The dust hasn’t yet settled on the announcements agreements made at COP26, with strong pressure on even the smallest of businesses to meet the lofty sustainability targets expected of them.
Many businesses are pushing their sustainability credentials to keep pace with this matter, with many facing accusations of ‘greenwashing’, while others have launched more successful initiatives.
And it’s no wonder – environmental, social, and governance (ESG) concerns are playing an increasing role in all aspects of how businesses are evaluated – from pitching to investors and making procurement decisions to informing consumer choices.
Even in light of the extreme supply chain delays occurring, Australia’s National Retail Association (NRA) found that ESG commitments are driving consumers in their decision-making, with 60 per cent saying they are open to receiving deliveries later if environmentally friendly practices are utilised.
But how easy is it to show off your green credentials? In order to attract both customers and talent, it is increasingly imperative that businesses can communicate and measure their commitment to ESG clearly.
The answer for many lies in data – tracking a range of different metrics to demonstrate their impact on the environment and society around them. However, for all the corporate reporting in the world, a lack of standardised metrics between businesses means that the data collected risks falling on deaf ears.
If that intelligence is specific to an organisation, how much of it can make sense to the customers, employees, investors, and regulators that it is aimed at? Without such standards – and the ability to understand the data – ESG metrics risk being branded as the next wave of corporate jargon.
While 85 per cent of consumers want brands to be more transparent about their sustainability practices, they will be dismissed as empty promises and corporate greenwashing if metrics aren’t communicated effectively and show real action.
This isn’t just an external issue, either. For all the generated data available to share with key stakeholders, often even the businesses reporting it don’t know what it means or how they should be presenting it.
The latest research from Qlik showed that despite the significant increase in the use of data in every aspect of business, just 24 per cent of the global workforce claimed to be fully confident in their ability to read, work with, analyse and argue with data.
As the intensifying debates over the environment and social justice show, however, the need to tell a story with data has an impact beyond attracting customers, hiring staff, or targeting investors. Having the ability to understand ESG data can drive decision-making with major ramifications for people and the planet.
At the highest level, it is contributing to decisions that inform major goals and targets, such as the United Nations Framework Convention on Climate Change (UNFCCC). This is where global ESG data reporting standards come in – providing the opportunity to align businesses with the global bodies driving change. And it all starts with a full understanding of the information we have available.
For example, while debate rages on the success or otherwise of COP26, one of the main focuses has been keeping the world on track to limit the rise in average temperature to 1.5 degrees. There are urgent scientific reasons why this target has been set, yet even for the largest organisations, understanding how their activities directly relate to this target can be difficult. With a better understanding of data and the ability to see the narrative in the intelligence, companies are in a much stronger position to align their activities with global goals and, crucially, make decisions that have a tangible impact.
Part of the challenge is that not everyone can be a climate expert. To accurately convey ESG data, each business needs to present it in a user-friendly manner. By doing so, all stakeholders can work with data to align and activate proactive efforts to operate more sustainably. For example, transparently developing accurate scenarios and simulations means that everyone in the organisation can understand key actions that need to be taken.
That’s the key – making data consumable by everyday users. Empowering employees to self-serve and use the resulting intelligence to support their roles, rather than stopping what they are doing to decipher huge volumes of information, can have a significant impact – particularly in an area that has been subject to little tracking and reporting.
Climate change is a matter of real urgency, and with 99.8 per cent of Australian businesses being SMEs, this challenge clearly cannot be overcome without this sector being fully involved. Accurately understanding and conveying ESG data will not only position a business in a leading role but also provide the basis for global collaboration and informed action.
This post was aggregated from Dynamic Business (https://dynamicbusiness.com).