The dust hasn’t yet settled on the announcements made and agreements forged at COP26, but attention is already turning to how both governments and private sector organizations will meet the lofty sustainability targets they are expected to.
Of course, this focus is not new but has been given new impetus. Many businesses have been trying to push their sustainability credentials for some time, with accusations of ‘greenwashing’ mixed with others launching more successful initiatives. And it’s no wonder – environmental, social and governance (ESG) concerns are playing an increasing role in all aspects of how these firms are evaluated – from pitching to investors and making procurement decisions, to informing consumer choices. A PwC study found that ESG commitments are driving both consumers and employees in their decision-making; 80% and 94% said respectively that they are more likely to buy from or work for a company that stands up for the environment.
But how easy is it to show off your green credentials? To attract both customers and talent, it is increasingly imperative that businesses are able to prove their commitment to ESG. The answer for many lies in data – tracking a range of different metrics to demonstrate their impact on the environment and society around them. Reporting information of this kind is on the up; a recent KPMG study noted that 80% of the world’s largest organizations now provide some form of sustainability reporting, up from 13% in 1993.
For all the corporate reporting in the world, a lack of standardized metrics between businesses means that the data collected risks falling on deaf ears. If that intelligence is specific to an organization, how much of it can make sense to the customers, employees, investors and regulators that it is aimed at? Without such standards – and the ability to understand said data – ESG metrics risk being branded as the next wave of corporate jargon. In fact, a Deloitte survey revealed that a lack of transparent information about ethical practices and values is stopping 34% of consumers from engaging with brands.
This isn’t just an external issue, either. Despite increased ESG reporting, PwC also reported that 37% of business leaders highlighted a lack of standards (along with regulatory complexity) as a major barrier to ESG growth. For all the generated data available to share with key stakeholders, often even the businesses reporting it don’t know what it means or how they should be presenting it.
The latest research from Qlik showed that, despite the significant increase in the use of data in every aspect of business, just 24% of the global workforce claimed to be fully confident in their ability to read, work with, analyze and argue with data.
As the intensifying debates over the environment and social justice show, however, the need to tell a story with data has an impact beyond attracting customers, hiring staff or targeting investors. Having the ability to understand ESG data can drive decision-making with major ramifications for people and planet. At the highest level, it is contributing to decisions that inform major goals and targets, such as the United Nations Framework Convention on Climate Change (UNFCCC). This is where global ESG data reporting standards come in – if corporate emissions targets might have been slightly nebulous, we now have the opportunity to align businesses with the global bodies driving change. And it all starts with a full understanding of the information we have available.
For example, while debate rages on the success or otherwise of COP26, one of the main focuses has been keeping the world on track to limit the rise in average temperature to 1.5 degrees. There are urgent scientific reasons why this target has been set, yet even for the largest of organizations, understanding how their activities directly relate to this target can be difficult. With a better understanding of data and the ability to see the narrative in the intelligence, companies are in a much stronger position to align their activities with global goals and crucially, make decisions that have a tangible impact.
Part of the challenge is that not everyone can be a climate expert. To accurately convey ESG data, each business needs to be able to present it in a user-friendly manner. By doing so, all stakeholders can work with data to align and activate proactive efforts to operate more sustainably. For example, developing accurate scenarios and simulations transparently means that everyone in the organization can understand key actions that need to be taken.
That’s the key – making data consumable by everyday users. It can be detailed, or even the result of complex calculations drawing on multiple different sources. But empowering employees to self-serve and use the resulting intelligence to support their roles, rather than stopping what they are doing to decipher huge volumes of information, can have a significant impact – particularly in an area which has been subject to little tracking and reporting.
Climate change is a matter of real urgency, and all organizations need to do their part. Being able to understand and convey associated data points accurately will not only support each organization in its efforts, but provide the basis for global collaboration and informed action.