Why a Human Advisor is Worth 100 ESG Software Platforms
In the evolving landscape of environmental, social and governance (ESG) and corporate sustainability, many companies are turning to software platforms for data analysis and automation. These tools promise efficiency and consistency in tracking ESG metrics. However, despite their technological prowess, ESG software platforms fall short in several critical areas.
The strategic advantage of human expertise
Human advisors bring a level of strategic thinking that software platforms simply cannot match. With industry-specific knowledge and invaluable experience gained over decades, advisors are equipped to expertly navigate complex regulatory environments and anticipate future trends. For instance, whilst a software platform can flag compliance issues, a seasoned ESG advisor can develop wide-ranging strategies to address these issues proactively. Advisors can also foresee and provide industry-specific applications of emerging ESG trends, helping companies stay ahead of the curve and leverage ESG as a competitive advantage. An experienced advisor’s ability to connect the dots between ESG performance and broader business objectives ensures that sustainability efforts are not siloed but integrated into the core business strategy.
Personalised engagement, ethical considerations and tailored strategies
One of the most significant advantages of human advisors is their ability to foster meaningful stakeholder engagement. ESG issues often involve diverse and sometimes conflicting stakeholder interests, requiring delicate negotiation and communication skills. Human advisors can facilitate dialogue, build consensus and ensure that all voices are heard. Furthermore, ethical considerations in ESG strategy often require nuanced judgement that a platform’s ‘weighting calculation’ cannot adequately match. Advisors can help companies navigate ethical dilemmas, ensuring that decisions are not only compliant with regulations but also aligned with the company’s values and societal expectations. Importantly, boards need to sign off on sustainability strategies that are uniquely designed for their organisation. Human advisors can tailor these strategies to reflect the specific challenges and opportunities faced by the company, ensuring that the board's approval is based on a bespoke ESG plan that is not identical to that of their largest competitor.
Value of industry experience in advisors
Advisors who have worked within the industry prior to consulting bring a wealth of practical knowledge and understanding. This experience allows them to provide more relevant and effective solutions, having firsthand insight into the challenges and opportunities specific to the industry. Their ability to relate to the operational realities and strategic objectives of the company makes their advice not only theoretically sound but also practically viable. This blend of industry experience and advisory skills is priceless for developing robust and actionable ESG strategies.
The limitations of ESG software platforms
ESG software platforms excel at collecting and processing large volumes of data, providing dashboards and reports that help companies monitor their ESG performance. However, these platforms lack the ability to interpret data within the context of a company's unique circumstances.
Advisors can analyse and prioritise data through the lens of industry-specific challenges and opportunities, ensuring that ESG strategies are not only data-driven but also contextually relevant. This nuanced understanding is crucial for making informed decisions that align with both regulatory requirements and stakeholder expectations. Additionally, advisors will ensure that a company’s regulatory response to ESG requirements is thorough, accurate and tailored to the specific business landscape of the organisation. This includes setting thresholds for double materiality assessments and prioritising which ESG commitments to move forward with in a long-term sustainability strategy.
Concluding thoughts
With the ever-increasing raft of regulatory requirements, senior ESG executives should view advisors and technology as complementary. Whilst technology provides invaluable means for data collection and disclosure management, it is the industry experience of human advisors that truly differentiates one company's double materiality assessment and sustainability strategy from its competitors. Human advisors bring the wisdom to prioritise a company’s many ESG commitments, based on company-specific circumstances, thus ensuring a tailored approach that technology alone cannot match.
Just as we need humans to translate data into stories of societal and environmental impact, human advisors are needed to transform ESG issues into actionable strategies that help reduce environmental risks and improve societal outcomes.
