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Along with companies becoming more conscious of sustainable management, the growth of ESG investment over recent years has made it more important that the relevant information be disclosed to investors. As a timely response to changes in the rules governing such disclosures is also called for, a lot of human effort and time goes into the collection and collation of large amounts of ESG information, which comes in many different forms and is dispersed across different organizations and countries. In response, Hitachi has developed a service that helps companies pursue sustainable management by streamlining the tasks of collecting, presenting, and analyzing ESG information. This article describes the goals and features of this service.
Figure 1 — Concept Diagram of ESG Management Support Service Rather than being implemented on a company-wide basis, use of the service can be targeted at smaller operational units, such as specific departments or projects. It eliminates human inefficiencies, delivers greater transparency in the collection process, and supports the presentation of collected data.
Integrated reporting has arisen as a means of presenting management strategies in terms of both the financial and non-financial conditions of companies, as laid out in the 2013 International Integrated Reporting Framework.
More recently, in the 2020s, there has also been an acceleration of action on the standardization and formalization of non-financial information disclosure. Examples include work on standardizing the disclosure of financial information relating to climate and sustainability, especially by the International Financial Reporting Standards*1 (IFRS) Foundation, the introduction of regulations in the European Union (EU) based on its Corporate Sustainability Reporting Directive*2, and more extensive non-financial information disclosure requirements from the Securities and Exchange Commission in the USA.
One of the challenges when collecting large amounts of different types of environmental, social, and governance (ESG) data is that it takes a lot of work. It also requires dealing with data formats that differ between organizations and nations while maintaining data consistency when organizations restructure or merge and responding quickly to changes in the topics covered by ESG disclosures. To address this, Hitachi has developed its ESG Management Support Service (MSS) to make collecting, presenting, and analyzing ESG data more efficient and to support digital transformation (DX) in ways that facilitate sustainable management. The service was launched in January 2023 (see Figure 1).
This article describes the challenges that arise when establishing a platform for information collection and how these are addressed by the functions of the ESG Management Support Service.
While efforts to collect ESG information have accelerated in recent years, the methods for doing so have not kept pace. At many companies, it involves the following sequence of steps.
Hitachi has identified the following three issues with collecting data in this way.
Figure 2 — Four Types of Functions Provided by ESG Management Support Service Information collection can be divided into four blocks: (1) Define information to be collected, (2) Determine where information is to be collected from, (3) Collect and return the required information, (4) Analyze and present the collected information. This service improves efficiency by providing the functions needed for each block.
Based on the issues identified, Hitachi commenced development of the ESG-MSS in April 2022, recognizing the urgent need for such a service to support collection functions.
The functions to be developed were split into four groups based on how users go about collecting data. These were: (1) Registration of template, (2) Management of contact lists, (3) Collection requests and reception of answer forms, and (4) Analysis (see Figure 2). The MSS was limited to the provision of data, with customers using business intelligence (BI) tools such as PowerBI*3 for analysis.
To ensure that the service can be delivered in a way that fits with how customers use it, the scope of data collection work is split into separate “tenants” and service contracts are offered on a tenant-by-tenant basis. This provides flexibility in service configuration, supporting both large and small implementations.
The main MSS functions are as follows.
This article has described how Hitachi has addressed the difficulties companies face when collecting information, developing functions for a service that utilizes companies’ existing tools and works the same way as their existing data collection practices.
In the future, Hitachi intends to expand the service with additional functions that will allow its use for information collection by more companies.