Environmental, Social, and Governance (ESG) is a central topic for CDOs, CFOs, and data managers. In this article, discover the best practices to deploy in your company to deliver effective ESG data reporting.
With massive fires, floods, and major heat waves, 2022 marked a turning point in the global climate crisis. It raises awareness and leads companies (and society as a whole) to act in a more responsible and sustainable way. More than a simple trend, the deployment of a relevant ESG strategy is a major challenge for companies.
ESG criteria are used to analyze and evaluate the consideration of sustainable development and long-term issues in corporate strategy. This directly affects the way you manage, administer and operate your data assets. For a long time, ESG governance was based on simple communication, but it is now based on evidence. Evidence that is fed by ESG data.
Investors, partners, customers, and the public at large are now demanding real transparency not only on how organizations are protecting and effectively using data to create value but also on how they are achieving long-term sustainability by focusing on corporate social responsibility and environmental impact as applied to data management.
What is the role of ESG data in companies?
Because companies must demonstrate their commitments to sustainability through facts, ESG data plays a key role. This data is analyzed by independent financial rating agencies that ensure the veracity of companies’ claims. The information declared is cross-checked with other sources from non-governmental organizations, associations, or institutions. ESG data then results in an accurate assessment of a company’s ESG practices within a given industry.
What are the best practices for successful ESG data reporting?
The preparation of efficient and relevant ESG data reporting relies on a precise and demanding methodology. The challenge is to quickly collect the information required for ESG reporting and ensure optimal traceability and rigorous security. To meet the challenge, we must be able to apply a number of good practices.
Centralize data in one place
The foundation for transparent ESG data reporting is the ability to centralize all data in a single location for collection and processing. This centralization is an essential prerequisite for data governance that represents the spirit that drives your company.
Guarantee data traceability (data lineage)
Because the heart of sincere ESG data reporting is data traceability, you must implement a data lineage tool. The latter ensures real-time tracking of data and acts as an aid within your company to ensure that your data emanates from a reliable and controlled source; that the transformations it may have undergone are known, tracked, and legitimate; and that it is available in the right place, at the right time and for the right user.
Implement a data governance policy
Quality, reliability, traceability. These are the three pillars that guarantee the veracity of your ESG data and demonstrate your commitment to sustainable development. These three pillars are united around a key issue: a true data governance policy. Data governance is the overall management of the availability, usability, integrity, and security of data used in your business.
Democratize data access for all (data literacy)
One of the major challenges in guaranteeing the reliability, security, and transparency of ESG data is to ensure that all stakeholders within the company rely on a strong data culture. This data culture allows each employee to position themselves as an essential link in the data quality chain by claiming the ability to identify, process, analyze and interpret data. Also known as Data Literacy, this data culture allows the development of a critical mindset that gives the company’s data its full value.