Using sustainability software or any other similar tools for business decisions can offer valuable insights into environmental impacts and help companies make more sustainable choices. However, there are several risks and challenges associated with relying solely on such tools:
Data Accuracy: Sustainability software relies heavily on data inputs. If the data used in these tools is inaccurate or incomplete, it can lead to flawed conclusions and misguided decisions.
Limited Scope: Most sustainability software tools focus on specific aspects of sustainability, such as carbon emissions. Relying solely on these tools might lead businesses to overlook other essential aspects of sustainability, like social and economic factors.
Lack of Context: Sustainability decisions often require a deep understanding of the specific context in which a business operates. Generic software might not consider industry-specific nuances, making the recommendations less relevant.
Dependency on Technology: Overreliance on technology can create a dependency. If the software fails or provides incorrect information, it might disrupt decision-making processes.
Dynamic Nature of Sustainability: Sustainability factors and regulations are continually changing. Software tools might not always adapt quickly enough to reflect these changes, leading to decisions based on outdated information.
Greenwashing Risk: Relying solely on sustainability software without implementing real changes can lead to greenwashing - the act of appearing environmentally friendly without taking substantial actions. This can harm a company's reputation.
Complexity of Sustainability: Sustainability is a multifaceted concept. No software can capture all its complexities accurately. Businesses might miss out on crucial elements that aren't covered by the software.
Security Concerns: Sustainability software often deals with sensitive data. Ensuring the security of this data is crucial to prevent breaches and protect the company and its stakeholders.
Legal and Ethical Risks: Depending on the region and industry, there might be legal and ethical considerations related to the data collection and usage in sustainability software. Ignoring these aspects can lead to legal issues.
Overlooking Behavioral and Cultural Factors: Sustainability is not just about numbers; it involves human behavior and stakeholder attitudes. Software might not capture these subtleties, which are essential for effective sustainability strategies.
To mitigate these risks, businesses should use sustainability software as a part of a broader sustainability strategy. Human expertise, contextual understanding, and regular updates to the software based on changing regulations and standards are essential to making well-informed and sustainable business decisions.
So, what should you ask a software provider to address these risks?
Here are some key questions to consider:
Data Accuracy and Sources:
Where does the software source its data from?
How frequently is the data updated, and how is its accuracy ensured?
What algorithms or calculations are being used to generate ratings or scores? Can you provide access to these for our disclosure and assurance processes?
Can our auditors have access to verify data for our sustainability reporting?
Scope and Customization:
What specific sustainability metrics does the software cover? Do they utilise the global standards or are they mapped thematically with custom metrics (eg. some companies and analysts might the titles from the Sustainable Development Goals, but they actually use their own metrics to assess performance)?
Can the software be customized to track progress against our company’s unique sustainability goals/metrics and how will it support our strategy and reporting process?
Integration and Compatibility:
How easily does the software integrate with our existing systems and technologies? Can it utilise API links to push/pull data from other systems?
Is there a dedicated support team to assist with the integration process?
Does the support team understand sustainability requirements and best practice or do they only have experience using the software? If they don't have sustainability experience, do they have a preferred provider that can assist to ensure the implementation meets best practice?
Security and Compliance:
What security measures are in place to protect our data?
How does the software comply with data protection and privacy regulations relevant to our industry and region?
Updates and Adaptability:
How does the software adapt to changes in sustainability regulations and standards?
What regulations and standards are included in the core price and which ones are additional? Do additional standards require custom coding to be implemented?
Does the software combine metrics from sustainability standards that are the same so that the data doesn't have to be inputted twice (eg. emissions metrics from TCFD & GRI)?
Is there a regular update schedule, and are updates included in the subscription cost?
Scalability and Future Growth:
Is the software scalable to accommodate our company’s growth and changing sustainability needs?
What is the process for upgrading or adding additional features as our requirements evolve?
By asking these questions, a company can gain a deeper understanding of the sustainability software provider's capabilities, ensuring a more informed decision-making process and reducing the risks associated with adopting new technology.
P.S. Our teams has used and implemented a variety of sustainability and social performance software. Contact us to get an independent third party opinion on your sustainability software needs.
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