RSMUS.comWhat is ESG and why is it important? Watch this webinar to understand what ESG is and what it will mean for companies in the near future. We will also review the Cloud for Sustainability from Microsoft that enables companies to track and report their emissions in preparation for upcoming SEC reporting requirements.
Learn more here – https://rsm.us/3MI0JSz
Learning Objectives:
- Learn about the Environment-Social-Governance movement and how collecting data and reporting on your company’s ESG footprint may impact your business
- Understand how Microsoft’s Cloud for Sustainability solution enables data aggregation and scoring of your environmental footprint
- Learn how RSM’s ESG practice can help you begin your company’s ESG journey
Question & Answer Transcript:
Caleb: How does developing greenhouse gas inventories enable companies to increase their ESG maturity?
Jake: This is a great question, and I think that the biggest thing to understand is the fact that ESG at the highest level is really being driven by ESG megatrends. And I mentioned the ESG megatrends at the beginning of this and spoke about the climate immersion we are currently in. I think the biggest thing is that regulatory and state expectations are honing in on greenhouse gas, climate change, and carbon footprint. That aspect of the business and environmental pillar is important. Not to take away from the social and governance pillar, but the environmental pillar is relevant across industries and geographic locations. It also has a social impact, and they are different depending on where you are in the world. The environmental aspect, especially greenhouse gas emissions, because all organizations and people have a carbon footprint no matter how big or how small. Companies can improve their ESG maturity and start embedding the way they think about ESG and sustainability by developing inventories as well as all of the various governance documents that come with it as well as strategies, targets, and goals through the scorecards. I believe that when companies are looking to quickly enhance their ESG maturity and appease the major needs of investors, customers, etc. That environmental impact and the carbon footprint shown through greenhouse gas inventories and reduction strategies allow companies to move the needle forward and show the benefits of implementing ESG, and it leads to companies being able to look at the aspects of S and G that fall under the umbrella of ESG.
Caleb: Thank you, Jake. We have one more question for you. What are stakeholders asking for in terms of strategy around greenhouse gas inventories?
Jake: When we look at some of the frameworks like the task force for climate-related financial disclosures, we are seeing a lot of the recent regulations not only in the US but in Canada and around the globe starting to look at not just the quantitative aspect of greenhouse gas emissions but also the quality aspect of it. The task force and climate-related financial disclosures have four elements. One is focused on the quantitative aspect and is called metrics and targets. There is also governance, strategy, and risk management aspect. This is where the governance pillar of the ESG acronym starts moving into the environmental pillar as well, where executives and management leadership have to show what the emissions are of their company and also speak to how they plan to reduce those emissions and who is responsible for overseeing the development of targets and the carrying out of the strategies. How do they find targets being missed? Within strategy and risk management, scenario analysis is a qualitative discussion about how companies deal with various climate scenarios. There are organizations that have developed a leasing climate scenario that you can find online. Some of them are industry or geographic-specific, but at the end of the day, it is about having a quantitative vs qualitative discussion around what happens if a situation from a climate change perspective, how is that going to impact the company, and how that company put risk management practices in places to ensure that they are positively contributing to meeting some of those global environmental and climate change goals. When we look at these inventories, we want the numbers, but stakeholders also want companies to have the discussion and strategy as well as the proper structures in place internally to ensure that their stated goals and objectives are actually being achieved.
Caleb: Thank you, Jake. A question came in the chat. It is what are the fees associated with this tool and is it licensed-based or a flat fee?
Paul: This particular tool is a monthly fee of $4,000. It is not per license. You would have a few people in this system, and you might have some more costs or fees related to the storage aspect of it. If you have a lot of data, you might have a monthly storage fee as well. The general fee is $4,000/month, and that is the going rate for something with these capabilities:
Jake: Aside from the fees associated with the tool, it is important to look at how the company is strategizing around how these fit in their technology roadmap in terms of what functionality they need today versus down the road. On top of that, it is important to understand that there may be some fees associated with developing that strategy around near-term and future state business requirements for this technology.
Paul: Good point. It is a tool you need to understand your strategy and what you want to accomplish to make this tool worth it, and that is where RSM can help you. There is always adding functionality to the tool, and this is relatively new. It has been out for several months and has been used with the Las Vegas Raiders. I am certain they will add more functionality to this tool as time goes on:
Paul: Thank you both. Paul, we can now move on to your questions. Does Microsoft have any other technology that keeps track of greenhouse gas emissions?
Paul: As with a lot of companies, Microsoft is jumping all in to help companies capture their footprints. Right now, there is the ability to use your Azure licensing and your Microsoft 365 licenses to run reports that will supply you with your usage model and see what your actual emissions are. Kt comes with a monthly cost, but once you log in and have your ID, it gives you the amounts of emissions that are generated from your usage on a monthly basis.
Caleb: Thank you, Paul. Your last question is: Can the Microsoft tool track any other ESG goals?
Paul: That is a good question. This is specific more towards the E part of ESG. For right now, we can use the scorecards for a goals perspective, and you can manage the process of working towards those goals. If you have an S or G initiative, you can also manage it across other Microsoft technology and converse with others inside and outside your organization to work towards your goals.
Caleb: Thank you, Paul. Are there any other closing remarks you two have? That concludes all of the questions we had.
Jake: I would like to thank everyone for joining us. We are seeing a lot of movement towards ESG and especially greenhouse gas emission inventories and moving towards strategies and developing those targets. This technology and the emergence of new technologies and functionality are only going to increase and continue over time as we see this becoming more and more important to organizations. I do not see this as being the first time those of you on this call will hear about this, and if there are any questions or comments, please reach out to us. Thank you.
Paul Duckworth
Paul Duckworth is a D365 Customer Experience Manager with an ESG specialty specializing in the Industrials practice at RSM. He has been implementing D365 CE systems for 20 years focusing on solution design and architecture. Recently he has been focusing on the Manufacturing and Renewable Energy industries.