For a Successful Green Transition, a Data-Driven Culture Is Vital

Benchmark ESG is a Business Reporter client.

Companies today are talking a great deal about decarbonization, and for many, it has become a top priority. A recent study found that 87% of European business leaders expect to achieve zero emissions by 2030 at the latest, indicating that significant planning is being done and resources are being mobilized to ensure the goal is realized.

This effort is being driven by a range of regulatory frameworks, including the European Commission’s Green Taxonomy, which will regulate green finance evaluations. But beyond compliance obligations, companies know that sustainability is central to business success; indeed, some are calling a clear ESG strategy the “new baseline” for attracting talent. 

As the transparency and reliability of sustainability performance data increases, applicants, potential investors, and other stakeholders can more easily evaluate a business’s success or failure in meeting sustainability goals. Poor performance has significant and wide-ranging implications for the viability of a business, while measurable progress will be rewarded with an ongoing license to operate. 

Conversations about how exactly decarbonization will be achieved tend to be around technologies being developed to help businesses transition to carbon-neutral operations. The study found that executives believe that IT will play a vital role, so it follows that significant investment will likely go into improving IT function. 

But that isn’t the only ingredient for success. What happens if not everyone is on board with the work required to realize a successful transition, or if a company’s messaging around decarbonization isn’t properly delivered? Technology might provide a key mechanism for going green, but other aspects of a business also need to be in place. 

“Culture” is an umbrella term that captures so many of the elements that are often left out of the tech-dominated conversation around decarbonization. Culture is the unsung hero of any transformative change within a business. Tweaks can be made here and there, and new technologies may achieve short-term gains on their own. But to effect durable change, the whole foundation needs to shift. To ensure that ESG objectives are met, business leaders must build a sustainability culture. They must find a way to ensure that everyone, from the boardroom to the shop floor, is invested in the idea of lasting transformation. 

There are various ways to do this. Criteria for success can be set, and incentives such as bonuses can be offered to encourage employees to work hard toward achieving the organization’s goals. Data can—and should—be leveraged to its full potential. Data is invaluable, as it serves as the lynchpin of any sustainability program and can show in fine detail the progress a company is making toward meeting its goals. 

To utilize this data properly, it’s crucial that it is investment-grade. That means it must demonstrate accuracy, timeliness, completeness, relevance and auditability. No longer can businesses boast of the mere existence of ESG data; they must be able to prove that it is trustworthy, and how they use that data must be transparent. 

Yet many have found that this is easier said than done. Inefficient and inconsistent data flows brought about by the continued use of manual reporting and analysis tools continue to impair the performance of businesses. This is something they must improve upon to make realistic strides towards meeting ESG disclosure requirements.

If businesses can overcome this barrier, they’ll achieve far-reaching results. Investment-grade ESG data has benefits beyond just external communications; it feeds directly into the creation of a durable sustainability culture within a business. If data integrity is assured, the ESG-related performance of the company can be precisely measured—and so can the performance of individual employees around key sustainability objectives. Accordingly, business executives can develop incentive structures that align with the performance data being collected. As the old boardroom saying goes, “that which gets incentivized gets prioritized.” By marrying strong data to a company’s vision of a sustainable culture, the pace of individual and company-wide momentum around sustainability will quicken. 

Producing quality ESG data is vital to the transformation of company culture, and a shift in culture is important to effect lasting change around sustainability. But how do we steer both efforts in the right direction? 

Unifying the enterprise through digital transformation is key to achieving both aims. Benchmark Digital Partners, a provider of cloud-based digital solutions for sustainability and ESG reporting, product stewardship programs and risk and compliance needs, helps companies around the world ensure data integrity and enhance data collection and reporting processes. The Benchmark ESG platform enables businesses to not only verify the quality of their data, but also to drive collaboration and engagement across functional teams, identify gaps and opportunities in real time and sustain ESG performance improvements in the long term. These services are delivered through a range of customizable best-practice workflows that allow effective cross-functional collaboration and defined, predictable outcomes. 

ESG disclosure demands on European companies are growing, thanks to climate change, sustainability drivers and increasing regulatory pressure. Building a robust and lasting sustainability culture will require work and resources, but there are solutions, such as those offered by Benchmark, that ensure the process is streamlined and transparent and drives meaningful results. 

Amid the clamor for progressive change among businesses, the work required to cultivate a sustainability culture is fully worth it—in terms of adding value, managing risk and, ultimately, securing the future of any company.

Access Benchmark’s ESG Resource Library for emerging trends, expert takes, corporate case studies and best practices for sustainability and ESG data management and reporting.

— Peter Walsh, Business Development Director, Europe, Benchmark ESG

This article originally appeared in Business Reporter. Image credit: iStock id623094344