U.S. companies are tracking sustainability data more than ever before, but according to a new report, the software tools they use are subpar.
The ReScore Project Group, a team of graduates from Columbia University’s Master of Science in Sustainability Management program, recently completed a study of the U.S. market for CSR data solutions in collaboration with Tennaxia, a cloud-based CSR software platform developed in Europe, and consulting firms 2020 Strategies, LLC and The Triana Group, Inc.
*Effective CSR Data Management: How Software Solutions Can Drive A Sustainable Future *found more than half of the 50 U.S. organizations surveyed reported using either Microsoft Excel spreadsheets or a combination of Excel and other software to track CSR data. Only 29 percent use data management software specifically designed for CSR purposes.
Source: ReScore Surveys & InterviewsIt turns out the most widely used CSR data tool in the U.S.—Excel—is also the lowest performing, according to the study. While managers typically perceive Excel as the low-cost option for tracking CSR data, study authors conclude that relying on basic spreadsheet software will actually cost more annually in staff time, inefficient workflows and errors.
A major issue with using Excel as the default tracking tool is that data is often of inconsistent quality and difficult to audit, explained Ryan Mullen, a Senior Associate in PwC's Sustainable Business Solutions practice and a participant in the study. Software tools designed specifically for CSR data typically generate “more auditable records,” he said.
U.S. Sustainability Reporting Rates Catching Up to Europe, But Data Quality Lags
In Europe—where CSR laws and investor pressure require more companies to publish sustainability data—good record keeping apparently goes hand in hand with better data.
The KPMG Survey of Corporate Responsibility Reporting 2013 found that while 86 percent of the 100 largest U.S. companies reported CSR data, only 23 percent pursued external assurance for the data. In France, the assurance rate more than tripled that of the U.S. at 76 percent.
Bar graph courtesy of KPMG.Faurecia, a global auto parts manufacturer and Tennaxia customer, tracks 180 environmental indicators across 330 manufacturing sites in 35 different countries and in eight different languages.
Stéphane Poli, an executive in Faurecia’s automotive seating business group, says the data collection and analysis is surprisingly easy with customized CSR software. Since adopting the Tennaxia CSR Reporting Solution, he’s established new companywide initiatives, including an aggressive energy reduction program that the software tracks by calculating ratios of energy consumption per employee, unit-produced and other metrics.
“We like that the software is highly customized,” Poli said. “It isn’t an off-the-shelf online platform. It’s constantly evolving to adapt to our needs by taking into account the feedback from our internal users.”
Pains and Promises of CSR Software
Although the U.S. market for CSR data systems is saturated with software-as-a-service (SaaS) products such as CRedit360, ProcessMAP, CSRware and now Tennaxia, software providers face an uphill climb to gain the confidence of U.S. sustainability professionals.
According to the study, sustainability managers generally don’t trust that CSR data systems can deliver what they promise. These managers seem to have had negative experiences with early CSR reporting tools and remain unconvinced an ideal solution exists. Given the tremendous differences in business goals and data management needs, several executives interviewed also expressed frustration at the lack of streamlined processes in software offerings on the market.
Sophia Mendelsohn, head of sustainability at JetBlue Airways, continues to mainly use Excel despite the numerous options in CSR software. She says CSR software providers approach her monthly. Still, she remains skeptical. “There hasn’t been a software system yet that, for the investment, I can see dominating the airline industry,” she said.
The Real Cost of Low Functioning Data Systems
In the study’s benchmark analysis of 16 leading CSR data management tools, every system outperformed Excel in the areas most important to CSR managers. In addition, managers who described work before and after CSR software implementation noted drastic reductions in staff time devoted to data management.
Excel typically requires tedious work aggregating data and manually inputting information, whereas CSR software includes features like automated data collection, data verification and adherence to major CSR frameworks, such as the Global Reporting Initiative (GRI) and CDP.
The international parcel delivery company Geopost switched from Excel to Tennaxia about a year ago, and has undergone major changes since. In the past, CSR data management and compliance reporting required two full weeks of staff time every quarter, including collating and verifying data from multiple complex spreadsheets. These days, thanks to the implemented automatic controls, the company gets the same amount of work done every quarter with just three minutes to consolidate and 2-3 days to verify data, according to Daphné de Kermoal, sustainable development director of Geopost.
De Kermoal says the cloud-based platform also has eliminated the bottlenecks that plagued the old Excel system, decreased the risk of errors, and facilitated the reporting verifications.
Arkema, a global specialty chemical and advanced materials company based in France, has had similar experiences. The company began using Tennaxia 10 years ago—first for waste management data and later expanding to EHS regulatory compliance and investment decision-making.
Bernard Lamy, an environmental remediation manager at Arkema, says the CSR software has cut the need for two full-time employees that were previously assigned to regulatory compliance. Now a team of five meets for two hours every other month to discuss substantive management issues informed by the data, including regulatory requirement updates supplied by the Tennaxia system. Lamy said his team also felt more confident in their investments because the platform allowed them to clearly see they weren’t diverting money from more urgent or crucial investments.
“These tools enabled us to take our heads out of the water and have a better perspective of the overall regulatory compliance strategy and actual decision-making,” Lamy said.
Why Functionality Isn’t Everything
The benchmark study shows that the leading CSR software systems have at least 75 percent of the key features demanded by the market. However, the offerings vary in their levels of customization, training and flexibility.
Tennaxia CEO Bernard Fort recognizes that software is only part of the solution. He says deep customization and ongoing client-provider relationships are key to successful adoption.
“The deployment process is merely the beginning of the client partnership,” he says. “Our software was designed by environmental sustainability experts, and our team helps the client define stakeholders, materiality and key performance indicators. Together we examine their unique objectives and build a software-enabled CSR management strategy.”
Fort says customer feedback plays an important role in the company’s product development, which allows customers to suggest new features to Tennaxia’s technical team.
Fort also says his company focuses on ensuring high data quality, facilitating the audit process and training staff to understand the meaning of the collected data. "Focusing on these issues allow us to build and deploy the most effective solution for each client in a time-efficient manner," he says.
Tennaxia will soon begin incorporating feedback from its first U.S. customers, including Manufacture New York, a Brooklyn-based fashion incubator aiming to promote independent fashion designers and apparel made through sustainable global supply chains. Tennaxia’s system will collect, analyze and manage the sustainability data of apparel produced in the factory.
Additionally, Tennaxia is inviting U.S. companies into a pilot program for early adopters that includes reduced fees for software licenses, consulting to configure and support the launch of a CSR platform and other benefits.
In an age when hard data is the foundation of most corporate decisions, for many companies the process of tracking sustainability information is woefully inadequate and out of date. In order to realize the full value of managing sustainability performance, companies should have an efficient system to collect and analyze CSR data. In this study, we review the main market drivers pushing U.S. companies to report sustainability data, identify what sustainability professionals look for in CSR data solutions, assess the current market for CSR reporting tools, and analyze key CSR data management solutions.
The intention of this whitepaper is to provide insight into CSR data management solution suppliers in regards to what their customers are looking for, and offer guidance to CSR professionals looking to best manage the CSR data process. The authors believe that widespread adoption of quality CSR data management is vital to driving sustainable business performance and collective sustainability goals. Download here.
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