The new reporting requirements linked to the developing regulatory landscape of the Sustainable Finance Disclosure Regulation (SFDR), the EU taxonomy and others have sent the finance world looking for Sustainability Platforms/ESG management systems. In response, a plethora of new companies are emerging and existing financial software solutions are adding their own add-ons. One can easily be overwhelmed by the choices out there and question how this landscape will develop. Our advice is to carefully think through why you are looking for a management system before evaluating and making your choice. This is how we reasoned.

More than a reporting tool

Northzone’s choice of a Sustainability Platform coincided with our strategic analysis work of 2022. Because of this, we quickly realised that this software choice wasn’t just about reporting but should support our strategic ambitions with regards to all top four priority areas. As we were evaluating platforms, we linked our assessment to these key areas and asked the following questions:

1) Does the tool offer possibilities to also assess impact in the investment process?

2) Does the tool help us facilitate responsible scaling in the portfolio?

3) Can the tool handle carbon accounting and ESG metrics (ie, not only carbon)

4) Does the tool help us to develop our reporting in accordance with SFDR and the EU taxonomy?

Other than these considerations, we assessed the founding team and looked for software that was data-based and not purely questionnaire-based, cost efficiency for Northzone and portfolio companies and the ability to scale and adapt to Northzone’s needs.

Best in class

Out of the wide range of solutions that we assessed, we found several that have developed solid solutions. Of the ones we assessed, we found these to be the best in class:

Apiday: - we particularly like their holistic offering ranging from DD to portfolio support and the customer-focused team.

**Atlas Metrics** - we particularly like their data model and ESG diagnostics module.

**ESG Advantage (MJ Hudson)** - we particularly like their data model, holistic offer and link to MJ Hudson consulting support.

**Plan A** - perhaps the most inspiring carbon solution that are now also adding a holistic ESG solution (don’t miss founder Lubomila Jordanova’s inspiring LinkedIn)

**Position Green** - we particularly like their team and link to their consulting arm.

**Worldfavor** - we particularly like their transparency model and their world-class sustainability support.

In the end, we choose Apiday as our collaboration partner. The reason for this choice was that the company corresponded best to the main needs as we had defined them in our strategic review. In Apiday, we got much more than a management system and rather a collaboration partner together with whom we are developing our entire process - from the impact and ESG assessment in DD to portfolio support and reporting. This collaboration suited us the best but also showed the importance of finding a tool that suits your needs. We don’t see this as a market where one tool will come to dominate all.