Introduction
ESG data refers to the data, information, and metrics in relation to environmental, social, and governance factors:
Environmental (E) - This aspect of ESG data focuses on the issues pertaining to a company's environmental impact. It includes data on a company's carbon emissions, energy efficiency, resource consumption, waste management, and other environmental practices.
Social (S) - This aspect of ESG data includes information about how a company interacts with and impacts its employees, customers, communities, and society as a whole. This data might cover issues such as labor practices, diversity and inclusion, human rights, and community engagement.
Governance (G) - This aspect of ESG data includes information about a company's internal practices, policies, and leadership structure. It includes information on articles such as board diversity, executive compensation, anti-corruption measures, and overall corporate governance.
ESG challenges
Currently, organizations face increasing requirements in ensuring that their sustainability systems include ESG data, such as the need to:
Strategize the required optimizations for sustainability objectives, such as net-zero emissions, water positive, and zero waste.
Establish a baseline of their sustainability measures against publicly available, industry-relevant indexes and statistics.
Comply with various regulatory disclosures and reporting frameworks and innovations that organizations can bring to their workloads in the context of sustainability.
Other trends pertaining to ESG data include:
Increasing regulation - Organizations of all sizes, across various industries and geographies, are under pressure to align with the UN Paris Agreement and are limiting emissions on their borders.
Additionally, new and proposed regulatory requirements, particularly in the EU, UK, and US, drive a need to capture data on current emissions and reduce future environmental impact.
Growing demand for change - Investors increasingly incorporate ESG considerations into their strategies. Simultaneously, consumers place greater emphasis on sustainability, compelling every organization to demonstrate tangible action and progress.
Lack of a system of record - Regardless of how mature an organization's infrastructure might be, elevated standards for reporting ESG impact, risk, and opportunities require refining and potentially reconstructing data management systems, processes, and controls. Dependence on historical or siloed data introduces problems of accuracy, relevancy, and consistency.
The current ESG data ecosystem is complex, varied, and widely distributed. Data that relates to different areas of ESG, such as carbon, water, waste, social, governance, biodiversity, pollution, and ecology, resides in different systems and formats. Organizations need to combine and harmonize disparate data to prepare it for sustainability scenarios.