In life, as in football, you won’t get far unless you know exactly where the goalposts are. Trouble is, that includes your own.
When it comes to avoiding a data own goal, you’d be forgiven for thinking that most people are smart enough to not gather, analyse and make decisions on information that would put the ball in the back of their own net. You’d be wrong. Too often we see businesses undermine their own strategies by simply not thinking about the type, depth and breadth of ESG data they need.
In the sphere of ESG and sustainability, data is vital for ESG practices, decisions and disclosures. But data in itself is not inherently ‘good’ or even useful – it’s all about choosing the right data and refining it into a useful and usable tool. Collecting vast amounts of metal ore isn’t intrinsically valuable or useful until it has been refined into usable and purer metal with a intended application. In the same way, mining for vast amounts of data, isn’t useful unless it can been refined and focused so it becomes fit for purpose. Clearly, running a business extracting ore would become obsolete if you hadn’t worked out why it was needed in the first place.
With so much information out there, business leaders must be able to sift through the potentially murky waters of ESG data, and get the right information, so that they can make the best decisions about strategy and growth. Albert Einstein once said in relation to data that “Not everything that can be counted counts, and not everything that counts can be counted”. So how do we determine what ‘counts’ when it comes to selecting and applying ESG data?
The spectrum of ESG data options are diverse and the number and variety of different approaches to ESG factors can be overwhelming. So in order to navigate the ESG sphere requires a clear purpose and goal and this should be reflected in the ESG data choices. Do you want to focus towards either environmental, social or governance issues, or concentrate on all three equally? Logically, the quality of ESG data will significantly impact the quality of the ESG decisions and subsequent disclosures. Therefore, before using ESG data, it is important to ensure that the collected data is of high quality- relevant, reliable, accurate and with maximum clarity.
In many cases you’ll be faced with the option to outsource data collection to a third party in order to reduce costs of management fees. However this approach may lack important details and reduce materiality and directionality in the long run so it is up to you to make sure that whenever you choose the data, the tools you deploy should be as flexible as possible. That’s why at Ecodesk we work on three simple principles that are underpinned by ‘relevance, convergence and trust’. This really helps drive a far more deliberate approach to data selection which has proven to reduce costs & reporting timeframes as well as build much higher levels of confidence in the underlying numbers.
The key to getting the most out of ESG data is to take control of data collection, analysis and selection and use it to empower business decisions. By selecting and choosing your own data allows a greater focus on your specific and individual aims and targets. This gives greater control and focus over the desired outcomes. Immersing oneself in the data builds a more intimate relationship with it and a greater understanding of the risks that come with poor or inappropriate selection.
Selecting the right data is clearly essential, but how can you ensure that you are making the right selections? Perhaps you simply can’t all of the time but consider ESG data collection as analogous to football management and team selection. When preparing for a match, a manager needs to consider which players to select and which ones to leave on the bench. This decision is important and will ultimately influence the result significantly. When deciding on the team sheet, the manager will consider their teams strengths and weaknesses, which players complement each other on the pitch and the realistic aims for the scoreline, in the hope of achieving the best result and avoiding scoring that ‘own goal’. Likewise, when selecting ESG data, ample consideration of data targets, focus areas and connections between data is required to ensure the best possible outcomes. Choosing which data makes the team sheet will help ensure the result is a success.
Selecting and publishing the ESG data ‘team sheet’ requires strong leadership, conviction and confidence. The responsibility is on managers to take control to make the right decisions and get the results!