Startup Talks, Seneca ESG – Streamlining ESG Reporting

In our last article, we looked at the concept of ESG (Environmental, Social, and Governance) and its importance. We highlighted how ESG is becoming an increasingly important consideration for companies, as investors and consumers increasingly prioritize sustainable and responsible business practices. We also discussed some key trends related to ESG, such as the rise of impact investing, the use of big data and AI to collect ESG data, analyze ESG factors, and the development of ESG-focused products and services. We believe that companies that prioritize ESG will be well-positioned to succeed in a rapidly evolving business landscape.

In today’s interview, we sit down with Jonathan Ha, the Founder and CEO of Seneca ESG, to learn more about the ESG frameworks and the complexity of collecting ESG data, data governance, and ESG reporting.

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Edward: Hi Jonathan, good to see you. Can you briefly tell us what Seneca ESG is doing?

Jonathan: Seneca ESG is a business intelligence company that specializes in ESG-focused software solutions for data analytics, assessment, reporting, and investor relations. Our products are designed to integrate with operational, investment, and risk management processes, catering to both investment managers and corporations, seeking to apply the best approaches to incorporate ESG into their businesses.

Edward: What inspired you to start Seneca ESG and what is your vision for the company?

Jonathan: Seneca ESG was founded on my passion for sustainability and the desire to make a positive impact through ESG-focused solutions. We strive to simplify ESG and remove the complexity and hassle from ESG data workflow, aiming to become a go-to solution for both corporations and investment managers by emphasizing stewardship and continuous improvement. Ultimately, we hope to encourage global adoption of workflows, measurement, and incentives that align corporate behavior with actions necessary to cultivate and preserve public social goods, such as a healthy environment, a fair society, and responsible governance.

Edward: What are Seneca ESG’s product offering and value proposition?

Jonathan: We offer two products: EPIC and ZENO. EPIC provides corporations with a comprehensive platform to collect, analyze, and report their ESG data. The platform's unique selling proposition lies in its focus on continuous improvement. It features a custom scoring engine, goal-setting, and progress tracking to ensure clients are always striving to enhance their ESG performance.

ZENO is an intuitive platform for financial institutions and investors to design situation-specific ESG assessments and scorecards. This custom approach reflects the ever-evolving nature of ESG assessments depending on asset class, market, sector, and investors' principles & values. ZENO's unique selling point is its direct linkage with EPIC, allowing for proactive stewardship and engaging dialogue between financial institutions and their portfolio companies that are using EPIC.

Edward: What are the current challenges in ESG data governance and management?

Jonathan: ESG data governance and management is currently faced with several challenges. One of the primary issues is the lack of education and awareness among public companies about the approach and rationale for gathering ESG data. The varying standards and data collection methods across different markets and regulatory jurisdictions, in addition to the subjective nature of these frameworks, make it difficult to standardize ESG data collection and management. The multitude of disclosure standards and the ambiguity surrounding the appropriate way to measure and report ESG data, such as Scope 3 emissions, pose another challenge.

To address these challenges, consultants including the Big 4 consulting firms have started to play a significant role in providing consulting services regarding data collection, analysis, and report preparation. However, there is still a missing component of certification and assurance, which will likely become essential as ESG reporting evolves. As ESG reporting becomes more standardized, service providers will be needed to deliver upon these standards, similar to how accountants, auditors, and legal advisors service the financial accounting needs of companies. The renaming of ESG reporting to non-financial reporting also suggests that these processes will be standardized and serviced similarly to financial accounting.

Edward: What are the future trends and developments in ESG and how are they likely to impact the industry in the years to come?

Jonathan: From our perspective, the key trends in ESG are:

• Governments and regulators are increasingly requiring transparent and consistent ESG reporting by corporations. This trend is creating a closer link between ESG performance, market reputation, stock price, and profitability. As a result, service providers are seeing greater demand for their offerings due to the mandatory ESG and sustainability disclosure requirements.

• Reduction in Green House Gas (“GHG”) and carbon neutrality are essential to ESG, and the priority of government legislation and policies. Service providers can focus on GHG emissions and carbon-neutral strategies to capture current demand from clients.

• The International Sustainability Standards Board (“ISSB”) will become the de-facto global standard. Reporting companies and service providers can focus on one standard, while the harmonization of corporate reporting format and content will make ESG data a homogenized commodity product. Service providers can streamline their analyses, and financial institutions will benefit from standardized data input.

• ESG assessment and ratings are complemented by subjective analyses and modeling, resulting in a tailored approach that fits specific objectives, values, and principles. Service providers can showcase their assessment and modeling capabilities to help meet clients' needs.

• ESG disclosure (aka non-financial accounting) will become as common as financial accounting, and enterprise software tools will be used by all companies and financial institutions to simplify the process.

Edward: How is Seneca ESG positioning itself to stay relevant in a rapidly evolving industry?

Jonathan: Seneca ESG is in a strong position by already incorporating all major disclosure standards into our products and ensuring timely updates to its frameworks. This future-proofs the company, especially with the expected consolidation to a single disclosure standard, likely to be ISSB.

Furthermore, Seneca ESG's EPIC for corporations and ZENO for financial institutions and investors are designed with flexibility in mind, allowing for customized analytics and scoring. This recognizes that ESG is a continuously evolving concept that must account for the nuances of each situation.

Edward: What is the key differentiation of Seneca ESG’s products from similar products in the market?

Jonathan: While most competitors in the ESG space concentrate solely on the corporate side and meeting compliance requirements, Seneca ESG offers a more comprehensive solution. Our EPIC platform supports over 60+ ESG frameworks, allowing for goal-setting and continuous improvement for corporations. Additionally, our ZENO platform offers stewardship and engagement tools for financial institutions and investors, making it the only platform with customized score card and stewardship capabilities.

Edward: Jonathan, thank you for your valuable insights into the current challenges and future trends in ESG reporting. Thank you very much for taking the time and best wishes for the success of Seneca ESG.

Compiled and edited by Chloe Yutong Yang

QIDS Venture Partners is dedicated to supporting and catalysing the developments in FinTech by sharing with our audience FinTech trends and interesting FinTech business ideas. You may forward this article to other investors who are interested in FinTech as well. If you need more information or would like to arrange a meeting with us, please feel free to contact our Managing Partner Edward Shen via LinkedIn or email.