{"id":55271,"date":"2021-03-04T08:00:15","date_gmt":"2021-03-04T16:00:15","guid":{"rendered":""},"modified":"2022-04-11T16:49:13","modified_gmt":"2022-04-11T23:49:13","slug":"learnings-from-greenbiz-21-just-how-big-is-the-esg-data-challenge","status":"publish","type":"post","link":"https:\/\/cm-edgetun.pages.dev\/en-us\/industry\/microsoft-in-business\/business-transformation\/2021\/03\/04\/learnings-from-greenbiz-21-just-how-big-is-the-esg-data-challenge\/","title":{"rendered":"Learnings from GreenBiz 21: Just How Big is the ESG Data Challenge?"},"content":{"rendered":"

\"windAt this year\u2019s GreenBiz 21 conference<\/a>, the drive to act to address climate change and social equity challenges was palpable. Bill Gates highlighted the ambitious goals for Breakthrough Energy<\/a>, followed by a thoughtful discussion about human rights and social justice with Sanda Ojiambo, CEO of the United Nations Global Impact. The conversation was inspiring, and the energy levels high!<\/p>\n

With the Task Force on Climate-related Financial Disclosures (TCFD)<\/a> reporting that their support has grown to \u201c1,340 companies with a market capitalization of $12.6 trillion and financial institutions responsible for assets of $150 trillion,\u201d CFOs are starting to take notice.<\/p>\n

At GreenBiz, I helped a Microsoft partner, ESGeo<\/a>, with several interactive sessions. ESGeo is an integrated reporting tool that is designed to collect data from disparate sources and stakeholders, turning them into insightful dashboards, proactive alerts, and audited reports to help companies manage the entire value chain of Environmental, Social, and Governance (ESG) factors. The feedback was that ESG data challenges are as big as the ESG challenges themselves.<\/p>\n

Capital Markets: Longing for Accurate, Real-Time Data<\/h3>\n

ESG has captured Capital Markets\u2019 imagination with its 2020 financial performance which has led to more ESG indexes, green\/sustainability-linked\/social\/transition bonds, environmental and social SPACs, and more. While there are global accounting standards and regulatory bodies, they remain largely unenforced today.<\/p>\n

From Capital Markets to stakeholders to customers to even the Wall Street Journal<\/a>, everyone is looking for historical and real-time ESG data, like we have for the financial markets. The challenge is that self-imposed reporting spans the entire eco-system that a Corporate operates in, not just its financial statements. The pressure on Corporates is intense!<\/p>\n

The Corporates that understand their ESG impact and their supply chain\u2019s will not only show a greater understanding of their business but will be able to mitigate material risk and gain capital allocation, leading to business resilience. Let\u2019s look at the ESG data pipeline to see just how complex it is.<\/p>\n

Corporates: The (In)Complete ESG Data View<\/h3>\n

ESG data starts with the Corporates, whether private or public. The data challenges start as teams gather data from internal systems, collaborating across business units. This data shows their own ESG footprint and could include things like building and product CO2 emissions, diversity strategies, and transparency reports.<\/p>\n

Fortune reported<\/a> that \u201c94% of the Fortune 1000 companies are experiencing disruption to their supply chains as a result of COVID-19,\u201d a black swan ESG event. To understand their ESG risk, Corporates need to gather data externally from their supply chain. This data collection could range from tens to hundreds or even thousands of suppliers. Corporates will encounter a wide range of ESG maturity across their supply chain, including those downstream companies that are not equipped to respond.<\/p>\n

\"map<\/p>\n

In the supply chain, there are further downstream signals sourced across the environment, local community level and social media, and customers that have upstream impacts. Fabrizio Fiocchi, CEO of ESGeo<\/a> explains how they can help, \u201cBusinesses have conflicting priorities between global sourcing and the sustainability teams \u2014 keeping costs low while looking for a sustainable supplier. Businesses need conduct due diligence of both new and existing supply chain members, create materiality maps, and benchmark the suppliers against each other.\u201d<\/p>\n

By the time the supplier provides the data (if they are equipped to), and the Corporate consolidates and analyzes it, the data is likely already out of date and watered down. This can be mitigated through integrated reporting. \u201cCircularity cannot be achieved with weak links in the business value chain and seamless reporting is the first step towards achieving global SDGs\u201d, says Leonardo De Biasi, VP of Data Intelligence<\/a>.<\/p>\n

When the Corporate finally compiles the internal and external data, creates their story, and publishes the report, several things happen.<\/p>\n