Is inadequate data crippling your ESG efforts? You are not alone

ESG (environmental, social and governance) has moved beyond just ticking a box to an enabler of business value. IDC predicts that, by 2024, 30 percent of organizations will advance their ESG metrics and data management beyond reporting capabilities to generate sustainably driven cost and competitive advantages. That is not a huge number, yet it’s a significant percentage. 

Nevertheless, there are several challenges that hamper organizations’ ESG efforts from progressing to the next level and bringing real value. Data, according to reports, is one of those key challenges.

A new global IBM Institute for Business Value (IBV) study, “The ESG ultimatum: Profit or perish,” of executives and consumers reveals that while an increased focus on environmental sustainability remains a top priority for consumers and business executives, inadequate data is a key challenge for both groups when it comes to achieving personal and corporate ESG goals. This is despite the encouraging fact that 76% of surveyed executives saying ESG is central to their business strategy. 

41 percent of executives in the survey point to inadequate data as the biggest obstacle to their ESG progress, followed by regulatory barriers (39%), inconsistent standards (37%) and inadequate skills (36%). Without the ability to access, analyze and understand ESG data, companies struggle to deliver greater transparency to the consumer – a key stakeholder – and meet consumer expectations. 

This also explains why a whopping 95 percent of surveyed executives say their organizations have developed ESG propositions; however, only 10 percent say that their organizations have made significant progress against them. Almost 3 in 4 surveyed executives (73%) say their organizations struggle to manage an overload of manual data, while 7 in 10 say they have difficulty consolidating or manipulating data. 

How ESG leaders address the data overload 

The study highlights ESG leaders, a sub-set of respondents with greater maturity in operationalizing ESG, who are seeing higher revenue, improved profitability, deeper customer engagement by approaching ESG as a transparency play that creates strategic business opportunities. These role models provide a roadmap for organizations looking to overcome data-related challenges and create sustainable change that includes: automating ESG processes and reporting capabilities to keep data current; tapping AI for enhanced insights into performance, forward looking analysis, and scenario development; aligning with ecosystem partners on ESG metric definitions and standards; and proactively establishing ESG data governance principles with stakeholders.

“Data is the lifeblood of ESG. Now is the time for enterprises to act. By operationalizing ESG plans, enterprises are putting information in the hands of operators who can make informed business decisions that can improve their ESG impact on a daily basis,” said Jonathan Wright, Global Managing Partner Sustainability Services and Global Business Transformation, IBM Consulting. “Organizations looking to increase stakeholder support and meet ESG reporting requirements should implement a sustainability roadmap that is inclusive of technologies, services and ecosystem partners that can position them for greater business success and help them address regulatory compliance,” said Wright.