Getting a grasp on ESG data

17 May 2024 

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With rapidly changing conditions in the field of ESG, managing data is becoming a significant challenge for companies. With the Corporate Sustainability Reporting Directive soon to be coming into action, the quality and quantity of ESG data that organisations are required to collect and disclose is to grow exponentially. 

In a recent survey undertaken by Bloomberg, financial market participants were questioned on their key priorities and hurdles in ESG data management, from collection to reporting. 41% of participants cited that constantly evolving and new ESG data metrics are the main challenge. 

Key considerations for firms 

A 2023 survey by MSCI found that 87% of global investors are considering ESG factors in their decision-making. This trajectory should signal to companies to implement effective ESG data management strategies. However, the considerations companies must make to ensure effective ESG data management are numerous:

Data Collection: Companies must build effective strategies for collecting data, across all of their operations. This includes collecting data on a broad range of topics such as emissions and workplace practices. To keep up with ESG developments, companies should aim to develop systematic approaches to data collection that are as accurate as possible. Operational difficulties are common, especially for larger businesses that have a more diverse operational structure. Specific challenges such as calculating Scope 3 emissions cause additional barriers. 

Data Quality: Companies must establish clear protocols for data collection, validation and verification. This minimises errors and inconsistencies; a crucial step in building trust with stakeholders. A massive 63% of respondents claimed coverage and quality issues with ESG reported data as a key challenge.

Materiality Assessments: Understanding your ESG goals is crucial to your success, not all ESG metrics will hold the same value to your orgnisation. A materiality assessment helps prioritise the issues most relevant to a company and its stakeholders. By focusing on these “material” issues, companies can ensure collected data translates into actionable insights and drives positive change.

Merging ESG with Business Practices: For ESG data management to have real impact, it needs to be integrated into existing business processes. This means embedding sustainability considerations into core functions like strategic planning, risk management, product development, and performance evaluation.

Data Security: ESG data often includes sensitive details. Companies should be inclined to prioritise data privacy and security by implementing robust measures. Upholding data security is essential for building trust with stakeholders and demonstrating a commitment to responsible practices.

By navigating these considerations, companies can develop a robust ESG data management strategy that fosters transparency, fuels sustainability efforts, and positions them for success in the evolving landscape of stakeholder expectations.

Our recommended priorities for ESG success

Investing in Employee Knowledge: Building a successful ESG program hinges on an engaged workforce. Developing ESG training programs for all employees should be a priority for firms. An example may be offering specialised training sessions focused on data collection methods, analysis techniques, and reporting requirements specific to ESG factors. This equips employees with the skills they need to contribute effectively. Employees should also understand how their role contributes to ESG initiatives. 

Choosing the Correct Tech: Technology is the game-changer in the ESG data world. ESG collection and analysis can be an extremely laborious and time-consuming. However using the correct tech, means it doesn’t have to be. ESG technology is rapidly evolving and now involves automation throughout, ensuring a more seamless experience. Our flagship product Sustainion, can automate data collection, cleansing and analysis meaning your team has more time spent on driving impact.

Continuous Improvement

It is crucial for firms to implement a process for ongoing monitoring and evaluation of ESG data management practices. This should include regular audits and reviews of data quality, accuracy, and relevance. Proactive improvement will help to identify gaps, inconsistencies, and areas for improvement in ESG data collection, reporting, and analysis. Use these insights to refine strategies and workflows. By encouraging experimentation with new technologies, methodologies, and partnerships aimed at enhancing ESG data management capabilities, your organisation can foster a culture of continuous learning and improvement. 

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