Excel Alone Falls Short for Businesses; ESG Digitalization is the Next Step, says Radim Petratur from Adastra

Companies planning their ESG strategies and associated reporting should not overlook the importance of automating and digitizing data in this field. This becomes especially crucial for large organizations where Excel and paper-based methods are no longer sufficient. These digital solutions simplify and enhance the efficiency of handling the extensive amount of data involved in ESG, such as that sourced from suppliers.


“Companies obligated to report under the CSRD (Corporate Sustainability Reporting Directive) must consider the digitalization of their data and, importantly, the ongoing, continuous collection of this data,” states Radim Petratur, an expert in sustainability and its digitalization at Adastra. Given that ESG is predominantly data-driven, Adastra, with its expertise in data digitalization, is also venturing into this domain.

Why should companies digitize ESG data, and what are the business benefits?

In a recent seminar I conducted, we surveyed why companies are digitizing their ESG data. The most common reason, cited by nearly 80 percent of respondents, was to increase efficiency and automation. Businesses are overwhelmed by the volume of data in Excel spreadsheets. About 60 percent mentioned the need to continuously monitor KPIs (Key Performance Indicators). Others highlighted the necessity to prepare for increasing reporting demands, anticipating that their chosen reporting tools would update automatically to keep pace with legislative changes. Notably, half of the companies required improved internal data sharing, while nearly 30 percent mentioned external data sharing, and around 20 percent emphasized the need for bulk data collection from suppliers in the value chain. In summary, companies are looking to simplify, automate, and optimize their processes.

Will this ultimately save the company manpower and money?

Absolutely, it will not only save resources and finances but also streamline work processes and make them more transparent. I always say that I only manage what I can measure. Excel, buried somewhere on Sharepoint, is no longer sufficient for larger companies.

What are Adastra’s plans in the ESG domain?

We approach ESG through data, leveraging our expertise in this area. Our goal is to be a strategic ESG partner for our clients, offering comprehensive services from A to Z. Initially, we collaborate with consultancy firms for the initial phase. Our role involves assisting in the continuous collection of ESG data, its automation, optimization, and the creation of clear dashboards. These dashboards provide management with insights for further business decisions. In simple terms, it allows companies to communicate their ESG activities to stakeholders, partners, banks, and employees, demonstrating how these initiatives can benefit their business. It’s a win-win situation.

Could you elaborate on the digital aspect? For instance, how would you assist a manufacturing company with a decarbonization strategy and reporting?

For a large manufacturing company required to report under CSRD or ESG standards, data is scattered across various systems, in physical formats with colleagues, and in Excel files. To gain an overview, you need to aggregate, digitize, clean, and ensure data quality at the entry point. But the work doesn’t end there. Continuous data management is crucial, ideally with a reliable partner who can assist in ongoing data evaluation and accessibility.

At Adastra, we specialize in data handling. We start by implementing a ‘Smart Data Box’ – a tool integrated with all systems containing ESG data. Then, we design methods for collecting the remaining data that aren’t digitally captured or automatically linked.

This centralizes all ESG data in one place, providing the client with a single source of truth and control. Companies can then decide how to further utilize this data. Various reporting tools are available in the market, each suitable for different companies depending on their stage and existing systems. Adastra’s role extends beyond initial support to include consultations and the integration of these reporting tools.

Do you primarily approach customers through consulting firms or directly?

We utilize both channels. As mentioned earlier, we closely collaborate with consulting firms. Naturally, some clients come through them, as these firms assist with setting up ESG strategies, double materiality, etc., but they usually don’t handle the data aspect. That’s where we provide our digital solution expertise.

Some companies reach out to us directly, and a portion of these are already our clients in other areas, such as those for whom we’ve developed data platforms or assisted with IoT or AI solutions. We primarily focus on large companies and corporations, not just in the Czech market but globally as well.

What exactly do companies want from you?

I would categorize companies into three groups based on their current phase in relation to ESG reporting. The first group needs to automate the collection of ESG data for further processing. The second group requires complete ESG software, including reporting tools, in addition to data services. The third group is starting from scratch and needs to develop a complete ESG strategy on a greenfield.

In essence: The fundamental step is to gather data in one place. We connect the data to some software – in its simplest form, this could be Excel, PowerBI, or an ESG tool like SAP or Microsoft. We recently started collaborating with Salacia from the Netherlands, which has extensive experience in their market. However, the foundation is data due diligence – understanding what and where my data is and collecting it into the ‘Smart Data Box.’

Is the data quality level quite varied across different companies?

There’s a lack of standards and best practices here. Digitalization is currently trailing behind reporting. In reporting, companies have made some progress and established good practices, but in digitalization, the challenge often lies in implementing solutions that truly benefit the client.

How much interest do you see in ESG data digitalization?

In our partner network, we’ve received about ten inquiries in just the last two months. Clients are increasingly requesting digitalization. We’ll see how this trend continues this year.

So this should be a big year, a trial period for many companies in terms of reporting.

If companies don’t address this now and wake up mid-year, it might be too late. Digitalization and subsequent reporting can’t be achieved in just two or three months. I would urge companies to address this sooner rather than later and include digitalization in their requests for comprehensive ESG service solutions.

Smaller companies with maybe only 100 to 500 employees might manage with their own solutions for a while, but collecting data from the supply chain will not be as straightforward.

So from your perspective, digitalization in ESG should ideally be part of most tenders that the requesting company issues for ESG?

Yes, companies should anticipate this to avoid playing catch-up later. They need to realize that well-conceived digitalization will grow with them and often address evolving legislation. The key is to start collecting data as soon as possible.

When a company opts for software beyond Excel, how costly can it be?

ESG data solutions and digitalization make economic sense primarily for larger firms, corporations, companies with multiple subsidiaries, and so on. With quality and comprehensive ESG tools, we are talking about an investment of over a million Czech crowns almost always.

 

Interview published by Ekonews.cz (25. 1. 2024)