Gathering and collecting data to track and report on ESG (environmental social governance) performance is one of the foundational responsibilities within a company's sustainability and investor relations efforts. However, ESG data collection can also be complex and challenging - particularly for large companies and diverse asset portfolios. Inside a company, ESG and sustainability are cross-departmental, often encompassing a wide range of metrics around a company’s operations, products, employees, supply chain, resource usage, governance, and more.
In a sense, ESG data is one of the truest reflections of a company’s business: what’s the company’s real identity and purpose? Who works there? What values, practices, and principles does it (genuinely) stand for? Where do its products and raw materials come from? How does the organization anticipate and manage risk en route to achieving its mission?
In most cases, ESG data gathering, stakeholder alignment, and decision-making also go hand-in-hand. Being able to make a strong, data-driven business case for sustainability and ESG programs (and their outcomes) is the best way to win internal executive buy-in for additional integration resources, as well as positive external consideration from investors, analysts, rating agencies, customers, and other stakeholders.
In our work with across dozens of companies and industries, we typically recommend a 6-step approach to ESG data collection:
In order to understand what ESG and sustainability data your organization needs to collect, start with a clear sense of its double materiality.
In double materiality, an ESG matter has double materiality if it's material from an ESG perspective, a financial perspective, or both perspectives.
What this means in practice is prioritize the most important ESG topics and risks a company has when considering data collection. For example, if an insurance or real estate company's investment portfolio is highly vulnerable to severe weather damage from climate change, that's material from both a financial and sustainability perspective. What climate risk data and KPIs should the organization track to monitor these risks and communicate them to stakeholders? Where does this data live throughout the organization (or even externally)? How will it be collected?
Your ESG materiality themes and topics should reflect your brand and business model. For example, a technology company might choose to focus its ESG initiatives on STEM (Science, Technology, Engineering, and Math) education and tech workforce diversity, because both of those areas align with the company's cultural DNA, products, and services.
By comparison, a retail apparel company might look at gender and racial equity, representative, body-positive imagery, and supply chain sustainability improvements because those are most material to its brand. Look at your identity, values, business model, and value chain: sustainability and ESG should build on that foundation, reinforce it, and be a vehicle for positive social and organizational change.
Once you’ve identified your material ESG themes, topics, and focus areas, design KPIs and start to map your ESG data sources and collection processes to measure baselines and track them over time. Established, third party sustainability reporting standards and ratings frameworks should also be used to inform your ESG KPI and data collection approach.
Organizations like Campbell's, Havas, Nike, Starbucks, TIAA, and Unilever have all found clear correlations between robust ESG programs and employee morale, loyalty, and retention, and - in some cases - direct sales growth. But understanding these relationships require strong data foundations, infrastructure, and analytics capabilities.
Once you've established your company's material ESG themes, initiatives, and measurable KPIs, work with internal departments, collaborators, and stakeholders to design a system and processes to gather and manage the necessary data. This may require upfront research, fact-finding, internal education, and capacity-building.
Work to understand:
What's your current state, and what is your future ideal state? What investments, partners, steps, and capabilities will it take to move your organization toward a more efficient, accurate, transparent, and well-governed ESG data collection system?
For example, its common for ESG and sustainability teams to collect and gather environmental data from finance, operations, and/or facilities, social data from HR, and governance data from the board, finance, legal, risk, and other parts of the organization. ESG data collection and management may require onboarding an ESG data management system like Brightest, and coordinating that with IT and procurement. Support from consultants may also be needed. ESG data collection is truly an aggregation process, one that requires significant cross-organizational collaboration, communication, and stakeholder engagement.
While individual departments may be responsible for specific ESG metrics and measurement areas, it's important for CEOs, CFOs, and sustainability leaders to create a unified, company-wide analytics approach. In order for ESG to really drive business benefits, competitive advantages, and social impact, it must be part of the company's top-level strategy, supported by the C-suite, and adopted across the organization.
You can't delegate ESG or sustainability to a single department - it's a company-wide effort
Similarly, rather than trying to boil the ocean and collect data on everything, focus on collecting accurate data and measuring a few core ESG and sustainability KPIs first, then build from there.
There are several steps and best practices any company can follow to effectively collect operational ESG and sustainability data:
In many cases, implementing ESG data collection improvements will require organizational change management. Be sure to harmonize stakeholder expectations, then build a solid business case for why ESG and sustainability data quality are so important for organizational risk management, reporting, and decision-making. Above all, organizational alignment, resourcing, and executive support are critical for efficient, effective, long-term ESG data collection success.
Most ESG professionals understand the relationship between strategy, operations, data, and reporting. The challenge is creating a consistent, secure process to efficiently get the data you need to measure results, report on success, and reinforce the positive transformation ESG can have across your business.
A good ESG data collection system should be able to gather data across a company's operations, supply chain, disclosures, third-party data providers, and publicly available information. The system should also be able to organize and analyze the data in a way that is meaningful and useful for stakeholders, such as investors, customers, and employees.
Data security and compliance are also critical considerations when it comes to ESG data collection. If you operate in a region with higher levels of ESG and environmental regulation like the European Union (EU), are a publicly listed firm, or work in a regulated industry like healthcare or finance, your organization will need an ESG data management solution that supports capabilities like:
In addition to other strong compliance and security controls. Make sure to work with your IT business partners to evaluate the security and controls of your ESG data collection workflows and any software solutions you integrate into your processes. ESG data should always be collected and stored on secure, encrypted servers to protect the data from unauthorized access.
The more you simplify, centralize, and streamline your ESG data collection and management process, the more time you'll have to focus on program work, affirming your outcomes, completing reporting and disclosure in a timely manner, and celebrating success.
While you know your internal stakeholder and capabilities ecosystem, along with what's best for your business, often your partners (ex: suppliers, third party experts, consultants, independent standards organizations, industry associations, or ESG technology providers like Brightest) can provide helpful best practices when it comes to collecting ESG data. Be honest in your self-assessment of ESG data collection and management maturity, and bring in external help to address key gaps and additional resource needs.
Brightest helps collect and centralize ESG data across all of a company's systems, teams, and data sources
This is one of the main reasons we invest so much in supporting cross-organizational ESG and sustainability data collaboration inside our ESG platform. Whether it's coordinating data collection across disparate offices and facilities, or working with suppliers on sustainable sourcing, the theme's always the same: it's always some combination of hard, slow, or an incomplete picture doing it alone or in silos. Positive internal and external relationships - supported by quality data - promote ESG data collection excellence.
Be sure to listen, collaborate, and engage your partners in the measurement conversation.
Effectively understanding and communicating ESG performance to stakeholders is one of the most important responsibilities of any ESG professional. The effectiveness of those efforts will only be as strong and reliable as the quality of your ESG data collection. Data underpins overall ESG performance and disclosure.
Wherever you are in your ESG data maturity roadmap, ESG data collection is a continuous improvement effort, and we wish you all the best as you continue making progress on better and better data capabilities and workflows. If we can be helpful at all (at any step in your process), please get in touch. A central part of our mission here at Brightest is empowering more efficient, transparent, and well-governed ESG data.