What is the link between HRIT and social sustainability reporting?
Sustainability is here to stay. Organisations are increasingly reporting on their sustainability performance and strategy, both from a mandatory compliance and voluntary perspective. Although there is a lot of uncertainty on how the actual reporting requirements will evolve, given the recent Omnibus directive from the European Commission, it’s certain that organisations will need to be transparent on their way of working and efforts to make this world more sustainable.
An essential first step for sustainability reporting is conducting a double materiality assessment, which allows an organisation to identify and prioritise sustainability issues based on their impact on the business and their importance to stakeholders. Since this blog emphasises the employment angle, it raises the question of how we can enhance sustainability reporting in terms of the social dimension. In this context, an organisation's HRIT architecture plays an essential role in centralising the key data points for reporting and ways to go beyond compliance.
The HRIT architecture, which encompasses the integrated systems that support an organisation's HR functions and processes, captures the majority of the organisation's social data. However, our findings reveal that organisations often have a fragmented and scattered HRIT landscape, making it a challenging starting point. Despite these challenges, the HRIT architecture remains a crucial foundation for sustainability reporting, particularly in relation to the social aspect, which focuses on employee well-being, diversity and inclusion, labour rights and community involvement.
A decentralised or centralised HRIT approach?
At some point, organisations may face a choice between a decentralised or centralised HRIT approach. A decentralised HRIT architecture may, for example, emerge after some acquisitions, with each organisation still operating as a separate entity and maintaining its own HR system. While this allows for autonomy, it can complicate sustainability reporting, as it becomes challenging to consolidate data from multiple systems to ensure comprehensive analysis and reporting.
On the other hand, a centralised HRIT integrates HR data from across the organisation into a single platform, simplifying data management and reporting. This centralised approach offers significant advantages for sustainability reporting, particularly in the social component, by providing a unified view of employee data and helping ensure compliance with sustainability standards.
Most often and especially within a Belgian context, we end up with a hybrid approach for HRIT. Most situations still have a distinction between soft and hard HR in terms of systems, so there isn’t a centralised HRIT approach. Hard HR data, like net pay and training hours, are maintained in the payroll system while soft HR data, like personal information and demographics, are maintained in the human resource information system (HRIS) at the centre of your HRIT architecture. HRIS often offers self service capabilities. As different systems remain in play, we define this as a hybrid approach. This requires the organisation to clearly define its vision and strategy for its primary systems for all social data.
What are the advantages of a centralised HRIT in relation to sustainability reporting?
By consolidating social data from multiple sources into a single system, organisations gain more accurate and consistent social sustainability metrics, such as diversity, inclusion and working conditions. Automated and real-time reporting reduces manual workload, ensures up-to-date insights and simplifies compliance with regulations like CSRD.
Beyond regulatory compliance, a centralised HRIT architecture enables seamless integration with other business functions, such as finance, operations and legal, providing a holistic view of sustainability performance. This cross-functional approach helps organisations align social initiatives with broader business goals, reinforcing sustainability and corporate responsibility. Additionally, AI-driven analytics within HRIT offer predictive insights into employee engagement, turnover and workplace satisfaction, allowing organisations to proactively address risks and opportunities. By leveraging these capabilities, businesses can foster a more engaged workforce, enhance workplace culture and strengthen their overall sustainability impact.
Sustainability readiness assessment for social data reporting
A frequently underestimated aspect is the readiness assessment phase. It is important to recognise that the transformation is a gradual process that does not happen overnight.
As its name suggests, the readiness assessment evaluates the organisation’s preparedness for the transformation. This can include aspects such as data, reporting, integration and processes, as well as the crucial double materiality assessment. Below, we outline three key streams of the readiness assessment and potential next steps:
Data availability and quality:
Evaluate how accessible and reliable social data is within the organisation. This includes verifying the completeness and accuracy of employment data, payroll data, employee demographics, diversity and inclusion metrics, labour rights records and community engagement activities.
Automated reporting and data integration:
Evaluate the capacity of HRIT systems to automate the collection and reporting process for social data within the hybrid architecture approach. This involves examining how well these systems integrate across different HR functions to facilitate seamless data flow, enabling efficient generation of comprehensive reports with minimal manual intervention. The focus is on ensuring that reporting processes are streamlined to deliver timely and accurate insights into social data.
Processes alignment and compliance:
Review the alignment of current HR processes and practices with both internal sustainability goals and external regulatory requirements. This includes analysing adherence to labour laws, ethical employment practices and commitments to diversity, equity and inclusion, ensuring that these are reflected accurately in the reporting process.
The HR technology team is essential for enhancing an organisation's readiness for social reporting, as it adds significant value to each of these three streams. By pooling our in-house HR(IT) expertise from various sectors and collaborating with our internal sustainability experts, our team not only contributes to the readiness assessment but also increases the overall effectiveness and accuracy of social reporting.
Conclusion
In summary, as sustainability considerations become increasingly important and pressure mounts due to regulations like the CSRD, organisations need to review and optimise their reporting on sustainability practices to meet the requirements. The accuracy, consistency and usability of data within the social aspect are largely influenced by an organisation's HRIT architecture. A centralised HRIT architecture is the holy grail which offers significant advantages for sustainability reporting, even though, in practice, we often end up working in a hybrid situation. Therefore, a clear vision and strategy need to be developed for each data element relevant for social reporting highlighting which system will be primary, how data maintenance will be achieved and how it will all be integrated together for social reporting, to support your broader business objectives while also enhancing the organisation’s corporate responsibility.
Regardless of the reporting deadline your organisation is facing, the key is to get started!
Authors
Sustainability and Technology
Integrating technology to meet sustainability ambitions
Sustainability and climate
Transforming business for a better world
