies ahead. These are
social issues such as pay equity and fair labor key tools that help leaders conduct meaningful
standards. Organizations must also consider conversations and make important decisions about
the increased attention to responsible, efficient progress and risk.
governance, particularly in areas such as executive
compensation and CEO succession. All stakeholders — from partners, investors, and
activists to the general public — are demanding
Meanwhile, ESG standards continue to be refined greater transparency around ESG initiatives.
and are gaining importance alongside shareholder Consumers are talking with their wallets, while an
questions and expectations. increasing number of regulatory bodies are moving
The scope of ESG spans all areas of an organization, accessible and auditable metrics from “nice-to-
both internally and externally. It can be challenging haves” to “must-haves.”
to connect complex and evolving ESG issues with
operational objectives, business strategies and
organizational risk, all while delivering the right
information to the right people for informed,
timely decisions.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 3
For example, the U.S. Securities and Exchange However, not all ESG solutions are created equal.
Commission (SEC) recently passed a climate risk Organizations seeking the right solution should
disclosure rule requiring publicly traded companies prioritize four key criteria and areas of functionality
to disclose their climate-related risks, with larger above all else:
companies also required to outline material Scope
→ Flexibility
1 and Scope 2 emissions. The E.U. passed similar
mandates in 2023, with the Corporate Sustainability → Data collection
Reporting Directive.
→ Monitoring and reporting
Meanwhile, in California, the Greenhouse Gases:
Climate-Related Financial Risk Act takes things a → Service and support
step further by requiring all business entities with
Read on for the questions to ask and the answers to
annual revenues of over $500 million to report their
seek when evaluating providers and solutions.
climate-related financial risks, including Scope 3
emissions, on their websites.

As forward-thinking corporations fold ESG into

a holistic approach to governance, risk and
compliance, the right technologies and tools
play a significant role. An ESG data management
solution can help governance professionals
and the organizations they serve coordinate the
moving parts, report on progress and stay ahead of
activists, investors and competitors.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 4
Flexibility
Given the complexities and variability of ESG tracking, monitoring, reporting and
compliance, there is no one-size-fits-all solution. Different industries use different
ESG frameworks and have differing stakeholder expectations.

Laws and regulatory requirements are changing team leaders need to configure software solutions
across jurisdictions, and each organization has its based on the unique needs of their organization,
own people, processes and practices for managing then bring in relevant stakeholders as required to
ESG issues. collaborate, review, approve and audit.

Consider the many parties involved in ESG activities: There’s also ESG maturity and scalability to consider.
the CEO, board, corporate secretary, general counsel, A solution needs to accommodate an organization
and audit and compliance teams — not to mention wherever it stands in its ESG journey, easily
stakeholders, suppliers and other external parties. integrating with existing systems and growing with
the organization.
A good ESG solution must enable them to act quickly
and easily, both now and in the future. Sustainability

Flexibility Q&A

Does the solution include the Will the solution work with your current
latest disclosure frameworks and level of ESG maturity, with the flexibility
requirements? to evolve and grow?

The solution should maintain up-to-date ESG A gold-standard ESG solution should offer tools that
standards and frameworks - including TCFD, GRI, allow you to analyze and orient information in ways
SASB and CDP - and update as new regulations arise. best suited to your business. It should offer a clear
It should allow customization for different territories roadmap to evolve with the needs and requirements
and should support bespoke frameworks or an of global boards, and should have the ability to
amalgamation of existing frameworks. seamlessly augment features and capabilities as your
ESG initiatives mature.
Are you able to map ESG data to your
internal objectives?

The solution should easily integrate with your existing

board portal solution and meet the needs of whoever
is using it: corporate secretaries, general counsel, ESG
committees and so on. You should be able to set and
monitor KPIs, customize peer groups for analysis and
track ESG progress against your peers and competitors.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 5
Major ESG standards

1 The Task Force on Climate-Related Financial Disclosures (TCFD)

The Financial Stability Board created this task force to enhance reporting on financial risk related to
climate. This enhanced transparency allows investors, insurers and lenders to make climate-informed
financial decisions.

2 The Global Reporting Initiative (GRI)

Founded in Boston in 1997 following public outcry over the environmental damage of the Exxon Valdez
oil spill in 1989 this global, independent standards organization helps entities such as governments and
businesses assess their ESG impacts and create a plan for improvement. Though not certifiable, their
standards offer a framework by which organizations can report and compare their impacts.

3 CDP
Based primarily in the U.K., U.S. and Germany, this international nonprofit (formerly the Carbon
Disclosure Project) provides a platform through which entities - ranging from businesses to entire
cities and states - can analyze, disclose and manage their environmental impact.

4 The World Economic Forum (WEF)

Headquartered in Geneva, Switzerland, this international NGO hosts an annual gathering where global
business and government leaders discuss the world’s most pressing issues. In 2020, the WEF
published a list of ESG global metrics that consolidates those from SASB, GRI, TCFD and others.

5 The Sustainability Accounting Standards Board (SASB)

Based in the U.S., this independent board creates, ratifies and amends sustainability standards for 77
industries, outlining the key ESG issues within each industry.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 6
Data collection
Data-rich organizations operate more efficiently, more decisively and with
greater foresight than their peers - and this is particularly true in the complex,
evolving area of ESG.

Consider the many parties involved in monitoring The methods of collection and means of storage
and reporting on ESG issues: sustainability officers, also matter. Can the right people access the data,
finance and procurement departments, facilities and is it secure from those with ill intentions? Will
managers, HR teams and more. These members of data collection practices stand up to the scrutiny
the ‘ESG ecosystem’ need to collect and tailor data of a third- party audit? And does the solution gather
in the most efficient manner, while minimizing impact the timeliest data from the right sources, so ESG
on data owners. To operate with maximum efficiency, practitioners can make informed decisions?
speed and accuracy, they require a solution that
simplifies and automates data collection, and keeps
it moving smoothly across multiple processes and
business functions.

Data collection Q&A

How does the solution collect ESG data, What proactive information-gathering
and from which sources? capabilities does the solution offer?

Data collection should be as automated and Surveys, questionnaires and assessments are
comprehensive as possible. The solution should offer valuable ways of collecting ESG data. The solution
multiple ways of pulling data from spreadsheets, should offer these capabilities to save you time and
surveys and systems of record. effort. It should enable you to automatically assign
tasks, deploy and monitor questionnaires and
assessments, send requests and follow-ups, and
Where and how is the data stored? track progress against goals.

Whether stored in the cloud, on-premises or in a hybrid

solution, data should be secure and easy to access, with
credentialed permissions that you can customize by
role. The ESG software provider should meet the highest
security standards and maintain key certifications.
Ask about encryption for data in transit and at rest. The
provider should also use data cleansing and validation to
ensure a robust, reliable and complete data set.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 7
Effective reporting
Are ESG initiatives meeting expectations, deadlines and commitments? Is data
being consistently disclosed across stakeholders and frameworks?

An ESG solution can help boards and executives keep Articulating meaning behind the numbers and
their fingers on the pulse of activities and progress, percentages is essential when it comes to getting
and spot red flags before they escalate into issues. buy-in from stakeholders and value from a data
For these reasons and more, effective reporting solution. An ESG solution should help organizations
capabilities are core to an effective ESG solution. present their findings in a compelling way, mapping
data to frameworks for easy publishing, with finely
A data dashboard, particularly a customizable one, honed tables and graphs, simple takeaways and
can give organizations visibility into KPIs, metrics and custom reporting based on the audience and
commitments. And automated monitoring can help their needs.
ESG teams sift through mountains of information in a
fraction of the time.

Effective reporting Q&A

What features does the solution offer partner relationships and ESG obligations, tasks, and
for streamlining and supporting internal controls based on any framework. The solution should
tasks and activities? use dashboards and visual storyboards to make data
easy to consume and act upon.
With ESG monitoring and reporting, a single weakness
can cut across multiple business processes and can Your organization should also have the ability to strictly
require a complex series of remediation steps to control the dissemination of reports and what recipients
fix. Look for a solution that guides users through the can do with these results. This protects the data from
process, with documented checks and balances and unauthorized dissemination.
the ability to monitor progress and escalate the issue if
something is missed. What capabilities does it offer for
An ideal solution should offer both customizable and regulatory reporting?
preconfigured workflows for ESG use cases. It should
The ESG solution should map to all relevant frameworks
also include collaboration tools for coordinating
and standards, with the most up-to-date regulations
with committees and across different locations and
and requirements.
different business functions.
For internal guidance on external issues, it should let
you set KPIs and controls, and monitor whether you’re
What capabilities does it offer for meeting commitments in key areas, such as public
C-suite and board reporting? disclosures or executive compensation.
The solution should seamlessly display all data relevant Importantly, the solution should automatically and
to ESG decisions: key business metrics, ESG program seamlessly generate auditable disclosures, tracking all
impacts, curated news and alerts, ESG “health scores,” changes and values throughout for a robust audit trail.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 8
Driving value across the organization
and with external stakeholders
The right ESG solution serves multiple purposes and users. For example:

CEOs, CFOs and the board…

Meanwhile, as organizations
can use an ESG solution to track ESG trends, stakeholder
contemplate the need for an ESG
expectations, peer activity and metrics related to
solution and evaluate their options:
ESG programs.

The general counsel and corporate secretary… Institutional investors

can use an ESG solution to draft disclosures and support
Are using ESG information to mitigate
ESG-related reporting and decision-making.
portfolio risk, identify new investment
opportunities and assemble proxy
The chief sustainability officer or head of ESG/CSR… season proposals.
can use an ESG solution to communicate ESG costs and
impacts - information critical for achieving buy-in and
NGOs
budget on ESG initiatives.
Are using ESG information to identify
companies to engage.
Procurement and legal teams…
can use an ESG solution to find and execute contracts
with ethical, reliable suppliers. Employees
Are requesting more details about an
HR, audit and compliance teams… organization’s ESG activities, such as
commuting and travel carbon footprints,
can use an ESG solution to monitor performance in
facility energy efficiency, supply chain
areas such as pay equity, workforce diversity and fair
sustainability, ethics and beyond.
labor standards.

PR and investor relations professionals… Consumers and

can use an ESG solution to monitor the organization’s
business partners
reputation and stakeholder attitudes. Are factoring an organization’s ESG
behavior into purchasing decisions.

Subsidiaries and business operating units…

can use an ESG solution to comply with organizational
policies and achieve sustainability targets.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 9
Functionality for climate and
sustainability
With climate remaining a top priority for investors, regulators, employees and
consumers, digital ESG solutions can help organizations prepare, from monitoring
performance to reporting progress against expectations and goals.

But climate is a complicated, multifaceted and a framework, like the Greenhouse Gas (GHG)
evolving issue, filled with nuances, complexities and Protocol’s Scope 1, 2 and 3 standards for measuring
moving parts. The ESG solution must be designed and managing emissions? Will it adapt to the
with climate and its challenges in mind. Does it frameworks of the future? Does it enable enterprise-
accommodate data collection and reporting for wide climate tracking and reporting across multiple
purpose-built frameworks or multiple levels within metrics?

Climate and sustainability Q&A

Does the solution track relevant Does the solution help you prepare for
climate metrics? the future?

A climate-ready ESG solution will include a range of Ideally, the solution should curate news and filings to
emissions and sustainability reporting frameworks, include regulatory developments and stakeholder
from carbon-specific factors to broader GHG sentiments from around the world, customized
measures, as well as leading forms of accreditation, to your organization’s jurisdictions, industry and
like the CDP carbon reporting framework. The operations. Predictive modelling capabilities are
solution should keep these metrics - which can also a plus.
number in the tens of thousands - up to date.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 10
Climate and sustainability Q&A

Does the solution let you monitor Is the climate solution audit-ready?
carbon and climate activities across
your operations and supply chain?
The solution should automatically and seamlessly
The GHG Protocol, among other frameworks, generate auditable disclosures, tracking all changes
requires this level of monitoring. A climate ready ESG and values throughout for a robust audit trail.
solution will cover the range of business activities:
water and waste treatment, business travel, shipping
and logistics, employee commuting, energy
analytics and waste creation.

Does the solution connect climate

regulations and expectations to
organizational goals?

An ESG solution should map climate frameworks

against an organization’s internal activities, making
it easier for leaders to track obligations and
recommend corrective action.

The ESG solution

must be designed
with climate and its
challenges in mind.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 11
Functionality for executive
compensation
Amid the many environmental and social issues that boards need to keep up with,
it’s easy to overlook or undervalue the “G” in “ESG.”

But shareholders, investors and increasingly An ESG solution should offer support with critical
regulators are watching corporate governance, with executive compensation decisions. Look for
a particularly close eye on executive compensation. one that delivers benchmarking data on peers
Meanwhile, board members, investors and corporate and competitors, specialized dashboards for
issuers rely on modelling to understand the impact of comparisons and analysis, and modelling for specific
executive compensation on ownership, voting and compensation plans, such as equity compensation.
long-term sustainable business growth.

Executive compensation Q&A

Does the solution offer compensation Does the ESG solution provide access to
benchmarking and analysis? key financial metrics and ownership data?

An ESG solution should reveal other CEO, CIO and This functionality lets you view executive
CFO salaries for insights. Look for detailed peer compensation, including equity compensation, in a
group analyses and ways to determine how an greater financial context. A better understanding of
executive’s monetary value correlates to their the present helps create a detailed assessment of
job effectiveness. the years ahead.

Does it offer compensation modelling, Are you able to align your organization’s
including modelling of equity-based executive compensation plans against key
compensation plans? ESG metrics?

Modelling guides compensation plan creation and The solution should allow you to pull ESG data from
much more. Investors use it to test their portfolio across your organization to map against a variety of
companies’ equity plans, benchmark plan costs standards, as well as peers and competitors.
and evaluate the risk of dilution to enhance their
engagement and voting decisions. Meanwhile,
corporate issuers use modelling to understand
shareholder concerns and gain the support to
legally grant equity compensation.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 12
Service and support
ESG activities are essential in today’s business environment and too time-sensitive
and high-stakes to be left to chance.

Board members, executives and governance Look for a solution that offers expert support to
professionals should seek a vendor committed to eliminate gaps and address issues. The right vendor
service, performance, innovation and continuous will work to expand, evolve and improve the solution
improvement. on an ongoing basis, allowing you to remain one step
ahead of the rapidly changing ESG landscape.

Service and support Q&A

How many years has the solution What kind of ongoing support does the
provider been working with ESG and provider offer alongside the solution?
governance issues?
Ongoing support is critical to sustained adoption.
Providers with numerous years of experience in The provider should offer in-depth training for the
both ESG and your industry will understand your duration of a contract - by phone, online chat, or
challenges and be able to address your pain points. virtual meeting - as well as crucial information on
Their solutions should be purpose-built for carbon product updates and enhancements, plus insight into
accounting and sustainability reporting. In addition how the solution is evolving.
to being an ESG and industry expert, the provider
should have a track record of innovating software
solutions that address and satisfy board and
governance needs.

What are the hours for tech support and What awards or recognition has the
customer service, and what is the typical provider received?
wait time for support calls?
Awards are an important independent benchmark
It’s important to seek out an ESG solution provider for performance. Look for recognition in critical
that offers prompt support, without call-backs areas such as customer service, application
or lengthy hold times. Support representatives usability or innovation.
should be in-house experts trained to resolve issues
efficiently and effectively.

A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 13
Diligent ESG
Diligent ESG responds to every one of these questions and challenges. It’s an auditable solution that simplifies
ESG data collection, benchmarking and reporting, and can scale as challenges and needs evolve.

With Diligent ESG, organizations can:

→ Map their own ESG program against the latest → Monitor carbon and climate activities across
requirements and standards, including TCFD, GRI, operations and supply chains
SASB, CDP and more → Align their executive compensation plans
→ Accommodate data collection and reporting against key ESG metrics
for multiple frameworks or multiple levels within → Generate ESG dashboards and visualizations,
a framework, from carbon-specific factors to making data easy to consume and act upon
broader GHG measures
→ Generate auditable disclosures, tracking all
→ Access top quality datasets and the same tools changes and values throughout for a robust
used by institutional investors, so they can track audit trail
and benchmark ESG progress against peers and
→ Seamlessly integrate a digital ESG solution
competitors
within a broader governance, risk and
→ Curate news and filings to include regulatory compliance ecosystem
developments and stakeholder sentiments from
around the world, customized to your organization’s
jurisdictions, industry and operations

One platform for all

your reporting needs
Effective ESG oversight requires an understanding of your
organization’s wider GRC initiatives and how they relate to
your climate reporting efforts. The Diligent One Platform was
purpose-built to provide a consolidated view of your ESG, audit,
risk and compliance activities, so you can make better-informed
decisions and stay ahead of the latest risks and regulations.

With all your ESG and GRC data in one place, you can take the
hassle out of climate reporting and easily demonstrate the
progress your stakeholders want to see.

Learn more about how the Diligent One Platform can streamline
your ESG practices by requesting a demo today →
A Buyer’s Guide to ESG data management software © 2024 Diligent Corporation and its affiliate companies. 1305073318 14
About Diligent
Diligent is the leading GRC SaaS company, empowering more than 1 million users and 700,000 board members
and leaders to make better decisions, faster. The Diligent One Platform helps organizations connect their entire
GRC practice — including governance, risk, compliance, audit and ESG — to bring clarity to complex risk, stay
ahead of regulatory changes and deliver impactful insights, in one consolidated view.

For more information or to request a demo, contact us today:

info@diligent.com | diligent.com

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