Manage entities in ESG Management

  • Release version: Xanadu
  • Updated August 1, 2024
  • 2 minutes to read
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    Summary of Manage entities in ESG Management

    Environmental, Social, and Governance (ESG) Management helps organizations and investors evaluate various entities—such as people, processes, departments, or applications—based on ESG criteria. Entities can be structured hierarchically, with parent (e.g., a company) and child entities (e.g., subsidiary companies). The parent entity typically manages reporting and measuring ESG metrics like greenhouse gas emissions (GHG) for its child entities. ESG disclosures communicate performance data on goals, targets, and metrics to stakeholders, enabling investors to assess and rate entities accordingly.

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    Key Concepts

    • Entities: Individual units assessed in ESG Management, such as datacenters or subsidiary companies.
    • Entity Classes: Conceptual tags or categories assigned to entities to group them by characteristics, such as location for office branches.
    • Entity Types: Groupings of entities based on shared attributes and filter conditions, such as “Employee” or “Product,” each with defined attributes (e.g., employee number, department).
    • Entity Relationships: Entities can have one-to-many relationships with entity types, allowing flexible classification (e.g., an entity named Hope can be both a Person and an Organization).
    • Upstream and Downstream Entities: Parent entities have downstream entities (children), and child entities have upstream entities (parents), supporting hierarchical ESG reporting.

    Practical Actions for ServiceNow Customers

    • Create Entities: Define entities to measure their ESG performance and assign ownership to ensure accountability.
    • Update Entities: Modify existing entity details as organizational structures or ESG goals evolve.
    • Create and Update Entity Types: Define or adjust entity types with appropriate filters, policies, and control objectives to standardize entity grouping and reporting.
    • Create and Update Entity Classes: Tag entities with conceptual information such as parent class, root entity, and tier to organize ESG management effectively.

    Benefits

    By managing entities, entity classes, and entity types within ESG Management, ServiceNow customers can accurately track and report ESG performance across organizational units. This structured approach supports transparent disclosures to stakeholders and enhances investors’ ability to evaluate ESG risks and opportunities associated with different parts of the organization.

    You can learn about how ESG, which stands for Environmental, Social, and Governance Management (ESG) is used by the investors and reporting agencies to evaluate different entities that they want to invest in, such as different business units in an organization.

    Entities can be people, processes, departments, or applications. For example, if your goal is to reduce the carbon emission from the datacenters, then you can consider datacenters as entities.

    As another example, assume you’re a company that has subsidiary companies. Your goal is to measure greenhouse gas emissions (GHG) in your subsidiary companies. Both your company and your subsidiary companies are your entities. Your company is the parent entity, while the subsidiary companies are the child entities. Typically, the parent entity handles reporting and measuring the GHG of the child entities.

    As part of your ESG Management strategy, you have to provide disclosures to your stakeholders. ESG Management disclosures refer to the disclosure of data that relate to an organization's Environmental, Social, and Governance Management performance. These disclosures concern the goals, targets, and metrics that are associated with your entities. By using these disclosures and other metrics, the investors assess and rate the performance of entities based on the ESG parameters.

    A parent entity that has the child entities is said to have downstream entities. Any child entity that has the parent entities is said to have upstream entities.

    After creating the entities, you can tag similar entities by individually defining an entity class for them or by linking them to an existing entity class.

    Entity classes

    Entity classes are used to tag an entity or to add the conceptual information about an entity. For example, consider a company that has office branches in three cities. The office space is considered as an entity, while the entity class for these entities is the location of the offices.

    Entity types

    An entity type is a grouping of entities that is based on filtering attributes. An entity type defines a set of the entities that have the same attributes. An entity type is used to describe and identify an entity that is based on a set of filter conditions.

    Consider the following two entity types: Employee and Product. Each entity type has its own attributes.

    For Employee, its attributes are employee number, name, department, and designation. In the Employee table of the company database, the sample attributes of an employee are displayed in row E1 as 1001 (employee number), Paul (name), Marketing (department), and PM (designation).

    For Product, its attributes are product ID, name, cost, and currency. In the Product table in the company database, the sample attributes of an energy-efficient product are displayed in row P1 as 800 (product ID), Solar Panel (name), 200 (cost), and USD (currency).

    Entities and entity types can have a one-to-many relationship. For example, an entity called Hope can have an entity type called Person and an entity type called Organization.