New tools can play a critical role in helping organizations prepare for CSRD.
It’s been a year of many advances for Microsoft Cloud for Sustainability. Now, with the expected onset of new environmental, social, and governance (ESG) reporting regulations, including those coming from the European Union’s Corporate Sustainability Reporting Directive (CSRD), we’re announcing powerful new capabilities to help organizations collect and manage more ESG data. Microsoft Sustainability Manager, a Cloud for Sustainability solution, is being expanded to give customers fuller visibility into their environmental impact across carbon, water, and waste. And new capabilities will help customers create a comprehensive ESG data estate and prepare to meet new reporting requirements.
Read on to learn about these latest updates. You can also join Microsoft Chief Sustainability Officer Melanie Nakagawa and other sustainability leaders exploring the latest tech innovations helping companies address regulations—June 15, 2023, at 10:00 AM Pacific Time and then on demand.
See how far Microsoft Cloud for Sustainability has come over the past year.
Faster time to insights with Project ESG Lake (preview)
With increasing market and stakeholder pressure to adhere to new ESG reporting rules and best practices, as well as growing demand for generative AI-based experiences, organizations around the world are exploring ways to apply and analyze data in new ways. The ability to predict risk and measure and manage sustainability issues across the entire operation and value chain hinges on the ability to stitch together a complex set of disconnected data sources and services and conduct a deep analysis of sustainability, operational, and financial data.
As a result, many organizations are rethinking their data management systems and embedding sustainability more intentionally into their core business models and operations. The journey starts with organizing the data estate—from gathering, aggregating, standardizing, and analyzing data to tracing data back to the source to support audit activities.
Today we’re introducing Project ESG Lake to help organizations better manage and prepare their data for holistic analysis and ultimately advance their progress toward achieving sustainability goals.
The solution offers an expansive ESG data model with more than 400 tables covering carbon, water, waste, social, governance, biodiversity, and general business areas. Using it, organizations can build a comprehensive data estate, centralizing and transforming data from across business units and supply chains into a standard schema that’s ready for advanced analytics and reporting. Greater visibility into activities across the business will help decision-makers improve ESG and business performance while boosting long-term competitiveness.
Project ESG Lake empowers organizations to bring together ESG data from various source systems and standardize it to the ESG data model to build a centralized ESG data estate.
With this solution, organizations can:
- Bring calculated emissions data from Microsoft Sustainability Manager or other third-party solutions into their ESG data estate, leveraging data integration and transformation frameworks that are offered within Project ESG Lake.
- Integrate their Microsoft-based emissions related to their usage of Microsoft Azure and Microsoft 365 into their ESG data estate. The data can be transformed and standardized to the analytical ESG data model using Project ESG Lake’s transformation framework to prepare for analytics and reporting initiatives.
- Further enrich their data using external datasets that are offered through Project ESG Lake across various sustainability categories, including biodiversity, climate risk, energy, and ESG.
- Leverage standardized ESG data in Project ESG Lake in the new Microsoft Fabric, an end-to-end, unified analytics platform that enables developers to leverage the power of generative AI against their data and helps business users glean meaningful insights from their data. Fabric can be used to access, deploy, and compute the solutions and services offered by Project ESG Lake.
- Connect aggregated and standardized ESG data in Project ESG Lake to a set of Power BI reporting templates aligned to ESG data models. These can help organizations accelerate the analysis and reporting of ESG categories and to visualize applicable metrics in Power BI. Power BI reports and visualizations can be customized to focus on specific metrics and targets for reporting initiatives.
Integrated environmental, social, and governance data from various source systems, standardized to build a centralized ESG data estate in Project ESG Lake.
Enhanced ESG reporting capabilities to improve regulatory preparedness
To get ready for regulations, customers need to understand their compliance posture, track required actions, and document evidence for upcoming regulatory initiatives. They also need to shore up data governance practices to prepare for audits and reporting. To address these needs, we’re rolling out targeted features and ultimately will provide a range of prebuilt ESG reporting templates aligned to major ESG regulatory reporting standards and workflows.
CSRD template in Microsoft Purview Compliance Manager: Starting in July 2023, customers can learn what is required to be CSRD-ready according to preliminary European Sustainability Reporting Standards (ESRS). ESRS regulations are expected to be finalized in the second half of 2023. The template will help organizations begin to collect the data they need for ESRS reporting and will evolve once new standards are adopted.
CSRD template in Microsoft Purview Compliance Manager.
Reporting and goal alignment: Also in July 2023, organizations can use new capabilities in Microsoft Sustainability Manager to help collect quantitative emissions, water, and waste data aligned to preliminary ESRS regulations and track progress against Science Based Targets initiative (SBTi) designations.1
Comprehensive emissions data management to capture the entire carbon footprint
To ensure complete accounting of their emissions impact, organizations need to collect and manage data for all categories of emissions across their operations and supply chains. Our final round of Scope 3 emissions calculation models in Microsoft Sustainability Manager—in preview in June 2023—enables customers to store, calculate, and report all 15 Scope 3 categories. Microsoft Sustainability Manager has supported Scopes 1 and 2 since its general availability in June of 2022.
Scope 3 emissions data management in Microsoft Sustainability Manager, covering all 15 Scope 3 emissions categories.
Emissions related to the processing of sold products—Scope 3 Category 10 (preview): The processing of sold products can have a significant environmental impact, particularly in industries where processing often involves energy-intensive activities like heating, cooling, and refrigeration. With Scope 3 Category 10 coverage, organizations can calculate emissions associated with this processing and identify areas where they can reduce their environmental impact and work toward more sustainable practices. These can include lowering indirect emissions generated from the processing of intermediate products sold by the reporting company but processed by third-party manufacturers before use by the end consumer.
Emissions from the use of sold products—Scope 3 Category 11 (preview): With the calculation of Scope 3 Category 11 direct and indirect emissions associated with the use of sold products, organizations can identify potential climate-related risks as well as the competitive advantages of developing low-carbon products and working with suppliers to reduce emissions.
Emissions from franchise operations—Scope 3 Category 14 (preview): Calculation of Scope 3 Category 14 emissions—including indirect emissions created by franchise operations—enables businesses to identify opportunities to improve their supply chain sustainability and reduce costs across all locations. Managing franchise emissions can help improve brand reputation, customer loyalty, and regulatory compliance while attracting and retaining franchises.
Emissions associated with investments—Scope 3 Category 15 (preview): Financial institutions mainly report emissions in Scope 3 Category 15, which refers to emissions resulting from their investments. This is an essential activity that can be quite complex as it involves gathering data from external sources and using advanced allocation methods. To facilitate this process, Microsoft Sustainability Manager provides a reliable methodology that can be directly adopted or customized to meet the specific needs of financial institutions.
Other emissions from fuel and energy—Scope 3 Category 3 (preview): Most organizations will soon need to account for fuel and energy-related emissions in their value chain—for example, coming from supplier-related activities as well as transportation and distribution losses of purchased energy. With Scope 3 Category 3 coverage, customers gain the same simple access to accounting procedures used for Scope 1 and Scope 2 fuel and energy categories but with additional considerations for value chains. Also, emissions from this category will be aligned to the approp
