From Compliance to Change: Rethinking ESG Data for Real Impact

This blog is part of a series published by Elizabeth Pulos, head of compliance, sustainability and traceability innovation, and leader of Inspectorio’s Center of Excellence.

Why ESG Professionals Are Stuck in Compliance Mode

For many sustainability professionals, the dream was always to drive meaningful change—improving peoples’ lives through better working conditions, reducing environmental impact in the most vulnerable parts of our supply chains, and lifting workers out of wage bondage and poverty. Some of us made significant strides and led the way in defining a new reality where consumers cared about quality materials, fair labor, and waste reduction. But the reality has been changing. Instead of focusing on strategic advances in ethical production, we’re finding ourselves drowning in ever-changing reporting requirements, ad hoc data collection exercises, and Scope 3 target setting without concrete baselines.

The shift from impact-driven sustainability to due diligence-led ESG work has left some of us questioning why we’re doing this at all. Instead of implementing proactive initiatives, our days are spent ensuring suppliers meet an ever-expanding list of regulatory and brand-specific requirements. While compliance is essential, it was never meant to be a panacea—why are we doing this if not to make the system at least a little bit better?

So, how did we get here? After all these years, can we actually reduce compliance fatigue and measurably improve our supply chains?

The ESG Reporting Trap: More Data, Less Impact

Over the past decade, regulatory bodies, investors, and consumers have demanded increased transparency in supply chain sustainability. As a result, companies have invested in materiality assessments, ESG data collection, and reporting resources. But instead of using this data for strategic decision-making, many organizations treat it as a box-checking exercise to satisfy compliance requirements.

This has led to three major challenges:

• Reporting Fatigue: Compliance officers and factory social compliance teams spend excessive time managing audits instead of actually improving conditions.
• Standards Fragmentation: Different buyers require slightly different compliance standards, creating inefficiencies and redundant work for everyone involved.
• Lack of Strategic Foresight: Many companies collect vast amounts of ESG data but lack the systems or resources to analyze and use it for real improvements.

As the old saying goes, you spend more time moving fire extinguishers up and down two feet than actually improving fire safety.

Are you ready to move past compliance fatigue and get back to making an impact? Join our webinar with Elizabeth Pulos to learn how you can take action today

Shifting from Compliance to Impact

A compliance-driven ESG strategy comes at a cost. When sustainability becomes just another checklist to complete, companies risk:

• Missing Opportunities for Improvement: Instead of using audits as a guideline for change, companies focus on passing inspections without fixing root causes.
• Damaging Supplier Relationships: Redundant and expensive audits create friction between brands and suppliers, leading to transactional relationships that damage trust and efficiency.
• Falling Behind on Regulatory Readiness: With evolving global ESG regulations (such as the CSDDD and UFLPA), companies that lack a strategic approach risk losing access to key markets.

While collecting ESG data may be a challenge, the harder part is to know what to do with it. To break free from the collection, compliance, and reporting cycle, companies need to rethink their approach to ESG data and sustainability strategy.

Here’s how:

• Centralize and Standardize ESG Data Collection – Eliminate inaccurate and redundant data and ensure consistency across data management processes.
• Use Data to Identify Risks and Opportunities, Not Just Reporting – Shift from reactive data collection to proactive insights management
• Engage Suppliers as Partners – Work collaboratively with suppliers to drive long-term improvements that help you meet your own environmental, social, and regulatory goals.
• Leverage AI and Automation – New technologies help to identify patterns, mitigate risk, predict strategic opportunities, and reduce labor-intense compliance efforts.

The Role of Technology in ESG Transformation

Companies leading the shift from compliance to impact aren’t adding more audits—they’re using insights from their supply chain data to make smarter decisions. These insights are enabled by disruptive technologies and powerful AI tools that analyze supplier performance and data in real time and at scale. The future of sustainability lies in turning ESG data into action, and sustainability professionals who embrace this shift will be able to make progress towards the goals that brought them into this space in the first place.

Next in the Series: The Problem with ESG Target Setting

In the next blog, I’ll explore why many sustainability goals are unrealistic and disconnected from supply chain realities—and how companies can set achievable targets that drive real progress.
 

About Elizabeth Pulos

Elizabeth is the head of compliance, sustainability, and traceability innovation at Inspectorio. As the leader of Inspectorio’s Center of Excellence, she fosters innovation and drives best practices in supply chain sustainability, compliance, and traceability among brands, suppliers, and technology vendors.

Before joining Inspectorio, Elizabeth was the director of global sustainability at Converse (Nike Inc.), served as Macy’s sustainability and social responsibility lead, and directed the compliance factory certification program at Worldwide Responsible Accredited Production (WRAP).