There are many motives for the collection of ESG data, including regulations, financial and reputational. But it’s fair to say, that there is a lot of confusion about the types, sources and providence of reporting data and what it actually means for your organisation.
This is partly due to the fragmented, and often difficult to follow ESG requirements. There are also several reporting bodies including the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB), who have slightly differing opinions about which ESG metrics are important and what stakeholders want.
The first challenge is for an organisation to be confident in their approach to ESG.
Strategies should be aligned with their own business needs. Reporting metrics must be reflective of their stakeholders, in their specific market.
The accuracy of data is a critical element of data quality and collection.
It ensures that an organisations activities are based on reliable and relevant information which, in turn, will lead to improved decision making, reporting and perhaps most importantly, stakeholder trust and engagement.
Data accuracy is a central theme in ESG.
As Peter Drucker says, ‘you can’t manage what you can’t measure’. With significant financial rewards and penalties, and the views of stakeholders, consumers and investors to take into account, data accuracy is essential to prevent lost time and money. Additionally, stakeholders are now expecting organisations to report on ESG related key performance indicators which has a direct effect on organisational reputation.
What does this mean for organisations and why is it important?
Let’s consider the assumed source of Peter Druckers quote, William Thomson, 1st Baron Kelvin:
“When you can measure what you are speaking about, and express it in numbers, you know something about it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts advanced to the stage of science.”
In this context, we realise ESG data is not ‘just a numbers game’. It is a science and should be based on fact. The collection of exacting, transparent and comprehensive data is essential to avoid unintentional greenwashing. That is, the process of making unsupported or misleading claims about an organisations ESG performance.
As stakeholders, and specifically your customers become increasingly savvy about greenwashing and how organisations measure the environmental sustainability and ethical impact of their activities, the importance of data and its management should never be underestimated.
At its basic level, ESG reporting shows that an organisation cares about its stakeholders, the environment and that they are doing the right thing. It allows them to precisely benchmark and measure their performance against industry competitors which drives continual improvement. It also gives consumers choice; they can knowledgeably evaluate their sustainability credentials.
For a business, this leads to improved performance, enhanced efficiency, engaged employees and ultimately increased sales. The panacea of the triple bottom line; people, plant, profit.
Want to know more?
Join our live Webinar on 15th June to hear from our expert speakers Jill Butler-Rennie and Andy Smith on all things ESG and your business. Click here to sign up or click here to get in touch with a member of our team today!