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The use case for ESG software in apparel and footwear

This article explores the thought process of assessing the benefits of utilizing ESG data management platforms and presents key insights derived from past industry-wide experiences in ESG reporting.

Published on

Jun 06, 2024

Written by

Laurent Vandepaer

Category

Knowledge

Table of content

In the realm of corporate sustainability, effective data management plays a pivotal role in driving tangible impact and fostering transparency. As apparel and footwear companies strive to integrate environmental, social, and governance (ESG) considerations into their business strategies, the need for robust data management solutions becomes increasingly apparent.

In my previous role as a sustainability performance lead at On, I integrated Life Cycle Assessment (LCA) and environmental footprinting into our sustainability framework.

This article explores the thought process of assessing the benefits of utilizing ESG data management platforms and presents key insights derived from past industry-wide experiences in ESG reporting.

Challenges with external consultants

Initially, we hired external consultants to assist with our greenhouse gas reporting requirements. Despite the perceived ease of outsourcing, the experience resulted in suboptimal outcomes, including:

  • Generic emission factors and inconsistent assumptions led to inaccuracies in data.
  • Limited access to calculations and lack of understanding of sector-specific emission drivers hindered transparency and data reliability.
  • Dependency on third-party methodologies resulted in difficulties in adapting to evolving reporting standards.

These difficulties sometimes led to complicated discussions with our stakeholders, who were accustomed to very clear and transparent financial data where calculation methods were much more mature.

Limitations of internal GHG footprinting and product sustainability

Transitioning to internal GHG footprinting improved data accuracy and understanding of emission drivers.

However, reliance on manual processes using spreadsheets posed several challenges:

  • Increased risk of errors
  • Difficulty in aligning with standards and ensuring consistency in reporting one year after the other.
  • Lack of scalability for future ESG reporting requirements.
  • Challenges in external auditability and traceability of calculations.

It was a challenge to maintain our internal tools in terms of capacity and elevate their use for customer-facing reporting, compliance with upcoming requirements such as PEFCR, the French ECO SCORE, and user interface for non-experts.

Arguments for the adoption of an ESG data management platform

Recognizing the need for a comprehensive solution, On opted for an ESG data management platform.

These platforms offer a range of features to streamline data collection, integration, validation, and reporting. The main features of these tools are:

Comprehensive data collection

Sustainability information often exists in a dispersed format, scattered across emails, Excel files, and in-house systems—or it may not be collected at all. The tools we discuss provide a centralized platform for monitoring and collecting data, offering integration with existing systems whenever feasible. They excel at compiling a broad array of ESG data points from diverse sources, streamlining data entry as needed.

This functionality manifests in several ways, including: 1) the deployment of pre-built or custom surveys via a centralized interface; which facilitates tracking and the dispatch of reminders, offering a more structured approach than the ad-hoc use of Google Sheets disseminated through emails; 2) the exchange of data through the import and export of files, such as CSVs, from other reporting systems; and 3) the automation of data collection through direct API connections to other internal systems, ensuring a seamless data integration process.

Automated data integration 

These tools are equipped to automate the integration of data from the aforementioned sources, transforming it into the necessary formats. They come equipped with pre-established calculation and data conversion logics, while also providing the flexibility to develop custom methods. This capability is particularly beneficial for ensuring consistency in results over time and across reporting as well as for replicating outcomes accurately. Additionally, it supports transparent documentation of the processes involved, enhancing the reliability and traceability of the data.

Data validation and quality checks

The systems are designed with features that validate the input data and perform comprehensive quality checks. These functionalities are crucial in confirming the data's reliability and precision.

What is Carbonfact's approach?

Carbonfact cleans and consolidates your data, minimizing manual effort and errors. Whether your data is stored in a database like a PLM or ERP system, a data warehouse like Snowflake or Google BigQuery, or even an Excel file, we can ingest your data in any format and from any source.

Secondary data and  emission factors library

The companies responsible for these tools maintain and compile extensive libraries of life cycle inventory datasets and emission factors from various sources. These can encompass up to 100,000 data points coming from Environmentally Extended Input-Output (EEIO) tables, as well as process- and activity-based databases. They continuously refresh and update these libraries, guaranteeing access to the latest data. This not only ensures the application of current and relevant data but also streamlines its utilization through a unified interface. Moreover, they undertake harmonization procedures wherever feasible to enhance data consistency and comparability.

Data enrichment

Beyond offering secondary data, these tools incorporate logical frameworks and execute calculations to bridge data gaps, ensuring a comprehensive dataset. The methodologies applied are meticulously designed to be documented, compliant with reporting frameworks and replicated annually, fostering consistency and reliability in data enhancement processes over time. This systematic approach to data enrichment ensures that users can maintain and build upon their data infrastructure with accuracy and confidence, year after year.

What is Carbonfact's approach?

Carbonfact does all the heavy lifting when it comes to data management. Our platform intelligently identifies and fills in missing data to calculate process-level for all your products. Our AI, trained on extensive primary datasets, automatically supplements details like component weights and process steps. With a rich database of blueprints—templates with pre-populated information about the value chain for specific product categories from 150+ fashion brands and manufacturers—we seamlessly address data gaps. Read more here.

Flexible report formatting

The tools provide versatile formatting options, enabling users to tailor data presentation to meet various standards and reporting requirements. The core concept is that once the raw data concerning organizational activities is inputted into the system, it can be seamlessly transformed and utilized across multiple reporting frameworks. This is achieved by adjusting the data to align with the specific format required by each framework, facilitating straightforward and consistent report generation.

Customizable reporting

The tools enable users to generate customizable reports based on various attributes, including business unit, country, and production site. This flexibility allows for targeted analysis and reporting that caters to specific organizational needs and objectives.

What is Carbonfact's approach?

With Carbonfact you can measure once and report everywhere. Our platform allows you to export multiple reports that adhere to various frameworks, including CSRD and CDP and the Textile Exchange Materials Benchmark. With the Explorer tool, you can slice your data and look at it from different combined dimensions. You can easily export the data for your impact reports.

Auditing capability

As regulatory scrutiny intensifies, these tools present a significant advantage through their audit-friendly features. They offer capabilities to meticulously document and store data along with the methodologies applied during processing. This ability to track changes and maintain comprehensive records bolsters auditing processes, making them more straightforward and effective. Such features are especially valuable in the context of evolving towards more rigorous assurance reporting standards.

What is Carbonfact's approach?

Our LCA engine is based on the ISO 14040 norm, GHG protocol, and the European Commission’s PEF standard, meaning you can expect the highest level of accuracy and transparency when assessing your environmental impact. Thanks to our Version Control feature, your calculations are always transparent, documented, and auditable. Carbonfact’s methodology is audited by PwC.

Exportable and interoperable data models

Users can export their final data models for integration with internal data management systems. This feature ensures that sustainability insights are propagated throughout the organization, enhancing informed decision-making and strategic planning.

Benchmarking capabilities

 The tools include benchmarking functions that compare an organization's data against that of peers in the same industry. This comparison helps assess the plausibility and competitiveness of the data, providing essential insights into industry standards and positioning.

Continuous updates and comprehensive libraries

These tools are continually updated and maintain an extensive collection of ESG standards, laws, and regulations. This dynamic repository ensures that organizations have access to the latest compliance requirements and sustainability best practices.

Compliance with reporting frameworks

Navigating the complexities of reporting mandates can be challenging. ESG management tools simplify this process by deconstructing the reporting requirements into specific, manageable data points and providing step-by-step guides tailored to various standards and regulations. This approach enables users to effortlessly align their reporting practices with current compliance demands.

Carbonfact demo video

Watch a demo video Carbon Management Software for apparel and footwear

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