Assessing the value of digitalizing ESG reporting

Abstract

This thesis investigates how digital tools for ESG (Environmental, Social, Governance) data collection, validation, consolidation, analysis and reporting create value for companies. A mixed-methods approach was used, including a structured literature review (augmented with AI-assisted analysis), along with qualitative case analysis using design thinking tools, such as a Problem Canvas to define challenges in ESG data collection and a Value Proposition Canvas to identify needs and supporting software features, with the findings being validated through semi-structured interviews with internal stakeholders. A value assessment which included cost-benefit modeling to quantify potential operational cost savings through digitalization, incorporating a breakeven analysis based on estimated administrative and assurance costs, and the assess-ment of intangible, strategic value creation such as risk mitigation, brand en-hancement, human capital development, and customer franchise using an International Valuation Standards Council (IVSC) framework.

A key finding is that software can streamline data collection, reduce manual work, and improve the quality and accuracy of data, which helps minimize risks related to non-compliance, loss of reputation, and enhances data security. The upfront software costs mean significant efficiency gains are needed for rapid payback. More importantly, the “value” of digitizing ESG reporting goes beyond direct operational cost savings to include strategic value drivers such as risk mitigation, enhanced compliance, brand enhancement, human capital development, and improved strategic decision-making based on better quality data. These non-financial benefits are often intangible and difficult to quantify in monetary terms, and manifest throughout the organization over longer time periods, illustrating the complexity in defining and measuring the full value of ESG digitalization.

The study proposes an evaluation framework that combines both quantitative metrics focusing on operational time savings and qualitative factors by lowering risk. The implications are that firms should adopt ESG reporting tools with clear short-term efficiency targets while also accounting for long-term strategic benefits. The research offers guidance to companies on how to approach investments in ESG digital solutions and suggests that future research is needed to measure the full impact of ESG digitalization on a company level.