After over 3,000 interviews with tech and business leaders over the last ten years, I have seen corporate sustainability rise in importance in boardrooms across multiple industries. Regulatory bodies, investors, customers, and even employees are all putting pressure on business leaders to address the environmental, operating practices, product and services and community impacts of their organization.
Sustainability-related legislation and reporting, particularly Environmental, Social, and Governance (ESG), continues to gain momentum. This is just the beginning of an increased focus on sustainability around every aspect of a business, including reporting, suppliers that enterprises choose to work with, etc. But what is driving these changes?
How ESG Regulations are Shaping Business Strategies Globally
In 2025, the first group of organizations will begin disclosing information to meet the European Sustainability Reporting Standards (ESRS) for the financial year 2024. These new reporting standards will apply to companies that are subject to the Corporate Sustainability Reporting Directive (CSRD).
In this first stage, it’s only large public interest companies that must disclose information on their ESG-related impact, risks, and opportunities. However, between 2026 and 2029, the reporting scope will expand to all large companies, listed SMEs, EU branches, and subsidiaries of non-EU companies.
Over in the US, the Securities and Exchange Commission (SEC) has also finalized the “enhancement and standardization of climate-related disclosures for investors” rule. This will require public companies to disclose climate-related information in their annual reports.
Additionally, an area that is seldom talked about is the fact that there are 27.6 million victims of forced labour in the supply chains of every country and sector. The inconvenient truth is that many of the world’s goods are imported and produced with forced or child labour.
The California Transparency in Supply Chains Act (CTSCA) was the first major legislation of its kind focused on transparency in supply chains to address modern slavery and human trafficking. Other nations quickly followed with the UK Modern Slavery Act, The German Supply Chain Due Diligence, and The Norway Transparency Act.
Canada is also following this trend [ST1] in attempting to eradicate these exploitative practices from their supply chains by introducing Bill S-211. The Act was created to fight against forced labour and child labour in supply chains. So, what are the biggest challenges on the horizon?
[ST1]Canada is not actually leading the way. They are following the trend which I first heard of with California (not sure if this was the first, please confirm and include), SB 657 Home Page | State of California – Department of Justice – Office of the Attorney General. Other jurisdictions may also be following which we may want to mention but not go into too much detail.
ESG Compliance: Why SMEs Can’t Afford to Stand Still
In the short term, much has been said about how new ESG legislation will significantly impact large companies, compelling them to adjust their operations to meet the regulatory requirements. However, we should highlight how small and medium-sized enterprises (SMEs) will not be immune to these changes either.
Any organization that partners with larger corporations or operates in regions with stringent sustainability standards risks being excluded from critical business opportunities if it fails to address its ESG responsibilities. This is already evident in industries such as automotive, where supply chains are scrutinized for issues like conflict minerals.
Ultimately, SMEs that want to continue partnerships with large players or expand into regulated markets must navigate the same sustainability reporting challenges.
The Silo Effect and Its Impact on ESG
One of the biggest problems is that sustainability efforts are managed in silos across an organization. For example, the environmental team could be doing great work reducing emissions and waste while the HR department tackles Corporate Social Responsibility (CSR). Elsewhere, the legal and compliance teams might be handling regulatory requirements. But the problem is these departments are rarely talking to each other.
The familiar issues caused by working in isolation are often further exacerbated by outdated tools and reliance on siloed management systems. For example, from the 400 companies Verdantix surveyed, 71% admitted they still rely on ESG spreadsheets or in-house sustainability tracking software for sustainability scoring.
How SMEs Can Overcome Siloed Sustainability Management
A cohesive strategy is required for the boardroom to see the bigger picture and assess the progress of any sustainability initiatives. So, how can companies unify their efforts to maximize efficiency and meet sustainability goals holistically? The answer is to adopt an integrated solution that consolidates these initiatives under a single framework.
Although it might sound simplistic, there are increasing examples of why a holistic approach to sustainability delivers greater impact. So, where should you begin?
Since the mid-2000s, enterprise sustainability software has transformed how companies manage business operations. But sustainability has often remained outside digital transformation initiatives, leaving many organizations needing help with manual processes and fragmented systems.
Consistent with a Verdantix ESG software survey, sustainability software today typically falls into three categories.
- Issue-specific solutions focus on energy management, waste reduction, or supplier relationships.
- Principle-specific tools are designed for regulatory compliance, such as monitoring environmental laws or managing occupational health and safety.
- Management system-specific platforms, providing corrective actions, training, document management, and reporting functionality.
According to Gartner, by 2027, 25% of Chief Information Officer compensation will be tied to the impact of sustainable technology. While sustainability software solutions typically focus heavily on carbon management and emissions tracking, some tools address broader sustainability aspects like energy management. The global energy management systems (EMS) was valued at $40.77 billion in 2022 and is projected to reach $113.85 billion by 2029 (15.65% CAGR).
Although each of these categories helps manage specific aspects of sustainability, without sharing information across departments, this fragmentation will continue to limit the potential of your sustainability efforts. What makes the Staarsoft® SaaS sustainability platform different is that it is designed to eliminate silos and provide organizations with a unified view of their sustainability efforts.
Identifying Measurable Value from Sustainability Investments
One of the organization’s most significant challenges when implementing sustainability initiatives or any new tech project is demonstrating its value. If poorly managed, sustainability efforts can feel like a cost rather than an opportunity. But there are many examples of organizations that have successfully overcome these obstacles.
For example, an environmental department at a large manufacturing company was tracking emissions and waste using environmental impact software. Elsewhere, the compliance team used another system for regulatory reporting, and the CSR team manually tracked employee engagement and community outreach initiatives through spreadsheets. They were doing everything that was asked of them, but it was too fragmented.
Staarsoft® enterprise sustainability software enables every department or business division to consolidate their efforts into a single platform. This provides a unified view of its sustainability performance. The integration improved operational efficiency and department communication, reduced duplicative efforts, and helped the company prioritize its sustainability goals.
In terms of overall value from their investment, Staarsoft® can show measurable progress and improve efficiency by at least 20%.
Where Do We Go From Here?
Every large enterprise now recognizes the need to integrate ESG factors into their core strategies. This shift is driven by increasing regulatory pressures, investor demands for sustainable practices, and a heightened public awareness of environmental and social issues.
Companies must proactively prepare for this shift by regularly evaluating their sustainability software needs to avoid falling behind, invest in scalable platforms, and stay informed about emerging technologies and best practices. By doing so, businesses can future proof their strategies and be better equipped for the growing demands of sustainability reporting.
The future of sustainability management lies in integration. As businesses face increasing pressure to meet sustainability goals while continuing to drive growth, they need tools to simplify and unify their efforts. As a result of this demand, the supply chain sustainability software market is predicted to surpass $7 billion in 2029 to meet these needs.
According to the 2023 Verdantix ESG Software Global Corporate Survey, priorities, tech preferences, and insufficient digital tools have become pivotal barriers to improving ESG initiatives. Simultaneously, this is fuelling the demand for advanced ESG software. Staarsoft® is bridging this gap with a digital tool that enhances overall ESG / CSR / Sustainability performance.
Discover the Staarsoft® Advantage
Staarsoft® empowers organizations to take control of their sustainability strategy by aligning efforts with business objectives and transforming sustainability from a burden into an opportunity for growth.
To learn more about how Staarsoft® can help transform your sustainability efforts, schedule a demo or download our approach. Explore how they can help you create a more sustainable, efficient, and connected future.
About the Author:
Neil C. Hughes
Neil C. Hughes is a freelance tech journalist with 20 years of experience in IT. He’s the host of the popular Tech Talks Daily Podcast, picking up a LinkedIn Top Voice for his influential insights in tech. Neil has written for INC and TNW but is currently writing for Techopedia and Cybernews.
