Last week was significant for positive climate change action in Australia with the Government’s Climate Bill, pursuing a 43% emissions reduction target by 2030, passing in the Lower House on Friday. We also witnessed a group of Australia’s top professional, industry, and investor bodies with US$33 trillion in assets under management reach an unprecedented consensus on the increasing need for sustainability reporting at the AICD Conference.
In backing the draft rules from the International Sustainability Standards Board (ISSB), established at the UN’s COP26 Conference last year, Australian business leaders have supported the development of a comprehensive global baseline for sustainability disclosures. We know there is an overwhelming desire to act and that the demand for precise, accurate, and comparable sustainability reporting is at a tipping point, but how confident are you in your organisations net zero data?
I also attended the ESG Summit in Sydney this week, where a group of industry leaders gathered to align on our Future Roadmap Towards a Net Zero Economy. A recurring thread weaving through all their insightful presentations was how critical an ESG reporting framework founded on accurate net zero data is for our transition to a low-carbon country, and I’m sharing my key takeaways on this here.
This astonishing insight came from Michael Cox, Schneider Electric’s Director of Sustainability – APAC, who shared key observations from Schneider’s recent Sustainability Index, launched in July this year. The Index surveyed 500 business decision-makers in the Australian market to explore drivers and barriers affecting the sustainability journeys of their organisations, with a whopping 79% of those surveyed agreeing that digital will play a key role in achieving their business sustainability goals.
Despite this, Schneider has found that many organisations find it challenging to move from ambition to action. Unfortunately, despite the benefits of sustainable operation, 11% of respondents said they had no intention to reduce their carbon footprint, with 45% shelving their plans until 2030 or later, mainly due to a lack of expertise or data.
We know that taking decisive climate action requires a steadfast commitment to innovation and transformation and that data plays a vital part in this. However, most companies (46%) still use manual data capture methods to trace their energy use – a process often inaccurate and prone to error.
A lack of accurate, high-quality data exposes your business to reputational damage, financial penalty, consumer distrust, compliance, and greenwashing risk, but Optima Technology’s market-leading data accuracy (98%) empowers us to help organisations set the benchmark in their net zero data. Our automated data solution is cost-effective and uniquely designed to turn data complexity into data clarity, producing audit-grade results and supported by industry-leading ISO-rated data security. Central to our Optima Technology platform is its market-leading extraction and validation stages enabling the platform to aggregate disparate sources and formats of data to provide our customers with an accurate Net Zero benchmark – a single source of truth. Moreover, comparisons to manual, offshore alternative solutions prove less errors, faster speed and affordable cost is possible with automated software.
The need for sustainability reporting has been front of mind for many this week, following the unprecedented consensus reached by peak industry and investor bodies at the AICD Conference. In backing the draft rules from the International Sustainability Standards Board (ISSB), established at the UN’s COP26 Conference last year, Australian business leaders have supported the development of a comprehensive global baseline for sustainability disclosures.
Encouragingly, Australia is currently the fourth biggest TCFD-reporting country in the world, despite our voluntary disclosures. If we look to the future with mandated disclosures on the near horizon, will we be able to meet this pace of this change? Jacquie Fegent-McGeachie, an ESG Advisory Partner at Deloitte Australia, shared her vision for future sustainability reporting in Australia, drawing on the Climate Action 100+’s Net Zero Carbon Benchmark research from March 2022, which suggests we have a long way to go. ; According to their research, only 5% of companies currently align their capex strategies to their net zero transition goals! We know that the alignment between financial and sustainability reporting is vital, but this is practically non-existent for the 95% of organisations surveyed by the Climate Action 100+. Data is critical to bridging this gap. The process, systems, and controls currently in place for financial reporting and its baseline data need to be replicated in sustainability reporting to provide the granularity of disclosures that stakeholders increasingly demand.
Kelly Davies, Partner at K&L Gates, stressed the need for organisations to get their ducks lined up in a row quickly to ensure they are well-prepared for future mandatory disclosure requirements. From the discussion, we learnt that Australia has the world’s second highest volume of climate change litigation cases, which is likely to increase with higher regulation, but how do you avoid being sued?
Davies believes integrating your governance and compliance teams across your operations to mitigate risks is vital to avoid being swept up in the wash. Institutional investors are also increasingly demanding greater transparency in disclosure. With savvy consumers and millennials calling for enhanced regulations while independently verifying the integrity of organisational ESG statements, this trend is likely to continue.
Increased scrutiny over your data collection (and manipulation, if it exists!) means that data accuracy will become just as important in the future as we look to the increased regulatory oversight on ESG claims and proof of evidence-based reporting that looms on the horizon.
Optima Technology’s recent market repositioning of our SaaS business was driven to meet this growing demand for Net Zero reporting, recognising that access to high-quality, reliable data will be the most significant barrier businesses must confront over the next five years in addressing climate risk.
But organisations need to establish an accurate baseline and do it yesterday; so, ask yourself these two key questions:
1. Without data integrity, how will your sustainability investments, initiatives and tracking lead to a successful Net Zero program?
2. With limited access (annual and historical) to sustainability data, how will your teams in operations, finance, sustainability, procurement, legal, and risk continually analyse and measure their success?