By Pat McCarthy, Chief Revenue Officer, Precisely
Tell me who is not talking about ESG. Over the last few years, public advocacy for issues like greenhouse gas emissions, diversity and inclusion, data privacy, among others, have had a profound impact on driving ESG initiatives within large organizations. Fortunately, many organizations have pursued ESG goals on their own and now, governing bodies are weighing in. As both a citizen of the world, and a business leader, it’s been an incredible thing to watch the power of people - collectively we’ve created a new business priority for every organization related to their business practices.
As ESG has become THE business imperative, there’s an enormous gap in the desire to be better and how an organization goes about becoming better. To help navigate uncharted waters, many business leaders are turning to myriad governing bodies and rating agencies for guidance. What they’re finding are varying lists of ESG goals, with no information on how to actually report on those goals. Whether it’s the Task Force on Climate-Related Financial Disclosures (TCFD), the Global Sustainable Investment Alliance (GSIA), Prudential Regulation Authority (PRA), Securities and Exchange Commission (SEC), the United Nations (UN), or a slew of other acronyms, not one agency provides guidance on how to successfully report ESG metrics.
While ESG has somewhat begun to feel like the Wild West for organizations, navigating this space as it gains more attention is possible – and it begins with data.
For some, this answer may come with a sigh of relief because their organization already invests in their data strategy to drive business outcomes. While this is good news for you, it doesn’t necessarily mean that you have the right investments in place to address ESG reporting.
As you look into your data investment strategy, there are three key areas where your investments should take priority:
-
Data standardization. You’ve heard it before: not all data is created equal. And this is particularly true when it comes to ESG-related data. With so many metrics now being required by the various agencies, you need to start by understanding what data aligns to a given metric. If you can understand what data is needed to satisfy reporting requirements, you can set parameters that can be used to catalog this specific data.
-
Data infrastructure. Once you know what data you need, you’re going to have to have a solid infrastructure in place that will enable you to govern it. A data framework – particularly one that is built in the cloud – allows data to be tracked and governed so that you know exactly where it’s coming from, how it’s analyzed, and how it’ll ultimately be used.
-
Data integrity. With the right data in hand, and stored in a way that’s accessible, you can begin the most important process of ESG reporting – and that’s making sure the data you’re working with is of the highest quality. The thing about ESG reporting is that it shouldn’t just be a snapshot in time – it should be a journey of progress. Data that can be validated for quality, and enriched for context, is the most important indicator that your ESG efforts are making the impact you want them to have.
The increased focus on ESG should be viewed as an incredibly exciting moment in our history. It shouldn’t be something that keeps business leaders awake at night. With the right data investments, ESG can instead be the thing that allows business leaders to sleep at night.
