Data can be a powerful asset for your company, particularly data relating to ESG and sustainability, but only if it is accurate.
As our nation pursues ambitious net zero goals, businesses across all industries and sectors are under pressure to track and report their sustainability performance; increasingly in standardised frameworks. And with environmental awareness growing and climate action accelerating, even those businesses that fall outside the scope of current regulations would do well to get ahead of the curve. Making the effort to gather robust sustainability data now will ensure you don’t leave yourself open to the risk of compliance penalties, or fall behind your competitors as ESG reporting becomes more widespread. It’s vital to remember though, that not all data is equal. When it comes to ESG, data integrity is everything. Here’s why:
With 80% of investors saying that Environmental and Social Governance (ESG) is an important factor in their investment decision-making, according to PriceWaterhouseCoopers, and 50% claiming they’d be willing to divest from companies that didn’t take sufficient action on ESG, it’s more important than ever for businesses to get their data in order.
Low-quality data could mean you slip into unintentional ‘greenwashing’, where businesses overrepresent the efforts they’ve made towards sustainability – whether intentionally or by accident – and mislead the public and investors about their dedication to ESG.
Many big companies have faced reputational problems due to greenwashing, including IKEA, Volkswagen, and Nestle. Although these scandals might not have been down to data mismanagement alone, they demonstrate the level of risk facing businesses that misreport sustainability data. Their stories should encourage every organisation to prioritise the integrity of its sustainability data. And with the Competition Markets Authority (CMA) publishing clear guidance around greenwashing last year as part of their Green Claims Code, businesses and consumers alike are more scrupulous than ever when it comes to ensuring authenticity of sustainability claims. Furthermore, the CMA (and associated bodies) has the power to take enforcement action on misleading claims, which can result in court proceedings and financial penalties.
Historically, an absence of impetus for standardised data requirements has made data integrity less of a priority – and enabled businesses to make bolder claims based on weaker data. Today, governments, regulators and action groups like the Task Force on Climate-related Financial Disclosures (TCFD) are all pushing for tighter regulation, meaning comprehensive and contextual data is fast becoming essential.
It’s important to note that the benefits of data integrity are far-reaching. Not only can dependable, accurate data help you avoid falling foul of compliance penalties, it can also help you shape a data-driven growth strategy that aligns with your organisation’s ESG values, and make progress towards real and lasting change. More on this below.
Data integrity goes far beyond data being simply good quality. It describes the validity, completeness, consistency, and accuracy of your data across its entire lifecycle. Essentially, it’s what makes data not just comprehensive, but useful too.
Data integrity means:
For data to have integrity, it must of course be of high quality too; meaning it is complete, unique, valid, up to date, and consistent throughout the dataset.
Although data might be high-quality and correct, this does not mean it’s inherently useful, and vice versa. It might lack supporting data that offers important context.
A focus on the integrity of ESG and sustainability data will pay dividends in the long run. Investors want to see businesses not just dedicating resources to ESG data-gathering, but taking real action based on that data.
By ensuring the integrity of the data, it becomes easier to use that data in tangible, practical ways, such as:
Although you might have invested time and resources into collecting data, poor data integrity and a lack of context and quality could render it useless.
Not only could this potentially impact your relationship with sustainability-conscious investors, damage brand trust among consumers and lead to unintentional greenwashing or costly penalties as mentioned above, it might also set you on an ineffective path of action; inhibiting your ability to implement meaningful change and create a resilient, sustainable business.
Are you looking to reassure investors of your sustainability credentials? Reposition yourself as a green and sustainable leader? It will be far easier to achieve these objectives when you base your strategy on quality, context-rich data.
Lots of data might look good from the outside, but it’s the context and quality that makes it truly useful and empowers you to take action. It’s also important to make sure the data you’re gathering provides insights that match your objectives.
For example, you might have plenty of data on the cost and usage of raw materials from your supply chain, but lack detailed info on the providers and sellers as part of your ESG responsibilities. This means you’re able to make determinations regarding cost savings, but not the environmental impact of your supply chain, rendering that data useless for sustainability purposes.
When informed by dependable data and a single source of truth, you can feel more confident about the business decisions you make – whether they relate to your ESG commitments or business growth strategy, or both. Through data, you can begin taking effective action and making real progress towards your goals.
Optima Technology is the new benchmark in net zero data, empowering the push for net zero by delivering accurate and precise data for companies looking to baseline and measure their progress towards ESG and sustainability targets. Delivering high data accuracy in the market, Optima Technology provides confidence for businesses of all sizes.
For more information on how Optima Technology can help you maximise the benefits of your ESG data, get in touch today.