The Essential ESG Checklist for Integrating Sustainability in Your ERP Business Processes

Authored by Baker Tilly’s Cindy M. Bratel

Sustainability is not just changing how businesses operate, but redefining what business success means. This paradigm has shaped corporate landscapes as organizations recognize that their responsibilities extend beyond the bottom line. As consumers, employees and investors increasingly align themselves with purpose-driven organizations, environmental, social and governance (ESG) practices are becoming a competitive advantage for businesses attempting to balance profit and purpose.

The stakes have never been higher. Studies show that companies prioritizing sustainability outperform their peers, with research indicating that high-sustainability companies show higher long-term stock market performance. Modern enterprise resource planning (ERP) systems provide the technological backbone to track and measure sustainability initiatives and offer data-driven insights needed to convert ESG commitments to measurable outcomes. IFS Cloud is an example of an ERP technology that includes a sustainability management module that helps customers monitor, manage and report on their sustainability specific goals and commitments.

However, the path to meaningful integration of sustainability in ERP business processes can seem daunting. Organizational leaders often grapple with questions: How do we begin assessing current business processes? What processes need to change to embed sustainability? How do we measure ESG success? Embedding sustainability in an organization’s strategic initiatives and daily operations requires practical implementation steps. The comprehensive checklist below will provide an approach to answering these questions and implementing lasting change. It is important to set expectations that these steps typically require a multi-year effort, often taking corporations two to five years to fully execute and implement.

Set a foundation

• Conduct a baseline assessment of current ESG and sustainability initiatives across all organizational departments and functions. Remember that initiatives such as community relationships, business ethics, employee development and work safety are examples of business practices that fall under the ESG umbrella. Define clear sustainability objectives aligned with long-term business strategy while addressing stakeholder expectations and industry-specific challenges.
• Create a dedicated budget for ESG initiatives with clear allocations across departments.
• Form a cross-functional committee with representatives from key business units.
• Develop key performance indicator (KPI) frameworks with environmental, social and governance metrics.

ERP system integration

• Evaluate current ERP capabilities to identify opportunities for efficient tracking and reporting across different business touchpoints.
• Identify ESG and sustainability-related regulatory and voluntary reporting requirements. Determine which global regulation may apply to your organization.
• Configure ERP modules for ESG reporting and implement environmental management systems that track and report carbon emission, energy consumption and waste metrics.
• Set up data collection points and sustainability KPIs into dashboards.

Define clear goals, policies and a roadmap

• Develop policies that address environmental stewardship, social impact and ethical governance.
• Define ESG goals that are measurable, achievable and relevant for clarity and accountability. Utilize leading frameworks such as the Sustainability Accounting Standards Board (SASB) to identify industry-specific material topics and metrics to incorporate.
• Ensure goals reflect the company’s mission and address the priorities of employees, customers and stakeholders.
• Develop a roadmap for implementation phases with clear milestones and success criteria.

Make progress on ESG goals

• Develop initiatives across the entire value chain, for instance, source materials responsibly, prioritize suppliers with sustainable certifications and minimize environmental impact in logistics.
• Create a framework including feedback channels and impact assessments for all key groups – employees, communities, suppliers and customers – with clear metrics.
• Implement a robust ESG oversight structure with dedicated committees, regular review processes and clear accountability mechanisms.
• Develop clear guidelines for anti-corruption, data privacy and regulatory compliance to ensure transparency in decision-making.

Measuring, assessing and communicating impact

• Implement robust systems that track ESG performance with all relevant metrics and indicators.
• Establish reporting frameworks and processes that provide transparent communication of progress and challenges.
• Create a communication strategy that effectively conveys ESG commitments, progress and impact.
• Define reporting frameworks that provide transparent, accurate and timely information about performance.

Integrating sustainability into business processes demands sophisticated technological solutions and advisory support. The alliance between Baker Tilly and IFS joins together industry best practices with class-leading applications, allowing businesses to scale into the next growth chapter efficiently and effectively with minimal disruption. Both Baker Tilly and IFS understand the importance of solving sustainability challenges and can help businesses with the support they need to achieve their measurable ESG goals.

Interested in learning more? Connect with a Baker Tilly specialist.