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Recent global events have shown business leaders how crucial it is for organizations to demonstrate capabilities to thrive in unpredictable and evolving circumstances. ESG ( environment, social, and governance ) is increasingly becoming an imperative as organizations cope with increasing global political, economic and social uncertainty. In just the past few months, new ESG directives concerning financial disclosures and reporting requirements have been developing at a rapid pace as compared to the decades-long process seen in developing traditional corporate reporting standards. Consider this snapshot of recent ESG announcements: March 21: SEC proposes climate-related financial disclosures March 24: IFRS and GRI sign agreement to align sustainability reporting March 30: EU on track to publish draft standards before the end of April ‘22 March 31: IFRS publishes S1 General Requirements Exposure Draft March 31: IFRS publishes S2 Climate Disclosures Requirements Exposure Draft April 6: UK Climate Financial Disclosure (CFD) law comes into effect Organizational leaders who have committed to ESG values haven’t done so for the optics. They’ve realized that an effective ESG strategy helps to secure a brighter future not only for their own business but for the health of the planet and the good of society as well. Increasingly, winning organizations will be characterized by their resilience in the face of the volatile global supply chain, social, and environmental conditions. Therefore, it’s more crucial than ever for organizations to implement strategies and demonstrate capabilities that will allow them to thrive in changing business environments. Driving toward compliance with emerging ESG reporting requirements equips organizations to outperform competitors in both near-term risk mitigation and ongoing resilience. By providing their organizations with these strategic capabilities, leaders empower their teams to perform and drive down the cost of their capital. To learn more about the impact of ESG, join us for our webinar “ The Critical Role of ESG in GRC Programs , ” featuring Michael Rasmussen of GRC 20/20 and Archer ESG Product Manager Phil Freund, who will discuss: The critical role of ESG in GRC programs How ESG impacts your organization Steps you can take today to begin planning and implementing an ESG program Webinar: The Critical Role of ESG in GRC Programs June 15, 2022 11:00 am Eastern Time Register Now! Visit Archer ESG Management for more information. Contact us to speak to an Archer Expert about how you can implement an ESG program.

How do you spell ESG? While it is a simple question, oftentimes simple questions are the hardest to answer. It does not matter what industry you work in. Each has its unique language, sayings, and code that is difficult to understand to those not adequately versed. The risk and compliance domains are no different. Risk and compliance functions are awash in techno-speak, anacronyms, abbreviations, and slang that, to the outsider listening in, the conversation can sound like listening to aliens from another planet. But if you can know the “alphabet” of your domain, conversations can flow as naturally as walking down the street. So, the answer to the simple question of how do you spell ESG depends on your understanding of the ESG alphabet. The good news is that the ESG alphabet is quite simple and easy to learn. So let's start with the basics: what does ESG mean? ESG stands for environmental, social, and governance. ESG is a risk management tool to help stakeholders (investors, employees, society) better understand the organizations they engage with regarding social and environmental factors such as the impact on the environment, diversity, and equity policies and practices. Now that we have answered that question, how can you learn to speak ESG? We will stick with the basics for this lesson and focus on the five most common ESG standards and the primary framework that are part of nearly every ESG conversation. ESG standards: GRI - The Global Reporting Initiative (known as GRI) is an international independent standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption. SASB - The Sustainability Accounting Standards Board (SASB) standard guides companies' disclosure of financially material sustainability information to their investors. The Standards identify the subset of ESG issues most relevant to financial performance in each industry. CDSB - The Climate Disclosure Standards Board (CDSB) standard provides investors and financial markets material information by integrating climate change-related information into mainstream financial reporting. CDP - The CDP (formerly the Carbon Disclosure Project) standard helps companies and cities disclose their environmental impact . It aims to make environmental reporting and risk management a business norm, driving disclosure, insight, and action towards a sustainable economy . IIRC - The International Integrated Reporting Council (IIRC) standard helps demonstrate the linkages between an organization's strategy, governance, and financial performance and the social, environmental, and economic context within which it operates. By reinforcing these connections, Integrated Reporting can help businesses make better-informed decisions regarding sustainability and enable investors and other stakeholders to understand how an organization is performing. ESG framework: TCFD - While many ESG frameworks are being discussed today, the TCFD (Task Force on Climate-Related Financial Disclosures) framework has risen to the top and has achieved global recognition. This framework helps public companies and other organizations more effectively disclose climate-related risks and opportunities through their existing reporting processes and disclose the organization's governance around climate-related risks and opportunities. You now know the basics of the ESG alphabet. These ESG standards and frameworks make up the core of most all ESG conversations. Understanding what these anacronyms stand for and how they can help guide your organization's ESG programs will catapult your ability to lead strategic and impactful ESG conversations with your organization's leadership. Want to learn more about ESG? We invite you (and your ESG colleagues) to watch a replay of Archer’s Peadar Duffy, Global ESG Practice Lead, and French Caldwell, Chief Strategy Officer for Archer, for a discussion of the critical factors and concepts risk managers need to know before implementing an ESG solution to best leverage their organization’s risk and compliance platform. For information on Archer ESG Management , visit www.ArcherIRM.com/ESG

At the UN Climate Change Conference COP 26 in Glasgow, the IRS foundation announced the creation of the International Sustainability Standards Board (ISSB). While this announcement was not necessarily a surprise as there was considerable support of the move, this announcement is a clear indicator of the acceleration of the production of ESG standards. For the risk management community, the effort underscores the importance of the core pillars as defined by the Task Force on Climate-related Financial Disclosures (TCFD) – governance, strategy, risk management and metrics and targets. This is also reflected in many of the conversations we are having with customers on ESG. We are seeing, in addition to having representatives from investor relations, corporate affairs, communications and the various sustainability leads, a growing, strong presence of risk functions in ESG strategies. The biggest challenge for organizations is the tsunami of demands and queries from a variety of stakeholders – investors, in particular. However, with the consolidation of standards as indicated by the announcement, the path towards a combined reporting structure – with both financial and non-financial information – may help alleviate some of this pressure. Organizations need to take steps now to prepare for this convergence. For organizations gathering information manually through hundreds of spreadsheets, there is time to transition to systems that allow you to substantiate ESG reporting at the top level, proving your viability going forward. Producing a report is only the first step. Operationalizing ESG data, exposing it to business operations to drive action, is the critical step to drive accountability, improve visibility, collaborate on issues, and build efficiencies in remediation efforts. In other words, an integrated risk management approach to establish that common language and taxonomy to effectively prioritize action. Archer – as a leader in integrated risk management capabilities – provides an onramp to not only address ESG efforts today, but also fold that effort into the broader risk management strategy for the future . The announcement reiterates ESG efforts are a business issue – not just a regulatory issue. Of course, there are regulations organizations must comply with, but ESG, at its core, is about the imperative to demonstrate to all stakeholders, the viability of the business and they can perform and prosper going forward. Watch Peader Duffy and Steve Schlarman discuss the announcement. Learn more about how Archer ESG enables you to measure, quantify, assess, and report ESG readiness across your organization and global supply .

Whether it’s having sound environmental practices, being a truly purpose-driven organisation, or taking a lead in areas such as corporate social responsibility, organisations all around the world are choosing to adopt good Environmental, Social and Governance (ESG) practices. Not only that, ESG practices are increasingly fundamental to not only being a high-performing organisation, but also a highly innovative organisation AND an organisation that is seen as an attractive investment. Sustainability (and ESG) can be a true business differentiator and can unlock new opportunities for your business. But with opportunity comes risk, and sustainability risk needs to be managed in ways that go beyond traditional risk methods. According to Archer's Global ESG Practice Lead, Peader Duffy , "Risk fundamentals are still valid. If they are correctly applied, they can underpin a 21st century competitive advantage of ‘Sensing and Anticipating’ what’s around the corner and ‘What Matters Most’ to the achievement of business objectives. The challenge, however, is in driving accountability, delivering data driven actionable insights and informing managers where they are on their E, S and G transition pathways." Peader also makes that case that, "Attempting to do this without a formal governance framework, without considering the risks around the business and without underpinning technology, is near impossible. And that’s even before considering the external factors, such as the regulatory environment a business operates within, or your suppliers and third parties and the impact they can have on how you achieve and enforce your own sustainability goals." So how do you overcome this situation? Archer’s Business Manager for South-East Asia, Huzefa Goawala, states that “being a sustainable organisation isn’t just about setting goals, it’s about executing on them, it's about monitoring them, it's about living by them.” For risk and ESG practitioners alike, a living and breathing framework to set and measure the performance of ESG initiatives is an essential tool in their dialogue with key stakeholders, including senior management and the board. They need to speak the same language as the organisation’s decisionmakers, and explain the business case around sustainability initiatives, while also being able to manage the risks and opportunities that surround them. By using technology to bring together data from different sources – both inside and outside the organisation – and driving engagement on an ongoing basis, a view can be gained of how their business is performing from a sustainability perspective. As a technology provider in this space, Archer IRM provides its customers with a SaaS platform to establish a governance framework, to capture objectives and to manage risk in relation to those objectives and take the right actions to move forward . To bring your sustainability goals to life, and make them sustainable, the platform enables monitoring progress, charting improvements over time, and driving the right actions to the right people at the right time through workflows and alerts. To learn more about how Archer IRM can help bring your ESG goals to life please contact one of our experts . About the author Sam O'Brien is VP Sales & Go-To-Market, APJ at Archer Integrated Risk Management

The Task Force on Climate-related Financial Disclosures (TCFD) and the European Union Corporate Sustainability Reporting Directive (EU CSRD) are two significant initiatives aimed at promoting sustainable development and addressing the risks and opportunities associated with climate change. While the TCFD focuses on climate-related financial disclosures, the EU CSRD seeks to establish a standard for sustainability reporting across the European Union. To better understand the role each plays in an organization's ESG program, let's take a closer look at their similarities and differences. Task Force on Climate-related Financial Disclosures (TCFD) The TCFD is a voluntary framework established in 2015 to help companies disclose information about their exposure to climate-related risks and opportunities. The TCFD framework provides guidance on the disclosure of four key areas: governance, strategy, risk management, and metrics and targets. The framework is intended to provide companies with a standardized and transparent way to report their climate-related financial risks and opportunities. The TCFD framework's recommendations are based on the understanding that climate change poses significant risks to financial stability and that investors and other stakeholders require consistent, comparable, and reliable information about these risks. By disclosing their exposure to climate-related risks, companies can better manage these risks, and investors can make more informed investment decisions. European Union Corporate Sustainability Reporting Directive (EU CSRD) The EU CSRD is a proposed directive establishing a common sustainability reporting standard across the European Union. It builds on the existing Non-Financial Reporting Directive (NFRD) and is part of the European Union's efforts to transition to a more sustainable economy. The proposed directive would apply to large companies with more than 250 employees or revenues of more than 50 million euros. The EU CSRD proposes that companies report on a range of sustainability issues, including environmental, social, and governance (ESG) factors. The directive aims to increase transparency and comparability of sustainability information for investors and other stakeholders. The EU CSRD also seeks to align the reporting requirements with internationally recognized standards, such as the TCFD framework. Similarities and Differences The TCFD and EU CSRD share a similar goal of promoting transparency and accountability around sustainability issues. Both initiatives recognize the importance of providing investors and other stakeholders with consistent, comparable, and reliable information about sustainability risks and opportunities. They also focus on addressing the financial risks associated with climate change. However, there are some key differences between the two initiatives. First, the TCFD is a voluntary framework, while the EU CSRD would be a mandatory reporting requirement for companies. Companies would be required to report on sustainability issues under the EU CSRD, whereas adherence to the TCFD framework is voluntary. Second, the TCFD framework explicitly focuses on climate-related financial disclosures, while the EU CSRD covers a broader range of sustainability issues. For example, the EU CSRD includes reporting requirements on environmental, social, and governance (ESG) factors, such as employee diversity and human rights, which are not covered by the TCFD framework. Third, the TCFD framework is an international initiative not specific to the European Union, while the EU CSRD is a directive specific to the European Union. However, the EU has endorsed the TCFD framework and has recommended that companies use it as a basis for their climate-related disclosures. Finally, the EU CSRD proposes that companies align their reporting requirements with internationally recognized standards, such as the TCFD framework. This would create greater consistency and comparability in sustainability reporting across the European Union. What should your organizations do today to prepare for mandatory ESG reporting With CSRD and other ESG mandates on the horizon, now is the time for organizations to address several key questions: What should your business be doing now to prepare for mandatory ESG reporting? What challenges does ESG data disclosure create for our organization, and how do we address them? How can we bring efficiency and centralization to our corporate ESG program? Archer's ESG Management solution enables organizations to collect and centralize ESG data into a single platform, evaluate the impact of risks and the opportunities on business strategy, understand 3rd party ESG risks, set ESG objectives, and produce auditable reporting on sustainability disclosures all from one integrated platform. In addition, Archer ESG Management can help automate and standardize the sustainability reporting process simplifying the effort needed to collect and aggregate data in sustainability reports and minimizing the risk of disclosing inaccurate information. Interested in learning more? Register for our March 22, 2023 webinar, "ESG in the EU -Preparing for Mandatory Reporting," to learn about: The expected impact of upcoming ESG reporting and regulatory enforcement The critical role of risk management in the success of corporate ESG programs How Archer ESG Management can help your organization tackle ESG reporting challenges Contact us to speak to an Archer expert.

In recent years, businesses have increasingly prioritized Environmental, Social, and Governance (ESG) reporting to measure their commitment to sustainability and responsible corporate practices. Many companies are now aware of the importance of measuring and managing ESG performance to reduce risks and seek out opportunities for growth. In addition, companies that successfully integrate ESG into their operations are viewed as more responsible and attractive to investors, customers, and other stakeholders. To meet this growing demand for better ESG reporting, Archer is proud to announce its accreditation as a CDP solution provider . Overview of CDP and its Mission CDP (formerly the Carbon Disclosure Project) is an international organization that works with organizations to measure and disclose their environmental impact. CDP scores the ESG performance of companies and provides insights into best practices and potential areas of concern. As an accredited CDP solution provider, Archer's ESG Management solution expands its ability to help our customers streamline their ESG reporting, provide them with actionable data, and use the CDP platform to benchmark against peers and industry standards. Additionally, in November 2022, the U.S. federal government proposed the Federal Supplier Climate Risks and Resilience Rule that will require major suppliers to the U.S. federal government to disclose their environmental impacts through CDP. This proposal amplifies the importance of introducing the CDP questionnaires in Archer’s ESG Management Solution . Archer's Expanded ESG Management Solution With this new accreditation, Archer expands its end-to-end solution for managing sustainability risks in a single, integrated risk management platform. At Archer, we believe that our CDP solution provider accreditation further strengthens our ability to help clients manage and mitigate ESG risks. With our expertise in risk management and sustainability, we can assist clients in identifying trends and potential impacts on environmental, social, and governance issues specific to their industry and location. In addition, Archer clients can customize risk assessments to fit their information needs or integrate them into other ESG frameworks, improving their understanding and evaluation of performance. Benefits of CDP Accreditation for Archer Customers Archer's accreditation as a CDP solution provider is a significant achievement demonstrating its leadership in ESG and integrated risk management. It provides an integrated platform that enables companies to manage their sustainability risks and meet regulatory requirements. Archer's commitment to sustainability and its focus on driving better risk decisions will help its clients achieve their corporate strategic goals and create value for society and the environment. Archer's ESG Management solution lets organizations collect and store all their ESG data in one platform. They can then analyze risks and opportunities, track 3rd party ESG risks, set ESG goals, and generate auditable sustainability reports from a single integrated platform. In addition, Archer ESG Management can help automate and standardize the sustainability reporting process simplifying the effort needed to collect and aggregate data in sustainability reports and minimizing the risk of disclosing inaccurate information. Take the next step and schedule a demonstration of Archer's ESG Management Solution Want to learn more about ESG and how Archer ESG Management solutions can help your organization? Watch our " ESG in the EU - Preparing for Mandatory Reporting " webinar to hear from Archer Global ESG Lead Tahmina Day and Sr. ESG Consultant Anna Gurevich. They'll discuss strategic and practical approaches to using ESG tech solutions to meet reporting requirements. Contact us to speak to an Archer expert.

As corporate social responsibility becomes increasingly important for investors and businesses, evaluating and managing ESG (Environmental, Social & Governance) risks is rapidly becoming a significant focus in many organizations. With higher expectations from stakeholders when it comes to ESG considerations, it’s more critical than ever for companies to be proactive in their approach to developing effective risk management programs that address potential ESG exposures. In this blog, we’ll discuss several measures you can implement to evaluate the effectiveness of your ESG risk management program and how to ensure it continues to add value and help business leaders achieve their strategic organizational goals. How do you know if your ESG risk management program is working? It’s critical to regularly assess your organization’s ESG risk management program’s effectiveness to ensure it achieves its objectives, meets stakeholders’ expectations, and aligns with your organization’s strategic goals and values. Measuring the effectiveness of an ESG risk management program involves setting objectives and goals, establishing key performance indicators (KPIs) to measure progress, collecting and analyzing relevant data, and reporting and communicating effectively with internal and external stakeholders. The Importance of Defining the Goals of Your ESG Risk Management Program As ESG has become increasingly vital to businesses and investors, having an effective strategy is essential. Without clearly defined objectives, however, any risk management program may be ineffective in delivering its desired results. Establishing Clear Objectives The first step in defining the goals of your ESG program is to establish clear objectives. This means identifying what you want your ESG risk management program to achieve. For example, common objectives may include reducing your carbon footprint, improving employee well-being, and enhancing corporate transparency. Setting clear goals and objectives helps ensure your ESG risk management program aligns with your business strategy. Identifying Key Performance Indicators Once you have identified your ESG objectives, the next step is to determine the key performance indicators (KPIs) that will help you track your progress toward achieving those objectives. For instance, if your goal is achieving carbon neutrality, KPIs such as energy consumption levels, greenhouse gas emissions output and waste management strategies can provide clarity into the progress of achieving this goal. Engaging Stakeholders ESG risk management programs are most effective when all stakeholders are engaged. This can include employees, investors, customers, and suppliers. Engaging your stakeholders in goal setting can help you identify the most critical issues and ensure your ESG risk management program meets their expectations and requirements. It can also help you build support for your ESG program and increase the likelihood of successful implementation. Examples of ESG stakeholders in the organization: Customers: Customers may be interested in a company’s ESG performance, as they may prefer to buy from companies that align with their values and priorities. Suppliers and Business Partners: Suppliers and business partners may be impacted by a company’s ESG policies, as they may be required to comply with the same standards or face reputational risks by association. Investors and Shareholders: These stakeholders are interested in a company’s financial performance and long-term sustainability. They may evaluate the company’s ESG performance when making investment decisions. Regulators and Government Agencies: Regulators and government agencies may require companies to disclose their ESG performance and risks and may hold companies accountable for non-compliance with environmental and social regulations. Integrating ESG with Corporate Strategy Another critical aspect of defining the goals of your ESG risk management program is integrating it with your corporate strategy. This ensures that your ESG risk management program supports your business objectives and values. By aligning your ESG risk management program with your corporate strategy, you can demonstrate to the Board and Sr. Executives how the program drives business value and contributes to the organization’s overall success. Bringing All Your ESG Data Together Collecting ESG data can be complex, as it often comes from multiple sources in various formats. Identify The Right ESG Data Sources: The first step in collecting and aggregating ESG data is identifying the right sources. ESG data might come from various sources, including public records, internal data, third parties, industry associations, and proprietary databases. Be selective in the ESG data you gather. Start with core issues such as carbon emissions, employee safety, and customer privacy, then build up to the more complex data issues. Use Technology to Help Manage Your ESG Data: Implementing an ESG risk management platform can significantly simplify collecting, managing, and centralizing the large volumes of data required to meet financial and non-financial reporting requirements. One of the biggest and most common mistakes many organizations make is believing common desktop tools and applications are up to this task. They are not. Desktop applications were never designed to meet the data analysis and reporting requirements inherent in many ESG reporting directives soon to be enacted. Monitor Key ESG Performance Indicators for Effective Risk Management Monitoring key ESG performance indicators (KPIs) is essential in identifying trends, measuring progress, and ensuring the ESG risk management program delivers value to the organization and aids in achieving corporate strategic goals. Identify your business’s most relevant ESG KPIs The first step in monitoring ESG KPIs is identifying the ESG factors most material to your business’s performance and risk profile. These factors vary by industry, geography, and stakeholder expectations. For example, a mining company may focus on water management, biodiversity, and social impacts, while a software company may prioritize data privacy, employee engagement, and board diversity. Referring to industry-specific ESG guidelines, such as GRI , SASB , CDP, and TCFD , can aid in understanding which KPIs are relevant to your industry and region. Examples of ESG performance indicators Environmental: carbon footprint, water usage, waste management, renewable energy, biodiversity, air quality, and chemical management. Social: employee turnover, retention, training, health and safety, diversity and inclusion, labor standards, human rights, community engagement, and customer privacy. Governance: board diversity, independence, structure, risk management, executive compensation, shareholder rights, anti-corruption, and cybersecurity Set targets and report on progress Setting targets enables businesses to track progress toward their ESG goals and identify areas for improvement. Therefore, it is critical to report on both the quantitative and qualitative aspects of ESG performance, including business and financial risks, greenhouse gas emissions, employee turnover, customer satisfaction, and initiatives and programs that improve ESG performance. Measure Your ESG Risk Management Program’s Impact Measuring the impact of your ESG risk management program is critical for understanding its effectiveness and making the business case for increased investment. By selecting relevant metrics, establishing a baseline, and tracking progress over time, you can build a complete picture of the positive impact of your ESG risk management program. Make these steps part of your evaluation and continuous improvement processes Establish a Baseline : A baseline for each KPI is critical to measure and compare their changes over time. These could include assessing environmental impact and setting ESG risk thresholds. Conduct Regular Audits and Assessments: Conducting regular assessments is vital to ensuring your ESG risk management program is on track and identifying areas of improvement. Use assessments to identify best practices, opportunities for improvement, and potential risks or vulnerabilities. Monitor and Report Progress: Track your ESG risk management program’s performance against the objectives and metrics you established and report on that performance to key stakeholders. Regular reporting enables you to demonstrate progress and identify areas where the program may have unforeseen gaps. Communicate Success to Key Stakeholders: Ensuring the Board and Sr. Executives are aware of the positive business impacts the ESG risk management program is delivering is critical to its success and continued expansion across the business. Conclusion Measuring your ESG risk management program’s effectiveness is essential for understanding its impact on your organization and its stakeholders. You can ensure your ESG risk management program delivers meaningful results by establishing clear objectives, setting targets and benchmarks, conducting regular audits and assessments, tracking progress, and communicating success. Want to Learn More Want to learn more about ESG and how Archer ESG Management solutions can help your organization? Download our white paper on ESG Strategy: Practical Steps for Risk Management Teams . Visit Archer ESG Management for more information. Contact us to speak to an Archer Expert about how you can start your ESG risk management program.

The investment community plays a pivotal role in the environmental, social, and governance (ESG) world. As the momentum behind impact investing continues to grow, institutional investors are increasingly motivated to assess the ESG footprint of their investment portfolios. However, this task presents significant challenges, as portfolio managers must execute a tedious process of collecting and reviewing an extensive volume of data points across their investment portfolios, which can encompass anywhere from a few dozen to thousands of investment companies. As a result, this manual approach leads to a long and inefficient execution cycle. At Archer, we are committed to understanding the pain points within the market and developing solutions that effectively address them. We are delighted to announce the launch of Archer ESG Portfolio Management. This cutting-edge solution enables institutional investors to efficiently gather and analyze ESG data across their investment portfolios. Initially tailored to cater to the needs of the private equity's general partner (GP) - portfolio company structure, this innovative solution can be utilized by a diverse group of institutional investors involved in private and public, debt and equity investments. A wide range of portfolio managers, including asset management companies, venture capital, private equity firms, and commercial lenders, can benefit immensely from implementing Archer ESG Portfolio Management. The versatility of Archer ESG Portfolio Management extends its application even beyond the investment realm, making it suitable for the parent company–subsidiary type of relationship structure. Archer ESG Management delivers an integrated approach for ESG data collection, aggregation, and analysis across the investment portfolio. The solution’s key features include: Portfolio hierarchy ESG Data Convergence Initiative (EDCI) framework Customizable metrics Aggregation Dashboards Portfolio Hierarchy The Archer ESG Management solution offers a distinct hierarchy for investor portfolio companies and LP & GP relationships. It allows portfolio managers to establish a relevant connection structure with portfolio companies. EDCI Framework Initiated by CalPERS and Carlyle, EDCI represents a set of guiding ESG principles applied by GPs and LPs to collect ESG data across their portfolio companies. The framework is widely used by private equity companies globally. Archer ESG Portfolio Management solution embeds the EDCI framework, allowing portfolio managers to automate the process of collecting ESG data based on EDCI. Customizable Metrics At Archer, we acknowledge that every portfolio management company is unique and might want to use its own metrics. Our ESG Portfolio Management solution enables investors to create customizable ESG metrics and collect data based on those tailored metrics. Aggregation Portfolio managers have to collect ESG data across a sizable number of portfolio companies. Archer ESG Portfolio Management aggregates data received from their portfolio companies at the portfolio and country/region levels for further analysis. Dashboards Archer ESG Portfolio Management provides dashboards and graphical reports that provide valuable information on ESG data collected across geographies, sectors, and the three dimensions of ESG. Portfolio managers can use analytics to track metrics and draw valuable insights into their portfolio ESG performance. We are excited about the potential for enhanced efficiency and automation that our solution offers to portfolio managers, empowering them to streamline their processes and freeing up valuable time to focus on what truly matters. If you would like to learn more about Archer ESG Portfolio Management, we invite you to join the upcoming webinar ESG Portfolio Management: Optimizing Opportunities and Performance , on August 15, 2023, hosted by ESG industry leaders Tahmina Day, Global ESG Solutions Lead, Archer; Terry Hill, Partner, BPM and Ben Zhang, Managing Director, BPM. Click here to register for the webinar.

What is Material? It is simply another way to say, 'what matters most.' But what matters most differs from person to person. Just as beauty is subjective and depends on an individual's perspective, materiality (what matters most) differs from stakeholder to stakeholder. There are dozens of different types of stakeholders, and they broadly fall into two categories: investors and non-investors. Non-investors include everyone from employees to customers, suppliers, governments, and the general public, all of whom may benefit or suffer from the actions of a company. Most of a company's value today comes from intangible assets. This means that the value of companies is typically derived from something other than cash, physical assets, or recurring revenues that are reasonably certain to occur. In many industries, over 80% of the value consists of factors like the valuation of personnel, intellectual property, manufacturing, and more. This has led to the realization that there's more to business success than money alone. In fact, financial success often depends on the way all the non-financial operational activities are orchestrated and run. By effectively managing these, a business can generate value over the longer term. All of this is well known to investors and non-investors who, over the last 20 years, have been familiar, or engaged with, the identification and measurement of the environmental and societal impacts which companies have been making as a result of their focus on delivering dividends to shareholders and repaying debt. Over recent decades investors have become increasingly conscious that their investment methodologies were less reliable than before as they observed the effects of globalization in a multi-polar, hyperconnected world that is growing in uncertainty. Investors do not like uncertainty. To minimize risk, they employ a variety of techniques, models, and tools to accurately assess the potential returns of an investment. This helps them identify which factors are most influential in their decision-making process and enables investors to gain insight into what matters most when evaluating the pros and cons of investing in something. Materiality: A Subjective Perspective? If you're focused on financial returns only, then so-called single materiality is what matters most to you. If you're focused on saving the planet, addressing social inequalities, or investing in companies exploiting opportunities in these areas, then impact materiality is what matters most to you. However, as with most things in life, it's more complex than that. Managing uncertainty requires that investors understand two things: What is Material to cashflow and a company's prospects, i.e., financial performance, and What is Material to the operational activities which underpin financial performance. Today, many of the world's largest investment funds are using ESG data as a proxy, a leading indicator of the likelihood of performance over the longer term. According to a recent Bloomberg survey of global business leaders, “the vast majority of respondents see ESG as an important consideration when making investment decisions in their own organizations, even among non-ESG fund managers.” This is where double materiality comes into play. With double materiality comes the hope of financial and sustainability-related, non-financial (aka impacts) information being presented in a way that is: Comparable (to financial data) Verifiable (limited assurance rising to reasonable assurance over the next few years) Timely (in sync with financial reporting), and Understandable Why We All Should Care? The lines between single and double materiality, as illustrated and defined by the IFRS's ISSB and the CSRD, are fuzzy. The objective of IFRS S1 General Requirements for Disclosure of Sustainability related Financial Information … is to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity '. However, it further states in the Application Guidance, which has the same authority as other parts of the standard, that …' information about sustainability-related risks and opportunities is useful to primary users because an entity's ability to generate cash flows over the short, medium and long term is inextricably linked to the interactions between the entity and its stakeholders, society, the economy and the natural environment throughout the entity's value chain. Together, the entity and the resources and relationships throughout its value chain form an interdependent system in which the entity operates. The entity's dependencies on those resources and relationships and its impacts on those resources and relationships give rise to sustainability-related risks and opportunities for the entity'. CSRD, on the other hand, defines double materiality as having two dimensions : impact materiality and financial materiality. A sustainability matter meets the criterion of double materiality if it is material from the impact perspective or the financial perspective, or both. In essence, the IFRS, with its mandate to produce international accounting standards, asserts alignment with the CSRD. The CSRD's approach begins with a GRI-informed materiality assessment. However, it also mandates a financial materiality assessment. In this process, the final step includes a 'more likely than not' evaluation of the impacts on financial and other forms of capital. How Archer ESG Solutions Can Help Companies Calculate Double Materiality The Archer Double Materiality Calculator helps you quickly and easily assess, calculate, and report on double materiality impacts. Pre-configured assessments based on the E.U.'s ESRS framework allow for evaluating individual impact and performing financial assessments. The Archer Double Materiality Calculator provides a simple and intuitive environment that enables users to quickly and efficiently input the required data by simply responding to questions and prompts in alignment with the ESRS framework. Integrated with the Archer ESG Management & IRM platform, financial and impact assessments can be incorporated into the organization's overall ESG risk analysis and provides financial teams with the critical information required to determine what ESG information needs to be disclosed. As with all Archer solutions, real-time, integrated graphical dashboards, reports, heatmaps, and quantifiable risk data help inform executives and senior leadership with decision-useful information to help achieve corporate strategic ESG goals and milestones. If you want to learn more about how Archer can help your organization assess double materiality, download our short whitepaper, ESG Reporting: From Data to Action , for additional information on best practices and steps you can take to today address your ESG reporting challenges. Contact us to speak with an Archer expert.

Today, organizations are facing a growing need to evaluate their third parties' environmental, social, and governance (ESG) performance. The drive behind this shift is the need to comply with evolving reporting requirements and guidelines for ESG. However, the lack of visibility into vendor and portfolio companies' ESG scores poses significant compliance and regulatory risks, threatening organizational sustainability efforts. ESG regulations organizations need to comply with include: Germany's Supply Chain Due Diligence Act Canada's Forced Labour and Supply Chain Reporting Law United States Uyghur Forced Labor Prevention Act European Commission's Mandatory Corporate Human Rights and Environmental Due Diligence draft Organizations must understand their vendors' commitment to ESG to overcome critical challenges. Environmental impact is a consideration as it directly affects an organization's overall environmental performance. Ensuring supply chain responsibility is essential to uphold social commitments and human rights, avoiding any adverse effects on the organization due to unethical sourcing or labor conditions by suppliers. Managing reputation risk is critical to prevent association with unethical practices that could hurt an organization's reputation. Data security and privacy concerns need to be considered, given the potential risks posed by third parties. Fostering innovation and collaboration with third parties can positively impact an organization's ESG performance. To overcome these challenges, organizations must clearly understand their vendors' commitment to ESG. Gaining insights into the ESG performance of vendors allows organizations to reinforce the resilience of their supply chains and proactively identify and prevent potential risks that could disrupt operations. Informed decisions about vendor selection, risk mitigation, and meeting regulatory requirements have become essential for organizations seeking to achieve their sustainability goals. Assessing the ESG practices of third parties enables organizations to mitigate ESG-related risks and ensures alignment with their ESG values. This proactive approach safeguards against potential liabilities and nurtures a culture of responsible business practices within the organization. In response to the growing need for comprehensive ESG insight, Archer has introduced Archer ESG Score Connect . Archer ESG Score Connect provides visibility into an organization's third-party ESG scores, facilitating a better understanding of their ESG performance to mitigate risks associated with ESG-related concerns. Contact us to speak to an Archer expert about how you can mitigate ESG risks by gaining insight into your organization's third-party ESG scores.

U.S. companies are increasingly looking to environmental, social, and governance (ESG) initiatives to shape their strategies. ESG considerations can range from supporting diversity and inclusion practices in the workplace to reducing carbon emissions or investing in sustainability efforts. Corporate reporting on ESG initiatives and metrics has remained primarily a voluntary effort to date, resulting in many claims of companies' greenwashing (intentional or by mistake) their environmental impact and sustainability practices. The lack of confidence by consumers and investors in corporate ESG disclosures has led to global organizational bodies like the Securities and Exchange Commission (SEC) in the United States and European Sustainability Reporting Standards (ESRS) developing guidelines and reporting criteria that organizations must attest to in their non-financial disclosures. As U.S. companies become more aware of the impact of upcoming ESG regulations, they must begin considering double materiality. Double materiality requires disclosing how a company impacts the world (outside-in materiality) and how the world affects the company (inside-out materiality). The Importance of Materiality Materiality plays a crucial role in the disclosure of information by companies. In the U.S., an omitted fact is considered "material" if a reasonable shareholder would deem it important in deciding how to vote or if its disclosure would significantly alter the total mix of information made available. The E.U.'s CSRD, on the other hand, requires double materiality. It entails disclosing how a company impacts the world (outside-in materiality) and how the world affects the company (inside-out materiality). However, gathering such a broad spectrum of data poses a significant challenge. Materiality reporting is estimated to impact nearly 30% of U.S. companies and over 50,000 EU companies. Both groups must programmatically identify any negative or positive impact the company has or might have on people and the environment, assess severity, identify stakeholders affected, and assess the financial triggers and effects. What is Double Materiality Double materiality refers to the idea that both a company's actions and the actions of external factors can have a material impact on the environment and society. Double materiality may sound like a complicated concept, but it's actually quite simple. At its core, double materiality means that companies can have a material impact on the environment and society, and vice versa, environmental and social issues can have a material impact on the business operations of a company. So, when companies report on their environmental and social impact, they must consider not only their direct impact but also their indirect impact on society and the environment. Why U.S. Companies Need to Understand Double Materiality: While the concept of double materiality may be new to most U.S. companies, it is becoming increasingly important for companies to understand, especially as global ESG reporting standards evolve. The Securities and Exchange Commission (SEC) is considering incorporating ESG disclosure requirements into its reporting regulations. This means that companies' ESG reports will become increasingly important to stakeholders, including investors, employees, and customers. Companies that do not understand the importance of double materiality may not accurately or effectively report their indirect impact, which can lead to adverse consequences, loss of credibility, and potential legal issues. Materiality and Sustainability are Top Concerns for CEOs More and more CEOs cite sustainability and materiality as part of their top initiatives and critical to corporate strategy. In several recent Gartner* reports and surveys, they found: 9% of CEOs put environmental sustainability among their top 3 business priorities 70% of CEOs surveyed plan to invest in new sustainable products 74% of supply chain leaders expect sustainability to impact profitability between now and 2025 Materiality concerns are not solely driven by regulation. On the contrary, many executives consider sustainability and materiality essential to attaining corporate strategy and revenue goals. * Sources::2022 Gartner CEO and Senior Business Executive Survey, 2022 Gartner Emerging Priorities in Supply Chain Survey, 2022 Gartner Circular Economy Survey ESG Reporting Timelines for U.S. Companies There are a few important dates that companies should be aware of when it comes to ESG reporting: The SEC's proposed roadmap was released in August 2020 and requires publicly traded companies to begin disclosing information on ESG metrics. The final rule is expected to be announced fall of 2023. The ESRS brought in by the CSRD will go into effect in 2024, and will impose mandatory double-materiality sustainability reporting for nearly 50,000 entities operating in the E.U. The ESRS requirement will also impact U.S. companies doing business in the E.U. The Challenges of Calculating Double Materiality in Sustainability Reporting Now that we have defined Double Materiality, the next challenge for organizations is calculating, assessing, and reporting on their double materiality metrics and status. Gathering Data One of the most significant challenges companies face in calculating double materiality is gathering the necessary data. Double materiality requires organizations to consider both the impacts of their operations on the environment and society and how global economic, social, and environmental trends will impact their operations. The challenge here is that data on global trends can be hard to find or unreliable. Additionally, organizations need to add context to this data to understand how it will impact their operations. Without sufficient data, organizations can misunderstand their double materiality risks, resulting in incomplete reporting. Analyzing Data Gathering data is just the first step toward double materiality reporting. After collecting the data, organizations must analyze it to make informed decisions about their materiality. However, analyzing data can be a complex exercise requiring high data literacy and specialized knowledge. Moreover, data sources and quality can vary widely and may require cleaning and processing. Organizations may face reputational or regulatory risks related to incomplete reporting or poorly informed decision-making without accurate analysis. Reporting Results Finally, communicating double materiality data is crucial but challenging. Stakeholders expect organizations to present meaningful and transparent information. Still, with double materiality, it can be challenging to balance internal and external impacts to demonstrate how trends may impact an organization. Additionally, communicating double materiality information requires specialized reporting done in a manner that satisfies the expectations of regulators, investors, and other stakeholders. Reporting results is vital not only to meet stakeholders' expectations but also to help drive meaningful improvements in corporate sustainability practices. The Benefits of Reporting on Double Materiality Improved Corporate Governance: Double materiality can significantly improve corporate governance by requiring companies to consider non-financial factors affecting their stakeholders. This approach enables companies to identify potential risks and opportunities early, mitigating negative impacts and taking advantage of opportunities. Additionally, it encourages companies to consider the impact of their decisions on the environment, society, and governance, which can lead to improved stakeholder relations and long-term sustainability. Enhanced Financial Reporting and Auditing Standards: Double materiality also enhances financial reporting and auditing standards by requiring companies to disclose their non-financial impacts. This information is essential for investors and other stakeholders to assess a company's performance and potential risks. Additionally, with increased transparency, regulators and auditors can better monitor and detect non-financial risks that could affect a company's financial performance. Greater Accountability in the Financial System: Double materiality encourages greater accountability in the financial system by requiring companies to consider the impact of their decisions on the environment, society, and governance. This approach promotes more sustainable business practices and protects stakeholders from negative impacts. Furthermore, with increased transparency and disclosure, companies are more accountable to their stakeholders, leading to improved stakeholder relations and long-term sustainability. Improved Investor Confidence: Finally, double materiality improves investor confidence by providing more complete and accurate information about a company's overall performance and potential risks. This information helps investors make informed decisions about investing in a company, increasing market stability. Moreover, with increased transparency, companies can attract socially responsible investors who prioritize sustainability. How Archer ESG Solutions Can Help Companies Calculate Double Materiality The Archer ESG Double Materiality Calculator helps you quickly and easily assess, calculate, and report on double materiality impacts. Pre-configured assessments based on the E.U.'s ESRS framework allow for evaluating individual impact and performing financial assessments. The Archer Double Materiality Calculator provides a simple and intuitive environment that enables users to quickly and efficiently input the required data by simply responding to questions and prompts in alignment with the ESRS framework. Integrated with the Archer ESG Management & IRM platform, financial and impact assessments can be incorporated into the organization's overall ESG risk analysis and provides financial teams with the critical information required to determine what ESG information needs to be disclosed. As with all Archer solutions, real-time, integrated graphical dashboards, reports, heatmaps, and quantifiable risk data help inform executives and senior leadership with decision-useful information to help achieve corporate strategic ESG goals and milestones. Features Perform double materiality assessments and calculations to identify critical ESG risks. Pre-configured impact and financial materiality assessments aligned to the ESRS framework User-selected option to report on impact materiality to Affected Stakeholders and/or Users of Sustainability Statements Pre-configured reports and dashboards providing decision-useful information to decision-makers. Benefits Quickly collect, assess, and report on double materiality impacts. Simple, intuitive, and easy-to-use interface. Materiality assessment can be completed quickly and efficiently. Equip financial leadership with knowledge of what ESG factors need to be disclosed in financial reports Integrated with Archer ESG Management and IRM platform If you want to learn more about how Archer can help your organization assess double materiality, download our short whitepaper, ESG Reporting: From Data to Action , for additional information on best practices and steps you can take to address your ESG reporting challenges. Better yet, join us for Archer Summit 2023 in San Diego and learn more about Archer ESG Solutions. Contact us to speak with an Archer expert.

To support the growing SaaS needs of Archer customers across the Middle East, we’re pleased to announce Archer’s newest data center in the United Arab Emirates (UAE). In collaboration with Amazon Web Services (AWS), this latest data center enables us to support the explosive growth of Archer SaaS in the region with the increased performance, lower latency, and the data residency our customers require. Our UAE data center offers improved security and compliance, as data will be stored locally and subject to UAE regulations. Additionally, this data center supports our customers who want to leverage the power and scalability of the cloud to help address business risk and global compliance challenges. With the deployment of our industry-leading Archer cloud infrastructure in the UAE, we now have data centers in the U.S., Canada, Europe, Australia, and Asia Pacific, as part of our strategy to provide a regional presence in our highest-demand areas. Archer SaaS enables organizations to leverage the flexibility, availability and scalability of the cloud, coupled with the depth and breadth of the Archer Suite, to comprehensively and proactively manage risk. Offered on the Amazon Web Services (AWS) platform, Archer SaaS offers: · Support for the full set of Archer use cases · A flexible pricing model · SaaS-specific contract terms · Data residency · And much more To learn more about Archer SaaS, contact us or join us for Archer Summit 2023 in San Diego September 11-13.