For any business to identify significant risks and opportunities, the integration of robust data gathering processes is paramount in an overall strategy. However, the challenge still remains in determining the most effective way to incorporate a data strategy into the business decision-making process and operating model. Most organizations’ current capabilities are generally confined to individual siloed products rather than enterprise-wide data accessibility.
The focus of ESG as a paradigm throughout the corporate landscape is not only becoming prevalent; in many cases, it’s becoming part of a license to operate. Today, stakeholder commitments towards ESG are increasingly integrated into the forefront of business strategy across commercial organizations as well as the public sector. As a result, ESG data consolidation is rapidly becoming a vital constituent of a data strategy. This consolidation and accessibility of ESG data are essential for individuals responsible for corporate strategy to best prepare themselves and their enterprises with the knowledge, data, and insight necessary to satisfy ESG demands and commitments.
The Implications of ESG Reporting for Your Data Strategy
Although business plans increasingly include ESG considerations, organizations often fail to demonstrate to workers, owners, and investors that they are meeting key sustainability targets. A glaring truth and the missing element in this puzzle is a well-thought-out data strategy complementary to your company plan that not only consolidates ESG data, must also provide the tools to analyze and enable more informed decision making. A data strategy guides the development of data platforms and tools that enable you to track and report on your ESG activities.
A Holistic Approach to Sustainability
E stands for Environment
This dimension encompasses not just basic regulatory compliance, but also active efforts to battle climate change, environmental degradation, and water depletion, as well as to promote conservation, renewable resource development, and product life-cycle circularity.
S stands for Social
This encompasses concern and accountability for the enterprise's stakeholders (including employees, clients, and the communities in which the firm operates), product liability, proactive stakeholder management, and opportunity creation for communities within the enterprise ecosystem.
G for Governance
Corporate Governance encompasses enterprise and government openness and accountability, proactive risk management, and guaranteeing transparent ownership of business and government interaction.
Implementing ESG Data in your Corporate Approach
To integrate ESG into an organization, the firm must determine how to integrate core ESG principles into each component of the business model and into daily operations and procedures that allow the enterprise to run. Until these values are ingrained and internalized, the company may inadvertently participate in greenwashing; cosmetic and ineffective use of ESG principles. The key is to track and report on ESG metrics that are material and comparable across the business.
Due to diverse (and sometimes redundant) worldwide reporting standards, an enterprise must revaluate its data approach for ESG reporting to focus more on what drives their business forward in a holistic and material way. It is not just a matter of combining and reporting on various variables (i.e. metrics) that may already exist; rather, it is necessary to modify how they are combined and analyzed, as well as refined and filtered in order to get the precise computations that lead to real goal achievement. Additionally, in accordance with GHG emission procedures, you may be required to do in-line calculations on the fly to comply with internal and external requirements to report emission events as they occur. Here lies an opportunity is hidden in the data to potentially mitigate future GHG events before they occur.
Overall, a sound data strategy is complementary to your business strategy and aids in defining how data may be used to accomplish business objectives. In the context of ESG, a data strategy enables companies to assess their progress toward sustainable development targets and look forward towards meeting goals set forth, rather than just reporting on what occurred in the past.
February 23, 2022