This episode of Sustainable Intelligence features Emily Sennett, Head of Customer Success at Novata. Emily leads a global team working with over 160 investor clients and 7000+ portfolio companies on ESG data reporting. Emily shares her insights on ESG reporting cycles, including the best times to start, strategies for effective data collection, and how to add value to portfolio companies throughout the year. Tune in to learn how to master ESG reporting and set your organization up for long-term success.
About Sustainable Intelligence
Sustainable Intelligence is an interview series from Novata that explores ESG and sustainability in the private markets. From carbon accounting to using data to create value, the series dives into the challenges and opportunities facing private market investors and company leaders as their integrate ESG across the business and respond to regulatory requirements. Each episode centers authentic dialogue, highlighting experts at the forefront of advancing ESG data collection and driving meaningful progress in the sustainability landscape. Listen to more episodes.
Conversation with Emily Sennett (Transcript)
Ella Williamson: Welcome to Sustainable Intelligence, where we discuss all things ESG and sustainability for the private markets, brought to you by Novata. I’m Ella Williamson, and I’m thrilled to be your host. Today, we’re joined by Emily Sennett, Head of Customer Success at Novata. Emily leads a global team that works with over 160 investor clients using the Novata platform and over 7,000 portfolio companies reporting ESG data, many for the first time.
Before Novata, Emily excelled in partnerships and sales roles in corporate governance and technology firms. I cannot wait to jump into today’s episode on ESG reporting cycles, when to start and how to get ahead. So, Emily, based on your experience with thousands of clients, what does a typical ESG reporting timeline look like for investors?
Emily Sennett: Thanks, Ella. Thank you for having me. Typically, it’s very cyclical. The actual data collection from portfolio companies is during the Q1 time period, just in line with financials. This doesn’t mean that the wheels aren’t running on ESG impact or sustainability initiatives throughout the year. There are definitely a lot of other things that investors participate in outside of data collection. Things like reporting to LPs, regulation, and other initiatives investors are aligned to is usually around the Q1 to Q2 timeframe and can even extend into the summer. Typically, the summer is less about the needs and requirements on dedicated deadlines as data collection is and more about how to provide value to portfolio companies. They often have one-on-one sessions with companies, portfolio company readouts, they even publish ESG reports and learnings and create next steps and action plans. We have some investors and companies that focus on harder data collection in the summer months, like carbon metrics and accounting their scope emissions. Also late in summer is when we typically have people start reflecting and strategizing for their annual monitoring for next year. This sets them up for success ahead of Q4 and the busy holiday time. It’s a great time to reflect on data collected, insights gained, make changes for the new year. They often look at what data was useful, what data was hard to analyze, what feedback they got directly from their companies, and what data they might not even have used. Then, if they’d done the hard strategic thinking, any last minute items would come as a ‘check the box’ exercise. Like last minute standard changes, approvals to be done by compliance teams. Also, if you’ve done your framework and you’ve settled on it in early Q4, you can focus your attention on the logistics, like company contacts, engaging internal stakeholders, and coordinating with sponsors.
Ella: Great. So although these reporting cycles tend to be annual in Q1, I love the way that you’ve suggested using those summer months to reflect on that year’s data collection and make the necessary changes to ensure you are consistently adding value to your portfolio companies. So, based on these timelines and deadlines that you’ve outlined, when is the ideal time for companies to get started with the reporting process?
Emily: Yeah, I’m glad you asked, because it was yesterday. It’s always about time management, so anytime you have time to dedicate to this ESG process, you should do it now. Often firms forget that setting up reporting and monitoring processes, there’s elements to learn. Just as much as ESG is new for portfolio companies, it’s new for internal folks at their firm that have to set up a strategy. They have a program that crosses over so many internal stakeholders and then is when they begin to collect, monitor, and analyze. This is a new internal process and a way of working that they have to establish internally without even any outside help from technology or advisors.
Typically, these teams are pretty small; things won’t happen overnight, and other stakeholders, as I mentioned, are inherently involved, like deal teams, compliance teams, IR teams, sponsors, and, of course, the portfolio companies themselves. Most of our clients don’t have sustainability or ESG in their title, so this also isn’t their day job. We see a lot of our clients put time and effort into these initiatives. But, I’d recommend to them, they don’t let perfection be the enemy of progress. At Novata, we’ve seen ESG change constantly, and we change with it. We update our metrics as the standards and regulations do, and our clients adjust and tweak their approach and their framework—and even their cadence. The companies in their portfolio make changes as well. It may be one small change year over year, but it’s a long game and it takes more than one conversation and more than one ESG engagement with companies. So overall, you don’t have to get it perfect. The first data collection, I definitely recommend starting with something and iterating.
Ella: It’s really about starting as soon as you can, as you said, and not aiming for that perfection. You can always redefine your strategy to meet the evolving standards as you go. Emily, can I ask you to share some of the strategies you’ve seen work with teams and how they can effectively convince their organization that now is the right time to start collecting this data?
Emily: Yes—I just want to echo my previous sentiment about perfection. It definitely does not have to start with all of the bells and whistles. You don’t have to start with strategy sessions, you don’t have to start with an ESG technology platform, you don’t even have to have a framework by industry. You can start small just on engaging internal stakeholders with data that’s already being collected. You may find that it overlaps with some of the data you might want to learn when it comes to ESG. So discovering data that already exists is a great way to show that it’s already embedded in current processes.
Another way to ensure ears perk up is regulations, and requirements are definitely coming. It’s better to be ahead of the curve and prepared, not only for a lot of requirements, but some pretty complex regulations as it pertains to companies tracking ESG data internally. There’s definitely a value add that internal stakeholders can see if you’re getting companies prepared for what’s inevitably coming. It’s much easier to get your internal processes and firm prepared as you get your portfolio companies prepared. And it’s not going away. Lastly, I think there’s an element of competition and even a baseline going forward. You’ll see it become a standard to already have tracked some of this data, especially as it comes to LP requests.
Ella: So there’s definitely a balance between the pressures and the internal needs of your business. And I completely agree with you that building familiarity with the process and a solid reporting infrastructure is key to setting you up for future success. Now, sticking to the same theme of saving time, why might prepping for ESG monitoring take longer with a platform if you already have an ESG framework or process in place?
Emily: Yeah, I’m just speaking from how Novata supports its clients and getting started quickly. You want to get a technology solution to pair with your ESG strategy. It will take a transition and an implementation that we dedicate with our onboarding team. If they come to us, a client, with a set of metrics and data they’ve used offline, Novata wants to ensure that and understand what’s been set up, what’s working, and where we slot in. When it comes to an ESG framework, we don’t just replicate what you’ve done in Excel. We make sure it’s like for like and in line with the standards and regulations you report to. That means it’s apples-to-apples and we are measuring the same thing. So you get the data and the quality of data back that you are expecting. Once this happens, you don’t have to maintain that Excel sheet of yours. You do that in-platform, and we update guidance with a repository of all of your frameworks included. It’s also a good chance to re-evaluate and switch it up. As I mentioned earlier, it’s not about being perfect the first time, so we help evaluate what’s not working and address it.
You might even work with our advisory team ahead of time to evaluate on a deeper level what you’ve been asking and collecting and seeing what’s effective and an actual value add. Lastly, engagement with companies may take time and adjustment. We have suggested templates on communications. We have timelines for internal deadlines, as well as engagement. And it’s just about getting the portfolio company familiar with the platform.
Ella: Great. So even though this process initially might take slightly longer, it’s all about ensuring that you’re set up for the future with optimal data quality and that you are collecting the right ESG metrics for your specific business needs, which I think is so key. So based on your experience working with over 160 investors worldwide, what approaches have your clients, and Novata, taken to get their ESG programs up and running as quickly as possible?
Emily: I would say, help. A lot of times it’s about learning from others, successes or even their mistakes. The Novato customer success team has done this over 150 times, year over year. So we have a lot of tips, best practices, and recommendations for framework creation, internal stakeholder communications, and even engaging with the portfolio companies on a new topic. We also lean on our internal teams, both the metrics and regulation, as well as the Advisory teams who have many years of expertise in the field. We are not gatekeeping our secrets by any means, and we even have connected clients to each other just to learn and strategize on what works best for them.
Since ESG monitoring can be cyclical, we have seen phased approaches being helpful to understand how to iterate quickly. We’ve had folks start with one fund, whether it’s the most engaged or highest emitters. Even having some with one company who is eager to learn and get started. We’ve had some roll this out with deal team engagement. We’ve had some roll this out without deal team engagement throughout the post reporting process or after you’ve collected the data. They’ll slowly incorporate the review of data and improvement in these conversations for the future, once they have a few years of data under their belt. And once you get used to the process and project management, then you scale. So I’d say jump in, start, and don’t be afraid to put the pen down and see what works, reflect, and then iterate.
Ella: So it’s all about a balance between understanding the unique needs of each organization and rolling this out in phases to ensure success at every stage of the investment lifecycle. Emily, it’s been fantastic having you on today. Thank you so much for sharing all your wisdom on mastering ESG reporting. We all need to get started sooner rather than later. That’s for sure!
So until next time, let’s keep building sustainable intelligence together. Find out more at novata.com.
