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by Jukka Kostiainen, Value Architect at Nortal

A game-changer – turning industrial ESG reporting from a hurdle into an opportunity

The EU’s Corporate Sustainability Reporting Directive (CSRD) is reshaping ESG reporting in industry, turning compliance into a strategic advantage. Many businesses struggle with ESG data management, necessitating innovative solutions. Microsoft Sustainability Manager offers crucial automation and precision for CSRD compliance, empowering organizations to enhance efficiency and innovation. Despite being underrated, this cloud-based solution enables businesses to meet regulatory standards while driving sustainability. Amidst the complexities of ESG reporting, Microsoft Sustainability Manager guides companies toward a future of success and sustainability. 

The European Union’s Corporate Sustainability Reporting Directive (CSRD) has established a new standard for transparency and accountability in ESG operations. It mandates organizations to disclose their environmental, social, and governance impacts with unprecedented detail. This is not just regulatory compliance for an industrial company – it is an opportunity to lean into a unique opportunity to embrace sustainability and foster a competitive advantage. 

However, we have observed a significant need among businesses for additional tools and expertise to manage and report on ESG data, particularly within their supply chains. On average, sustainability reporting projects take up to nine months to complete, often requiring substantial investments in external consulting and integrating more than 100 solutions to meet CSRD compliance. 

Despite these challenges and complexities, many organizations in the industrial sector have opted to manage their CSRD compliance using Excel or fragmented systems, leading to tedious data consolidation processes. This approach often results in inefficiencies, inaccuracies, and missed opportunities. 

Unlocking efficiency and insights with modern technology and AI

Microsoft Sustainability Manager is a cloud-based solution designed to streamline the gathering, storage, analysis, and reporting of ESG data for businesses. Through automation, it enhances accuracy, ensuring that data accurately reflects the organization’s environmental and social footprint. This precision is crucial for compliance with the CSRD, which requires levels of detail and accuracy that traditional manual methods often struggle to achieve. 

Despite its underappreciation in public discussion, Microsoft Sustainability Manager offers robust capabilities for companies. It enables monitoring and benchmarking performance against industry standards and best practices, integrating environmental, social, and governance data into a comprehensive “real ESG” dashboard. This allows for insights, identifying risks and opportunities, and setting and tracking ESG goals across various environmental domains, such as Scope 1, 2, and 3 carbon emissions, water consumption, waste generation, and material circularity. 

Artificial Intelligence (AI) plays a crucial role in Microsoft Sustainability Manager, as with many vendor solutions. The platform features an integrated AI assistant known as Copilot, which aids in identifying trends and abnormalities, such as identifying top-emitting suppliers. Copilot chat is a valuable tool for easing the learning curve for end-users, enabling them to interact in natural language to obtain necessary data, comparisons, or insights without requiring extensive training or manual navigation of the solution’s functionalities. 

Becoming the visionary skipper with an eye on the horizon

While Microsoft Sustainability Manager offers versatile opportunities to streamline data gathering and processing, it’s essential to recognize that connecting the dots requires first collecting them. The significance of data integrations and the democratization of industrial data cannot be overstated. For organizations lacking a data strategy and platform, constructing an ESG dashboard is a compelling reason to address these crucial topics. 

Transitioning from data collectors to proactive leaders, you and your team assume the helm in steering the ESG ship within your organization and across your supply chain, thereby saving time and mitigating errors and risks. With an intuitive and continuously updated view of data and insights, ESG leadership becomes more accurate and reliable, leveraging advanced data science and artificial intelligence to ensure consistency and automate calculations. This empowers you to adapt and scale data processing to meet evolving organizational needs, preferences, and regulatory requirements. 

Embracing a forward-thinking mindset, your team transcends the confines of hindsight to become more insightful and proactive. Microsoft Sustainability Manager empowers members to readily identify and seize opportunities for improvement and innovation. This proactive stance extends beyond the platform itself, encompassing the utilization of various cloud tools and data resources, thereby driving continuous growth and evolution. 

Tackling two emerging themes: Scope 3 and Product Carbon Footprint 

We have identified two significant emerging themes for our industrial clients: scope 3 emissions and Product Carbon Footprint.  

Scope 3 emissions, often overshadowing direct emissions, represent the indirect activities within your supply chain, from resource procurement to product end-of-life. With Microsoft Sustainability Manager shedding light on Scope 3 emissions, your organization can pinpoint areas of highest impact, enabling smarter and more cost-effective operations throughout the supply chain. Additionally, end clients have a growing demand for insight into the lifetime carbon footprint of products they intend to order.  

Product Carbon Footprint, distinct from organizational carbon footprint, focuses on a product’s environmental impact throughout its lifecycle. Leveraging Microsoft Sustainability Manager, you can identify and mitigate high-emission areas in your product lifecycle, fostering innovation and differentiation in the market through smarter production and material use.

Narrative of innovation and leadership that – at last – holds truth

Microsoft Sustainability Manager offers more than just data reporting – it enables the construction of a narrative centered on innovation and leadership in the green economy. While the journey to ESG excellence may be complex, with the right tools and partners, it becomes a pathway to growth. 

Countless companies are offering CSRD reporting solutions. However, it’s crucial to prioritize data security and integration with widely used ecosystems. A solution that safeguards your data ownership and boasts a proven track record and a solid roadmap for the future is paramount. Moreover, aligning your technology choice with your existing Microsoft data platform is a natural extension, as it revolves around data management, data-driven decision-making, and associated reporting. Therefore, synchronization with your data platform technology and architecture, rather than just your application platform or architecture, is advisable. This approach maximizes synergy benefits, emphasizing the importance of data management and reporting. Starting with a pilot program covering one or two departments can provide valuable insights into the solution’s efficacy. 

The industrial sector stands at a unique crossroads, with the opportunity to leverage the ESG revolution to transform regulatory compliance into a strategic asset. By embracing tools like Microsoft Sustainability Manager and partnering with seasoned industry experts like Nortal, organizations can effectively navigate the complexities of ESG reporting and emerge as leaders in sustainability. 

Furthermore, the crucial role of data platforms in driving ESG reporting efficiency cannot be emphasized enough. The 80–20 principle is pertinent here, where 80% of the effort is dedicated to data collection, integration, and modeling, while the remaining 20% focuses on reporting. Sustainability solutions like Microsoft Sustainability Manager provide much of this reporting framework out of the box, significantly reducing the data modeling workload. The real benefit comes when data can seamlessly and automatically integrate into the solution. Without this automation, weeks can be spent each month collecting required data, highlighting the importance of efficient data flow management. 

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