Why digital transformation and non-financial reporting go hand-in-hand?

For decades, annual reports detailing bottom lines and balance sheets were the gospel of corporate transparency. Compliance reports kept regulators at bay, and health and safety documents ensured employee well-being. But today, a new chapter unfolds in the story of corporate accountability.

Stakeholders, from investors to employees to communities, are increasingly demanding a broader narrative – one that shines a light not just on profits, but on a company's footprint on the planet, its relationships with its people, its inclusivity initiatives, its commitment to ethical governance and more. In this evolving landscape, traditional reporting alone feels like reading half the book. For the rest, we need ESG (environmental, social and governance) reports.

Once a whispered footnote within corporate giants, ESG has exploded into a mainstream movement, with even smaller, privately-held companies embracing ESG initiatives. A staggering 67% of privately owned firms, alongside their publicly traded (88%) and VC/PE-backed (79%) counterparts, are now actively weaving ESG into their fabric.

But this shift isn't solely driven by internal motivation. Global mandates are acting as powerful catalysts, with governmental provisions for ESG (or non-financial) reporting a staggering 74% spike in just four years. Companies everywhere are preparing to open their books and reveal their impact, not just on their wallets, but on the world we all share.

ESG reporting unlocks a treasure trove of benefits. For companies, it's a shield against environmental and social risks, a bridge to stakeholder trust, and a magnet for talent aligned with their values. For investors, it's about making informed decisions based on a fuller understanding of a company's long-term potential. And for communities, it's about holding corporations accountable for their impact on the world we share.

Where does digital transformation fit in?

ESG reporting requires robust data as its foundation. This is where digital transformation shines – it unlocks the power of data, enabling companies to gather, analyse, and present their non-financial performance with unprecedented accuracy and transparency.

Here are some ways in which digital transformation influences non-financial reporting:

Data gathering and analysis:

  • Automated data collection and analysis:
  • Cloud technologies can streamline data collection related to environmental impact, employee well-being, diversity, and other non-financial metrics in a centralised platform. Big data analytics and artificial intelligence (AI) can help companies analyse and interpret this data, identify trends, pinpoint areas for improvement, and measure the effectiveness of their sustainability and social responsibility initiatives. This saves time and reduces the risk of errors compared to manual methods.

  • Real-time insights:
  • Sensors and IoT provide continuous data flow which digital dashboards use to provide real-time insights into a company's non-financial performance. This allows for quicker decision-making and adaptive adjustments based on changing circumstances.

Transparency and reporting:

  • Automated reporting:
  • Digital platforms can automate ESG report generation with accuracy and consistency. This facilitates timely disclosure and saves resources compared to manual data compilation and report generation.

  • Interactive reporting:
  • Digital reports can be interactive with infographics, videos, and other multimedia elements, making them more engaging and accessible for stakeholders. This enhances report readability.

  • Data security:
  • Blockchain helps securely store and track data across your supply chain, ensuring transparent and ethical practices.

  • Improved accessibility:
  • Digital platforms allow companies to easily share their non-financial reports with a wider audience, including investors, employees, customers, and communities, fostering trust and accountability.

Stakeholder engagement:

  • Targeted communication:
  • Digital tools can be used to segment stakeholders and deliver targeted communication based on their specific interests and concerns.

  • Interactive platforms:
  • Online platforms can be used to host discussions, Q&A sessions, and feedback mechanisms, enabling stakeholders to actively engage with the company's non-financial performance.

  • Continuous improvement:
  • Digital tools can facilitate ongoing dialogue and collaboration between companies and stakeholders, leading to continuous improvement in ESG practices and initiatives.

Supply chain finance

  • Sustainable finance solutions
  • Green finance options (bonds & loans) + blockchain tracking = verified sustainability impact, no greenwashing.

  • Incentivising ethical practices
  • ESG performance = financial rewards and penalties in supply chain deals, leading to greener and fairer practices.

  • Improved supplier visibility
  • ESG acts as a filter in the supply chain. It helps pick ethical partners and build a greener economy, one invoice at a time.

Overall, digital transformation empowers companies to collect more accurate and comprehensive non-financial data, gain deeper insights into their environmental and social impact, improve transparency and communication with stakeholders, strengthen accountability and trust, and make data-driven decisions for sustainable and inclusive growth.

Ushering a highly conscious high-tech era

Echoing a society increasingly aware of its interconnectedness, ESG reporting dives deep into a company's footprint, from resource consumption and community ties to employee voices and boardroom ethics.

It is not just a shift in reporting, but a seismic change in the very fabric of business. It's a recognition that true success lies not just in profits, but in leaving a positive footprint on the planet and its people. It's a call to action, an invitation to rewrite the narrative of corporate responsibility, one chapter at a time.

So, embrace this new era, not with trepidation, but with open minds. For, in the tapestry of ESG, you weave a more sustainable, inclusive and just world. Let the numbers tell the story, but let the impact be the legacy.

Infosys BPM at your service

Stakeholders want to know your impact. Infosys BPM helps you showcase the positive changes you're making. Our expertise in digital transformation services translates data into clear, engaging narratives that build trust and drive sustainable growth.

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