Better data is the key to meeting ESG standards

This week marked Earth Day 2024, and as we navigate an increasingly data-driven landscape and harness the burgeoning power of artificial intelligence, there are few justifications for organisations to not manage and report their environmental, social and governance (ESG) data with enhanced efficiency and transparency. Global ESG standards are on the rise, and Australia is at the forefront of this movement. In June last year, the Australian Government took decisive steps by initiating mandatory ESG reporting for large companies and financial institutions, set to commence this June. Yet, the question remains: are our large corporations adequately prepared?

As we strive for a future marked by accountability, the selection of data partners will critically define an organisation’s capability not only to meet but to surpass ESG standards. Transitioning to advanced data systems transcends mere compliance; it is a strategic imperative that accelerates our progress towards sustainable development goals.

Despite many Australian organisations committing resolutely to new ESG standards, they face hurdles in achieving their objectives due to data challenges within the supply chain, which can inadvertently lead to unintended greenwashing. The Australian Competition and Consumer Commission recently found that 57% of 247 businesses surveyed might have engaged in greenwashing through their claims.

Frequently, the data required is already present within organisations; however, the challenge lies in unlocking this data and integrating it with other vital datasets for comprehensive analytics. This enables management to obtain a holistic view. A 2023 survey disclosed that over 80% of Australian organisations still depend on spreadsheets to collect, analyse and report ESG-related data, instead of leveraging modern AI and analytics platforms. This reliance on outdated methods means that most of our reporting has been backward-looking, whereas the need of the hour is for real-time, actionable insights for immediate impact.

The principal obstacle is not merely the availability of data but the capability to seamlessly integrate and analyse it to ensure accurate and reliable reporting of ESG data, thus avoiding the risks of greenwashing. With ESG data predominantly unstructured and scattered across various formats and locations, this presents a significant challenge.

According to the same study, more than 70% of Australian senior business leaders surveyed last year cited data collection as the most challenging aspect of the ESG reporting process. 47% of respondents indicated that incomplete and missing ESG data was a significant obstacle, with another 33% reporting inconsistent and irregular data collection procedures, and 47% citing poor data quality as a key hurdle.

Consider the example of Woolworths, Australia’s largest supermarket chain, which once struggled with common data challenges such as fragmented databases and complex integration. The adoption of Qlik technology transformed Woolworths’ operations, enabling more effective inventory management and reducing food waste by allowing comprehensive analysis of customer segmentation, trading hours, expiration dates and sales patterns, thus optimising markdown policies and stock rotation of perishable goods.

Similarly, organisations with extensive property portfolios, such as the Australian National University (ANU), stand to benefit from improved data collection for enhanced energy efficiency insights. ANU’s initiative to replace outdated dial-based electricity meters with more contemporary digital meters feeding Qlik’s energy dashboard — processing data from over 1000 electricity meters every five minutes — illustrates the transformative power of integrating advanced data systems.

Ultimately, to adeptly manage and report ESG data, businesses must select the right data partner and build a robust data foundation by effectively collecting, integrating and delivering trusted data into your preferred environment, be it on-premise, in the cloud or a hybrid. Once established, AI-powered analytics can be used to transform that data into actionable insights and strategies — creating visualisations, generating predictions and providing interactive, rapid responses that benefit not just reporting efforts but the user’s overall business operations.

As the climate crisis intensifies and the targets set in the Paris Agreement become increasingly daunting, trustworthy and timely data will play a crucial role. During this Earth Day week, it’s imperative for all of us to commit to advancing our data practices to achieve our ESG goals and foster a more sustainable world.

Mark Fazackerley.

Top image credit: iStock.com/Boy Wirat