OneStream’s Capabilities for Sustainability

Modern organizations can no longer ignore the buzz around Sustainability. Sustainability or ESG is a reaction to Milton Friedman’s 1970s credo that the social responsibility of business is to increase profits. But far too many examples today show how this narrow definition of social responsibility has negatively impacted employees, local communities and/or the environment – all of which are stakeholders.

Failing to consider these stakeholders threatens sustainable business models as employees may leave, communities may take legal action, or climate change forces you to unforeseen investments. Combating these threats, Sustainability aims to consider all stakeholders of the company. And OneStream’s capabilities Sustainability ensure that trusted information can be effectively available as and when required. But before we dive into all of that, let’s first review the benefits of Sustainability and the bidirectional relationship between organization and climate.

Research shows that Sustainability pays off. How? It makes companies more resilient in times of change. The interrupted supply chains during the pandemic offers the perfect example. Companies that invested in trusted relations with suppliers and employees got production back on track faster and grew faster than companies without those strong relations.

Not convinced? Well, then consider the following.

Sustainability considerations remain firmly embedded in investment decisions: 87% of investors globally incorporate ESG considerations, while more than 90% of ESG adopters plan to maintain or increase their allocations to ESG or sustainable investment strategies. Within that environment, fund managers must consider demands like zero emissions/zero pollution, equal opportunities or avoidance of child labor, throughout the entire value chain of portfolio assets.

To assess these risks, investment analysts require data, typically non-financial data, and typically the quality of that data is questionable at best. With the apparent risk that green funds turn out not to be so green or there is child labor somewhere in the value chain of a portfolio company that compromises the status of the entire portfolio.

At the same time, governments across the globe want to accelerate the transition to renewable energy. The EU Green Deal, the US Inflation Reduction Act and similar transition programs in other parts of the world all aim to support private investments in green technology – with massive amounts of public money. Yet these governments face a big challenge: How can governments ensure they’re supporting truly green technology and not just some repackaged old tech?

So again, data quality is an issue.

Here, governments have an advantage: they have regulatory bodies. So, they issue regulations to get reliable data that support their transition agenda. And while the current US administration is unlikely to pass any regulation, The EU is rolling out the CSRD with the majority of companies reporting their first audited ESG reporting on 2027/28. Other jurisdictions (e.g., UK, Brazil, Japan, ANZ, Singapore, SA) have passed or will soon pass similar legislation. As well as a number of state governments in the US

Using quantitative and qualitative data to report on environmental and social topics, combined with governance, will ensure policies are in place and anchored throughout the company, all the way up to the executive level. This process is a huge undertaking for companies. It’s a journey. Some companies have been on this journey for 15-20 years. Others are just getting started.

This topic is expansive, but a blog post is not an essay. To stay mindful of your time, let’s just zoom in on energy transition and the resulting focus on climate change as part of the larger environmental topic.

The Bidirectional Interaction Between Organization and Climate

Through their activities, organizations impact the environments in which they operate, and organizations’ emissions of greenhouse gases (GHGs) potentially impact climate change. Organizations can make choices to reduce that impact, however. So, when organizations claim a desire to become NetZero by 2035, they need to make choices that achieve that goal.

The consequences of not taking action on emissions can negatively impact the business model of a organization. When making decisions for the future, organizations should therefore consider the related risks and opportunities of climate change.

See the similarities with Finance? With setting financial targets and reporting on progress. With identifying opportunities and mitigating risks that impact the future capabilities to make a profit. These steps are what financial outlooks are all about. Similar to financial outlooks, financial markets discount the resilience to climate change and other Sustainability performance metrics in the stock price of a company.

How can organizations ensure they are prepared for this journey?

For many companies, the field of Sustainability is new. It needs data from all parts of the organization, and the quality of that data is typically poor. Organizations must account not only for their own operations but also for their entire value chains. That combination creates a massive puzzle of data that many companies struggle with.

Data quality will thus undoubtedly be a main topic for years to come. And the OneStream platform has proven to be of great value for managing data quality. At OneStream, our data integration engine, our workflows, our consolidation and our task audit capabilities are exactly what organizations need to get on top of data quality.

But how can organizations communicate their Sustainability performance in a meaningful way? By aligning it with their financial performance. The other part of our claim for Sustainability is therefore that companies must align Sustainability reporting & planning with their financial reporting and planning by…

• Allowing leadership to make decisions on financial and Sustainability criteria.
• Reporting on performance in a consistent, easy-to-understand way for the financial markets and other stakeholders.
• Generating reports and analyses that speak the language of the board and provide a solid basis for the company’s strategy.

How does OneStream do all of that? Those familiar with our platform know that we’re recognized as the leader when it comes to data quality, reporting, planning and more. That means the platform, just as it is, can also handle the challenges in Sustainability.

The Sustainability solution Streamlines Environmental, Social and Governance reporting and enables planning & measurement against corporate sustainability goals. The solution combines the collection and calculation of CO2e and streamlines ESG Reporting.

How is this accomplished? The capabilities of the solution include:

• Framework Management automating compliance support for ESRS, GRI, SASB & ASRS
• Factor Ingestion and management capabilities that load the required emission factors
• Centralized Data Management - Reduce manual errors and streamline the reporting process.
• Emissions Tracking & Carbon Footprint - Scope 1, 2, and 3 emissions aligned with global standards.
• Planning & Scenario Modeling - Model climate mitigation strategies and assess impacts on finances.
• Faster Implementation – OneStream’s unified platform delivers best-in-class integration capabilities – making it easy to integrate multiple ESG data sources.

In the OneStream Sustainability solution, you enter activity (e.g., fuel consumption, electricity usage), distance (by vehicle type) or e.g. spend. The solution then applies factors to convert this input into carbon dioxide equivalent (CO2e), the common denominator for global warming potential. The solution also converts the common types of refrigerants into CO2e.

You can slice and dice your emissions data in the same way you would do with financials (e.g., by region, product, business area, etc.). Extensible Dimensionality provides the data model with the same structures as defined for the financial model. From there, the Sustainability model can be extended with more granularity – for example, by location (factory, warehouse, mine, office) or asset class (e.g., vehicle type). And it can be done all with a single point of maintenance and full control.

To learn more, read our Sustainability e-Book or check out the blog posts in our ESG series. And if your organization is ready to align Sustainability with financial reporting and get ahead of the upcoming disclosure mandates, contact OneStream today to get started.