ESG Software Integration: FAQ for CFOs

ESG reporting is no longer optional for CFOs. With regulations tightening across the UK and globally, integrating ESG software into financial systems is now essential for compliance, accurate reporting, and strategic decision-making. Here's what you need to know:

• Why it matters: ESG investments now total approximately £24 trillion, and nearly half of investors prioritise ESG factors. Yet, only 22% of CFOs feel prepared for climate-related disclosures or external assurance.

• Key challenges: CFOs face fragmented data, multiple reporting standards (like ISSB and CSRD), and outdated tools like spreadsheets.

• The solution: ESG software centralises data, automates processes, and integrates with financial systems to improve compliance, accuracy, and collaboration.

Benefits of ESG software integration:

• Compliance: Align with global frameworks like CSRD and ISSB, cutting reporting time by up to 7x and costs by up to 80%.

• Data accuracy: Automate data validation and manage complex metrics like Scope 3 emissions.

• Team collaboration: Simplify workflows and improve communication across departments.

How to get started:

1. Assess your current data and workflows.

2. Define compliance and reporting needs.

3. Plan a phased implementation with stakeholder involvement.

With ESG software, CFOs can meet growing stakeholder demands, reduce risks, and align sustainability with financial goals. Start by evaluating your systems and choosing tools that integrate seamlessly with your existing platforms.

Key Benefits of ESG Software Integration

Bringing ESG software into the fold can streamline processes, minimise risks, and add strategic value for CFOs. These advantages translate to better compliance, improved data accuracy, and smoother teamwork, as outlined below.

Better Compliance with Global Standards

ESG software transforms compliance from a reactive chore into a proactive strength. By centralising sustainability data and keeping it updated with the latest regulations, these platforms help organisations stay ahead of changing requirements, saving them from the chaos of last-minute adjustments.

With ESG software, reporting becomes far more efficient - up to seven times faster - while cutting costs by as much as 80%. It consolidates multiple regulatory frameworks into one platform, a game-changer for the 74% of companies still stuck using spreadsheets and manual methods for sustainability reporting.

What’s more, many ESG platforms come pre-configured to align with frameworks like CDP, ISSB, and CSRD. These systems can often be set up in as little as six weeks, ensuring organisations meet regulatory deadlines without disrupting their financial routines.

Beyond just meeting compliance requirements, these tools enhance the accuracy and integration of critical data.

Better Data Accuracy and Centralisation

Centralised ESG platforms take the guesswork out of data management. By automating data collection and validation, they reduce human error and create a secure, auditable record.

Having a single, reliable data repository ensures finance teams have access to consistent, up-to-date information. This is especially crucial for handling complex metrics like Scope 3 emissions, where automated validation is indispensable. The result? Data that meets the same rigorous standards as financial reporting, enabling timely and informed decision-making.

Real-time analytics replace outdated annual reports with ongoing performance insights. This shift supports the quarterly ESG disclosures that many investors now expect and provides management with the insights needed to make strategic decisions. Advanced visualisation tools also allow CFOs to create polished reports that clearly connect sustainability efforts to financial outcomes.

Better Collaboration Between Teams

A unified ESG platform eliminates version control headaches and simplifies collaboration across departments with automated workflows.

By automating task assignments and closing communication gaps, these platforms make it easier for teams to work together effectively. This is especially important given the complex nature of sustainability data, which often involves multiple departments like operations, procurement, and HR. ESG platforms provide structure and visibility, enabling all stakeholders to contribute to accurate reporting while maintaining the financial oversight CFOs need.

The demand for ESG software is growing rapidly, with the market projected to reach around £451.7 million by 2028. This surge is fuelled by the need for tools that support global collaboration, ensure data integrity, and provide full visibility at scale.

Common Challenges and Practical Solutions

While ESG software integration brings clear advantages, CFOs often encounter hurdles that need addressing to unlock its full potential.

Breaking Down Data Silos

One major issue CFOs face is fragmented ESG data scattered across various sources. Unlike traditional financial data that flows through well-established accounting systems, sustainability data can be found in spreadsheets, utility invoices, ERP systems, and departmental databases. Legacy systems often struggle to accommodate the new data types and reporting needs required by modern ESG frameworks.

"Rigid applications that don't talk to each other aren't going to work compared to a modern cloud-native system that can operationalize sustainability data", says Ernesto Boada, Interim CIO at Workday.

To tackle this, CFOs should centralise financial and operational data on a unified, real-time platform. Cloud-based systems can extract value from existing data while making it easier to integrate external sources. This approach turns fragmented data into a cohesive view, supporting both financial and sustainability reporting.

For CFOs aiming to address data silos effectively, automated systems that capture ESG data and integrate it with financial workflows can eliminate manual processes and ensure consistency across reports. However, breaking down silos is just one piece of the puzzle - handling diverse reporting standards is another significant challenge.

Managing Multiple Reporting Standards

Navigating the maze of ESG reporting standards, such as ISSB, CSRD, and GRI, adds layers of complexity. Each framework comes with its own requirements, and it’s no surprise that only 22% of CFOs feel prepared for climate reporting and assurance obligations.

"When regulations force you to look at something that you haven't paid attention to previously, you can gain new insights and inspiration", says Massimo Terrevazzi, Group CFO & Executive Director at Perfetti Van Melle Group.

To simplify compliance, prioritise ERP integration so ESG tools seamlessly connect with existing systems. AI technologies can assist by streamlining regulatory compliance, automating data collection, and generating reports. Additionally, integrating CSRD metrics with traditional financial KPIs offers a more comprehensive view of performance. For a deeper dive into integrating ISSB reporting into financial strategies, check out this ISSB reporting guide.

Aligning ESG data with financial systems is essential for ensuring CFOs maintain the level of oversight they require.

Integration with Existing Systems

The technical challenge of integrating ESG software with current financial systems is another obstacle. Many traditional systems aren’t built to handle the demands of ESG data, leading to compatibility issues, compliance risks, and potential cost concerns.

"We wanted to ensure our ESG data solution was easily compatible with our existing ERP system", shared a CFO from a consumer goods company.

Start by inventorying, cleansing, and standardising ESG and financial data. Then, design ETL pipelines to link various data sources into a unified model. Collaboration between IT, finance, and sustainability teams is crucial to align ESG integration with broader organisational goals. Automating workflows within ESG reporting solutions can further streamline data submission, validation, and approval processes, reducing manual effort and improving accuracy.

Ultimately, choosing ESG software that integrates easily with existing systems, supported by upgraded IT infrastructure and ongoing team training, can help CFOs overcome these integration challenges effectively.

Key Features to Consider in ESG Software

When choosing ESG software, it’s crucial to focus on tools that seamlessly link ESG data with financial reporting and compliance needs.

Multi-Framework Compliance Support

A survey by ISS, a proxy adviser, reveals that 90% of companies either use or plan to use multiple systems for non-financial disclosures. This makes it essential for ESG software to support frameworks like ISSB, CSRD, GHGP, and TCFD to ensure broad coverage and effective communication with diverse stakeholders. By aligning overlapping requirements across these frameworks, businesses can streamline reporting and avoid duplicating efforts.

Currently, 20 jurisdictions - representing around 55% of global GDP - have adopted or are in the process of adopting ISSB standards. ESG software that provides real-time regulatory updates and automates reporting processes is particularly valuable in this shifting regulatory environment. For example, a medium-sized insurance company used Manifest Climate to identify gaps in its disclosures and align them with key frameworks. This led to faster, more consistent reporting and improved readiness for regulatory changes. It’s worth noting that ISSB focuses on financial materiality (impact on financial performance), while CSRD takes a broader view, incorporating both financial and environmental or societal impacts.

Such compliance features also make it easier to integrate ESG reporting with existing financial systems.

Integration with Financial Systems

Your ESG software should effortlessly connect with the systems you already use, such as ERP, HRIS, and CRM platforms. Look for tools that offer pre-built connectors and APIs to simplify data integration.

"When it comes to ERP centricity, most of the data that you need in the sustainability reporting is already sitting in the ERP, or it could potentially sit there", says Adriana Andreea Ursu, Global Sustainability Principal at SAP.

This is particularly relevant for organisations in the UK that rely on platforms like Xero, QuickBooks, or larger ERP systems. The software should also be capable of handling data requirements tied to frameworks like SASB and CSRD. Research shows that companies effectively integrating ESG factors into their financial systems have seen a 6.4% higher return on equity. Additionally, brands with strong ESG alignment can double their market value four times faster, and sustainability-marketed products command a 39.5% price premium over traditional counterparts. By embedding ESG into financial reporting, businesses gain a more comprehensive view of overall performance.

Automation is another critical feature that can enhance the efficiency of ESG reporting.

Automation and Custom Reporting Tools

Automation powered by AI can drastically cut down on manual tasks while improving data accuracy. Studies indicate that AI can save risk professionals an average of 7½ hours per week.

"AI is going to be key. We found that in some of our research, risk professionals expected it to save them around 7½ hours a week", says Sawyer Knight, Director of ESG Strategy and Market Insights at Thomson Reuters.

How to Implement ESG Software Successfully

Getting ESG software up and running effectively calls for a structured, automated approach. By following a clear implementation process, CFOs can integrate data smoothly while keeping operational disruptions to a minimum.

Assess Existing Data and Workflows

Before choosing an ESG platform, take a close look at your current systems. Start by mapping out all your data sources across departments - this could include financial data from your ERP, employee records from HR systems, energy usage data, and supplier information from procurement systems. Understanding these workflows is essential.

Next, evaluate how efficient your current reporting processes are. Many organisations find that manual methods drain resources that could be better spent on strategic analysis. Ask yourself if your existing software can handle the demands of data collection and integration effectively.

Regulatory compliance is another key area to review. Look closely at the CSRD reporting requirements for your region and ensure your systems can meet these standards while staying updated with regulatory changes.

Also, consider the financial and operational costs of your current approach. Factor in the time and resources needed for training and transitioning to a new system. Manual processes often come with hidden costs, which can highlight the value of automated solutions.

Once you have a clear understanding of your current setup, you can pinpoint the specific compliance and reporting needs your new ESG system must meet.

Define Compliance and Reporting Needs

With 78% of CFOs feeling pressure from stakeholders to act on sustainability - and only 22% feeling ready to report on climate-related risks and opportunities - defining clear compliance and reporting goals is essential. Start with a materiality assessment to identify the ESG metrics that matter most to your organisation and its stakeholders.

Decide with your executive team whether your ESG efforts will focus solely on compliance or if they’ll also aim to drive business growth. Review your current data collection capabilities to see if they can handle the granular data often required by ISSB standards. Many organisations find that existing systems fall short, making enhanced integration a necessity. Be ready to provide limited assurance as regulatory expectations continue to evolve.

Plan Phased Implementation

Once you’ve defined your needs and assessed your workflows, adopt a phased rollout approach. This strategy reduces disruption and ensures data integrity as you transition. Avoid overhauling everything at once; instead, manage risks by rolling out the system in stages, allowing for adjustments along the way.

Bring in key stakeholders early - this includes IT, controlling, and purchasing teams - to ensure the software addresses a range of needs. Start with a pilot phase in a specific department or reporting area to test the software’s functionality and identify areas for improvement before scaling up.

Before introducing new tools, optimise existing workflows to avoid unnecessary rework and fully benefit from the software’s capabilities. Integrate ESG data collection into your current business processes to maintain data quality and avoid duplication. For organisations with complex supply chains, this phase is also critical for tracking Scope 3 emissions effectively.

Training is another crucial step - equip your teams to make the most of the software. Establish regular reviews to keep the system aligned with changing regulatory requirements. By focusing on opportunities to create value through ESG, you can develop a strong implementation plan and build a compelling case for comprehensive ESG data integration.

Conclusion: The Value of ESG Software Integration

ESG integration has become a game-changer for CFOs, offering a streamlined way to bring sustainability and financial reporting together under one roof. With the right tools, businesses can simplify compliance while improving the quality of their reporting.

Take Greenomy, for instance. This platform digitises over 1,200 ESRS data points, demonstrating how automation can make compliance less of a headache and reporting much more efficient. Similarly, the Schufa Holding AG case from 2024 highlights how technology can transform traditional processes. These examples show why UK businesses need to modernise their systems to stay competitive.

The urgency is clear. UK organisations face evolving regulations and growing demands from stakeholders. Tools like Speeki, which align with both UK-specific and international frameworks, provide the adaptability needed to navigate this increasingly complex regulatory environment.

By centralising ESG data and automating processes, CFOs can cut the costs of manual work while improving data accuracy and readiness for audits. This not only ensures compliance but also builds a foundation for long-term growth and trust among stakeholders.

For finance leaders working on ISSB reporting, the key is to start by evaluating existing systems. A well-thought-out plan that includes careful assessments, phased rollouts, and active stakeholder involvement can lead to the best outcomes. Those who take this approach are more likely to see strong returns on their investment in ESG software.

FAQs

How can CFOs smoothly integrate ESG software with their financial systems to ensure accurate data and compliance with UK regulations?

To successfully integrate ESG software into existing financial systems, CFOs should begin by setting clear goals and pinpointing the ESG metrics that matter most to their organisation. It's important to choose software that works smoothly with existing tools like ERP, HRIS, and CRM systems to ensure consistent and accurate data flow.

Teamwork is essential here. Finance, ESG, and audit teams need to collaborate closely to weave ESG considerations into risk management and stay compliant with the UK's evolving standards. Using solutions that offer automation and standardised data collection can cut down on manual errors, boost efficiency, and make reporting much easier. By following these steps, CFOs can handle the challenges of ESG technology integration with greater confidence.

How can CFOs effectively prepare their organisations for transitioning to automated ESG reporting?

To make the shift to automated ESG reporting as seamless as possible, CFOs should begin by assessing their organisation's current ESG needs. Aligning ESG goals with the company's broader business strategies is key, and setting clear policies alongside measurable targets can create a solid starting point.

The next step is to establish dependable systems for gathering and managing ESG data. Focus on ensuring data accuracy while staying compliant with the latest UK regulations and standards. Collaboration between departments like finance, sustainability, and IT can make it easier to integrate ESG factors into existing financial systems.

Lastly, keep a close eye on updates to UK ESG regulations and reporting frameworks. Preparing ahead for these changes will not only make compliance more straightforward but also improve the efficiency of your reporting processes.

How can ESG software help CFOs connect sustainability goals with financial performance, and what impact could this have on the organisation's market value?

ESG software helps CFOs connect sustainability initiatives with financial performance by merging ESG metrics with financial data. This combination offers a more detailed view of how sustainability efforts impact financial results, enabling smarter decisions and better strategic planning.

By enhancing transparency and aligning ESG reporting with financial objectives, these tools strengthen trust with stakeholders - especially investors who place growing importance on strong ESG performance. This improved trust and alignment can also boost the organisation's market value, as companies with solid ESG practices are often perceived as more resilient and competitive in the marketplace.

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