Investors, board members, consumers, and regulatory agencies are interested in environmental, social, and governance criteria—a set of business standards often referred to as ESG. The regulatory environment, which is constantly shifting and evolving, spans the globe and yet differs in each geographic region, impacting disclosure environments in different places.
As more private and public sector organizations begin to open up their data to share with others, the opportunity presents itself to aggregate that data for better informed decisions and even innovation in ESG; for example, some companies are finding new ways to reinvent processes to do more than reduce carbon—companies such as ExxonMobil and BP Global have announced their intentions to get to net zero emissions. A modern data cloud platform lies at the heart of this innovation by allowing companies to share data while retaining the control they need for governance and, where needed, the privacy of employees, citizens, and customers.
Data needs to be accessible and consumable by all kinds of people within an organization, not just those in technical roles. Companies may want to share manufacturing-sourced data across their organization and global enterprise with partners, HR, finance, or the C-suite. A common pitfall in ESG is finding that the same kind of data is called out differently, such as in different regions or countries. This can result in competing data taxonomies. This disparity can be transcended by a data cloud platform that works with diverse data types, all from a unified platform, easing the road to better data quality and more readily consumable data. ESG is a cross-disciplinary function, or really a set of functions, performed by varying personas from factory floor to boardroom.
Another important concept in ESG is materiality. This means simply that what matters in your industry or market space is going to vary and this will impact the metrics needed to measure results. For example, a company with a substantial real estate footprint and a manufacturing arm is going to add environmental factors that a digital streaming service doesn’t have. So there are at least two important aspects to materiality for any given business: what your industry regards as material may evolve and impact your criteria, and/or your business may expand into new markets or products and services that change what you must consider material.
The ideal data cloud platform must be flexible enough to adapt to business and regulatory changes, which are fluid over time. While we cannot predict exactly what will change in different regions of the world, we can be fairly certain that regulations will change. A modern data cloud platform can accelerate the data pipeline necessary for proper disclosure of certain kinds of emissions. Companies sharing supply chain data require governance to mitigate risk and for proper disclosure, both of which are supported by efficient sharing of data with your supplier network.
Here’s our suggested checklist for what your ESG solution must be able to do:
- Data diversity: Can you integrate data from different systems and different vendors? Can your ESG solution handle different kinds of data, such as structured and unstructured? Can you manage different data types using the same platform?
- Adaptability: Can your system adapt quickly to fluctuating external variables, such as consumer demand, regulatory changes, or investor mindset?
- Data lake access: Can you access a data lake for data sets beyond that of your own company or immediate ecosystem?
- Secure data sharing: Can you share data with third parties in a way that is in near real time and meets all your governance requirements?
ESG is a journey
For companies building a data-driven approach to their ESG journey, there is a pool of available data across the manufacturing sector in every area—from pharmaceutical and consumer goods to oil and gas or healthcare, which can help you set your sights on your north star. This kind of data supports data-driven decisions about where to invest to reach your goals, and it can serve as a baseline to measure against as you strive to improve.
Remember that data is key to the journey to improvement. At the heart of ESG is the notion that while it matters that what you produce adds value to customers’ lives, how you produce it and how you treat the people who support its production matters just as much. A modern data cloud solution, with the ability to share data across the ecosystem, puts a lot of power on your side.