Socialsuite at the Front Lines of Sustainability Reporting
As one of the first US software solutions designed for managing Environmental, Social, Governance (ESG) and related sustainability reporting for organizations worldwide, Socialsuite shines a light on the progress of ESG disclosures around the world.The Impact of Mandatory Reporting
Moving From Compliance to Value Creation
ESG Blowback Lessens When the Focus is on Value Creation
About Socialsuite
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Apart from the largest companies regularly doing business in the European Union, US organizations generally remain well behind the Europeans in terms of addressing the new EU Corporate Sustainability Reporting Directive. While building impact and double materiality analysis into business planning provides unique opportunities to identify and address both risks and opportunities across all stakeholders, most US companies still are focusing on compliance rather than the potential for future value creation.
These are some of the takeaways from a recent interview with Seth Forman, CEO of SocialsuiteHQ, an Austin-based technology and professional services firm that both simplifies and enhances the ability for companies to conduct materiality assessments, identify financial risks and impacts on the world, both positive and negative.Socialsuite was founded in 2015 in Australia initially to focus on social impact software to help non-profits measure and report their impact for fund-raising purposes. In 2022, the company raised Series A financing and moved the company to the US with headquarters in Austin to expand into offering a full suite of ESG impact analysis services. Socialsuite reportedly has over 100 customers, including both private and public companies.
Today, it describes itself as a sustainability technology company powered by a materiality management platform helping public and private companies comply with sustainability regulations and create business value.
The Impact of Mandatory Reporting
Initially, demand for the expanded sustainability impact and reporting package came from CFOs and investor relations management due to demands in various industries for voluntary reporting, Forman reports. Now, with mandatory reporting coming from the European Union, compliance and legal teams are becoming more influentual. The company faces more competition in Europe than in the US due to the number of companies there needing to comply more quickly with ESG regulations. In the US, in addition to helping in-house management address their organizational needs for impact analysis and reporting, the company continues to develop relationships with consulting, accounting, and other firms supporting its software with professional services.
Like any software, Forman emphasizes the need for all people directly involved to fully understand its capabilities and applications to address the purpose, goals, and objectives of any impact measurement or compliance process. Success comes not just through the software itself, but the step-by-step planning process, including information gathering, engagement with all stakeholders, upstream and downstream analysis if applicable, and more. His company provides this type of support for organizations requesting it, but says it is working with a growing number of select channel partners able to provide the necessary advisory services.
Moving From Compliance to Value Creation
Socialsuite, he adds, is in the fortunate position of serving a marketplace being driven by legal requirements, which are only growing in demand, despite the anti-ESG blowback in the US. He is already seeing a steady increase in requests in the US and more worldwide due to the European Union law and demands for other industry disclosures. That said, Forman believes the true potential for the company’s software, analysis, and reporting processes is not compliance but better business management. “When senior management understands the benefits of systematically and accurately analyzing the impacts of their environmental and people strategies, and both the risks and opportunities they are creating, they recognize that this is an essential planning process even if they are not subject to mandatory reporting.”
Depending on the size of the organization, the initial process of setting up an ongoing impact and double-materiality process might seem daunting, he continues, but once accomplished, future costs plummet if properly integrated into the company’s operating or resources management system. Even more significantly, Forman stresses, customers gain a valuable guidance system for identifying strategies to address both risks and opportunities along with a means of monitoring their impact for the purposes of continuous improvement.
“Even though legal compliance drives demand, to us, it’s critical to change the conversation around sustainability from compliance to value creation. Not only does a systematic analysis of the financial and other impacts of risks and opportunities on environmental and people matters reduce risks but involves all stakeholders in identifying growth or even cost-cutting opportunities,” Forman underlines.
ESG Blowback Lessens When the Focus is on Value Creation
What about the anti-ESG blowback, particularly in the US, or talk about simplifying the EU CSRD into an omnibus bill that also includes the Corporate Sustainability Due Diligence Directive (CSDDD). This separate law, also now in effect, applies specifically to disclosures in an organization’s supply and distribution chain. “The EU is likely going to simplify aspects of the CSRD and perhaps create a single omnibus law combined with CSDDD, but mandatory disclosures are not going away. There is pushback in Europe about excessive bureaucracy, but there is no evidence of any action to curtail the essential elements of CSRD.”
He believes that at least some of the opposition in the US is due to a lack of understanding about ESG, since the entire concept is new to many. “Once management recognizes that sustainability is just a better way of managing risks and opportunities; that it can provide competitive advantages, people become more open.”
Note. Some business groups in the US publicly oppose the EU CSRD, and it is possible it could become a topic in upcoming trade and tariff negotiations with the European Union. That said, given the proven power of the EU to impose conditions and fines on US firms doing business there, and the ability for any of these companies or US suppliers to abandon the EU market at will, it seems unlikely that the US will be able to do anything to thwart the application of these reporting requirements in the EU other than use them as a bargaining chip for other concessions. See ESM: Will the EU Corporate Sustainability Reporting Law Become a Trade Issue?
About Socialsuite
The company says its technology and professional services support analysis of:
Impact materiality. Provide an analysis of a company’s impact on the environment and society.
Financial materiality. Identify sustainability risks and opportunities that may affect a company financially.
Double materiality. Assess both impact and financial materiality.
CSRD double materiality. Double materiality analysis for the EU's upcoming CSRD mandates and to better identify risks and opportunities in organizations across all stakeholders.
Social impact. Measuring impact for nonprofits and corporate social responsibility efforts globally.
Socialsuite provides industry-specific topic lists for ESG within its materiality assessment software, with topics compiled from various standards, frameworks, regulations, and benchmarking analyses. In addition to the EU CSRD, Socialsuite helps companies comply with the ASRS (Australian Sustainability Reporting Standards), and California CCDA (Climate Corporate Data Accountability) disclosures, and many other global regulations.
In addition, the company says it has developed modules for metals and mining, technology, life sciences, telecommunications, construction, transportation and logistics, manufacturing, and professional services.
For More Information
Kate Smith
Kate@socialsuitehq.com
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