Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
Environmental, social, and governance (ESG) is no longer just something that is nice to participate in –it’s quickly becoming one of the top ways for organizations to stay relevant and gain public trust. That said, the future of the ESG movement itself lies in complete, quality data. Without comprehensive and correct data, organizations will be hard-pressed to provide accurate ESG reports to stakeholders and the public. So, how can your company collect its own quality data, and what should you ensure you are including in your collection process? Below, we break down the different types of data and best practices for ESG data acquisition.
The Different Types of ESG Data
When it comes to ESG, both quantitative and qualitative data are essential to get the full picture of sustainability at your company. Quantitative data is numbers-based and physically measurable. Qualitative data is interpretation-based and descriptive. For example, quantitative data will tell you the exact amount of greenhouse gas emissions your organization produces. Qualitative data, on the other hand, can help you to understand why or how something happened. For example, why your greenhouse gas emissions have been increasing.
In addition, there are three primary categories of ESG data:
- Environmental data: Encompasses environmental information like carbon emissions and energy consumption, water usage, and waste and pollution outputs
- Social data: Includes workforce diversity, gender equity, and human rights
- Governance data: Relates to topics such as corruption, labor practices, and gender composition of the board
The Importance of Acquiring Quality Data
We spoke above about the difference between quantitative and qualitative data. It is important to note that while qualitative data is invaluable to your company, investors rely on quantitative ESG data to identify where to lend their support. For investors, your company’s ESG performance is only as good as its data quality. That is why complete, correct data is so important. Incomplete data can result in inaccurate reporting, lack of transparency, and potential backlash from stakeholders if your efforts are deemed as greenwashing. In addition, the SEC has recently proposed new legislation that, once passed, will require publicly traded companies to participate in climate disclosure. Quality ESG data will be essential for compliance with this legislation.
How to Collect Quality ESG Data
Collecting and consolidating your ESG data is a daunting task. However, as we discussed above, it is necessary for sharing your organization’s sustainability journey. ESG data can be sourced from your organization directly or from publicly available third-party resources. When it comes to ensuring data quality, some vendors offer auditing tools to confirm the accuracy of the data.
Key Takeaways
Here are three things to remember with regard to ESG data:
1. Both qualitative and quantitative data are important for your company. You should be able to see where your company stands from an ESG standpoint and why.
2. For investors, quantitative data is invaluable. Make sure you provide them with the data they need to make their decisions.
3. Incomplete data can be harmful to your company, so it’s important to collect all necessary data before releasing reports. If you don’t have certain data, disclose that fact rather than fabricating data.
Climate change isn’t going away any time soon, and as a result, stakeholder interest in ESG is only going to continue to build. If you can arm your company with quality ESG data, you will be on the right path to the future.
This article was written by Beatrice O’Campo, Marketing Associate at WatchWire.
References
- Stevens, Jason. “The Rise of ESG and the Importance of ESG Data.” Nasdaq, 19 Nov. 2021, https://www.nasdaq.com/articles/the-rise-of-esg-and-the-importance-of-esg-data.