FinTech Global discussed with Alexander Stevens, CEO of Greenomy, a developer of ESG and sustainability reporting software, the major ESG trends of 2023 and his predictions for 2024.
One of the biggest trends of 2023 was the standardization of ESG reporting, supported by the adoption of the Corporate Sustainability Reporting Directive (CSRD) and the IFRS Sustainability Disclosure Standards (ISSB).
The CSRD entered into force in January 2023 and requires qualifying EU subsidiaries to report on the ESG impacts of their operations. Its aim is to bolster transparency and allow consumers to assess a company’s sustainability performance. As part of this regulation, the European Sustainability Reporting Standards has just come into effect, which expands the current scope of sustainability reporting standards and comprises 12 standards that outline the reporting requirements of CSRD. Greenomy recently discussed whether it believes firms are ready for the ESRS standards.
The IFRS Sustainability standards, effective from January 1st, mandate that firms provide sustainability-related financial disclosures concurrently with their financial statements. Their aim is to better guide ESG reporting and integrate ESG considerations into financial decision-making.
Stevens stated that both of these regulations bring a share of new challenges for preparers looking for digital solutions to assist their disclosures.
The most surprising development of the year, for Stevens, was the widespread adoption of generative AI. In the space of a year, the technology went from being unknown to one of the most talked about pieces of technology. All types of companies raced to experiment with the technology to see how their operations could be improved. While there are some negatives attached to the widespread availability of the technology, ranging from people losing their jobs to children using it to complete homework, there are a lot of benefits to come from generative AI, particularly for sustainability reporting.
Greenomy noticed how useful the technology could be for companies and quickly incorporated it within its solution and developing three use cases. The first is a legislative bot allowing to ask questions against the CSRD and EU Taxonomy’s thousands of pages of legislation and guidelines. Use case two is a best practices bot allowing to scan thousands of sustainability reports and identify best practices among peers. Its final use case is a CSRD bot that allows users to upload any internal document and use its content to answer CSRD disclosure requirements.
On a company level
While ESG continued to rise in importance throughout the year, 2023 was tough on businesses across all sectors. The struggling financial sector forced many companies to enter a level of survival mode, leading to smaller budgets and making the most of existing resources.
While many felt the pinch of the year, Greenomy was fortunate to not be among them and was able to expand its operations during the year. Stevens said, “Our commitment to innovation and compliance with emerging regulations such as the CSRD has solidified our position as a leading ESG reporting solution.” He added that Greenomy had anticipated the CSRD’s adoption and codified it in record time, allowing customers to pilot it and provide feedback to ensure it addressed all their needs and reduced reporting burdens. “Ultimately the enhanced and up-to-date collective offering has led to a substantial growth in our user base.”
While Greenomoy experienced a number of significant developments this year, including partnerships with tech giant Microsoft, financial messaging infrastructure provider Swift, and Swiss and Spanish Stock Exchange operator SIX, one of its biggest success stories was the launch of Greenomy CSRD Accelerator and the launch of the Greenomy Academy.
Stevens said, “On one side, the CSRD Accelerator allowed our clients to go through a quick and efficient capacity-building program, understanding the requirements of CSRD and the best practices to achieve easy cross-team sourcing of the data required for the final CSRD disclosure. On the other side, the Greenomy Academy, launched in February, offers free e-courses on CSRD and the EU Taxonomy, as the first step to being compliant is understanding these new regulations. We already have 2000 users!”
The CSRD Accelerator is a 12-week program designed to help companies develop a clear plan to implement CSRD reporting strategies and ensure they will continue to work beyond implementation. Participants will receive support from Greenomy’s experienced team of regulatory, data and sustainability experts, as well as Greenomy’s SaaS platform that digitises data capture and reporting. The Greenomy Academy is a free educational platform that helps professionals understand ESG reporting and the associated disclosures. Its training modules are based upon Greenomy’s expertise and leverage its team of ESG and regulatory experts.
Trends for 2024
Looking ahead into the new year, Stevens sees AI and machine learning to continue playing a major role. He expects the technology will be vital in ESG data analysis and reporting processes. He added, “Navigating the evolving regulatory landscape will be crucial; with the adoption of the voluntary SME standards by EFRAG, SMEs will be a new segment in need of reporting solutions.”
As for challenges, he expects the emerging global standards will prove to be a significant challenge for companies. For those looking to ease compliance with the various standards, Stevens urges them to seek interoperability between the diverse reporting standards (ESRS, ISSB, GRI), allowing sustainable finance flow across jurisdictions.
Coming off the back of a very successful 2023, Stevens is confident the momentum will continue into the new year. With the implementation of CSRD and other incoming ESG regulations, Greenomy is well positioned to meet rising market demand for reporting software.
He concluded, “I am highly optimistic about the prospects for Greenomy and the ESG industry in 2024. The increasing emphasis on sustainability, coupled with our commitment to technological innovation and compliance with emerging regulations like the CSRD and ISSB, positions us well for continued success. We are excited about the opportunities that lie ahead and are confident in our ability to meet the evolving needs of our clients while staying at the forefront of regulatory developments.”