Effective data collection is the cornerstone of robust Environmental, Social, and Governance (ESG) strategies in an increasingly competitive and environmentally-conscious business landscape. Data-driven insights can help companies make informed decisions, optimise their operations, and align with sustainability goals.
This article will explore the critical aspects of data collection, including the importance of comprehensive data, best practices, and the role of technology in streamlining data management and analysis. We will also discuss how to leverage these insights can drive meaningful progress towards environmental sustainability and ESG performance.
What does “data collection” mean for carbon accounting?
Credit: Plan A
What are the challenges in data collection?
The data collection process is often associated with an array of challenges, such as:
- Identifying relevant data: Difficulty in identifying all relevant data points to collect at an early stage.
- Limitations in data quality: It is difficult to ensure the quality, accuracy, and consistency of emissions data.
- Assumptions about data perfection: The assumption that climate data needs to be perfect to realise a first carbon assessment makes data collection cumbersome and time-consuming.
- Engaging internal stakeholders: Emissions data is often stored in silos across departments, regions, business units and decision-makers, which makes it challenging for companies to find and consolidate the data.
- Analogue data: Some data may still need to be digitally available (e.g. paper contracts for renting an office, paper utility bills).
- Lack of team resources: Scope 3 emissions data is likely to require the involvement of several departments like procurement, R&D, manufacturing, and marketing. Creating a team to collate all this information can be challenging.
- Retrieving Scope 3 emissions: Scope 3 emissions data is the most challenging to gather since it depends on external stakeholders and suppliers. It’s also the most essential scope as it represents 90% of a company’s carbon footprint.
What are the benefits of accurate data collection?
Collecting comprehensive and reliable data is the first step in understanding a company’s environmental impact and developing a strong ESG strategy. This data enables organisations to achieve the following:
Informed decision-making and risk management
Comprehensive emissions and ESG data provide valuable insights into a company’s environmental risks, enabling more informed decision-making and risk management strategies. A report by the World Economic Forum identified climate change and environmental risks as the most likely and impactful global risks over the next decade.
Comply with regulations and reporting standards
As governments and regulatory bodies impose stricter environmental and ESG requirements, comprehensive data collection is essential for companies to maintain compliance and adhere to reporting standards. Additionally, organisations that have voluntarily committed to initiatives such as the Paris Agreement, the Science-Based Targets Initiative (SBTi), or the Task Force on Climate-related Financial Disclosures (TCFD) require this data to demonstrate their progress and adherence to these commitments.
Enhance transparency and stakeholder engagement
Transparent data reporting helps companies build trust with stakeholders, including investors, customers, and employees. It also enables organisations to respond to increasing public demand for greater corporate accountability and commitment to sustainability. For example, 94% of consumers are more likely to be loyal to a company that is transparent about its environmental and social impact.
Best practices for collecting and mapping emissions data
Understanding data gaps
Data gaps occur when no accurate, relevant, or complete information exists about a company’s emissions and ESG performance. Several factors, including fragmented data storage, outdated systems, inadequate monitoring and reporting, and a lack of standardised metrics, can cause these gaps. According to a report by KPMG, only 25% of companies provide comprehensive sustainability data in their annual reports14. This highlights the need for businesses to adopt best practices for identifying and addressing data gaps.
Mapping and filling data gaps
1. Establish clear goals and targets:
Setting clear emissions reduction goals and targets can guide your data collection efforts and ensure you focus on the most relevant and impactful areas. Align your goals with international standards, such as the Science Based Targets Initiative (SBTi) or the United Nations Sustainable Development Goals (SDGs).
2. Standardise data collection and reporting:
Adopt standardised data collection and reporting frameworks, such as the Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standards Board (SASB) Standards, or the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This will improve data consistency, comparability, and accuracy.
3. Implement robust data management systems:
Invest in data management systems, allowing centralised data storage, easy access, and seamless integration with other systems. According to a study by Deloitte, 84% of companies recognise the importance of digital tools for ESG data management.
4. Collaborate with suppliers and stakeholders:
Engage with suppliers and stakeholders to obtain Scope 3 emissions data and other relevant ESG information. Establishing strong relationships and communication channels can improve data accuracy and completeness. Monitor progress and reassess regularly: Regularly monitor and reassess your data collection processes to identify emerging data gaps and areas for improvement. Continuous improvement is crucial for maintaining accurate and up-to-date emissions and ESG data.
5. Provide training and support:
Ensure your employees have the necessary training and support to collect, manage, and analyse emissions and ESG data effectively. Building internal capacity will lead to more accurate and reliable data. Mapping and filling data gaps is critical to effective emissions and ESG data collection. By adopting best practices and leveraging industry standards and digital tools, companies can improve their data's accuracy, completeness, and relevance, paving the way for more informed decision-making and impactful sustainability initiatives.
Effective data collection is the cornerstone of effective decarbonisation strategies in an increasingly competitive and environmentally-conscious economic landscape. Companies that take the appropriate steps to ensure they have robust data collection processes in place will ensure they can extract data-driven insights; helping companies make informed decisions, optimise their operations, and align with sustainability goals.
Book a demo to discover how you can leverage software to transform your data collection process and centralise your emissions data, giving you immediate visibility into your company’s carbon footprint.
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