ESG in 2023 – Keeping ahead of the data.

Guest blog by Patrick Feehily, Sustainability Expert 

What’s new in 2023

2023 is set to be a busy year for anyone involved in Environmental, Social and Governance (ESG). We have new international standards on the way, more companies disclosing climate related financial information, the UK government’s new guidance on ‘Transition Plans’, further taskforce recommendations on nature and new work into standards on Human Rights and Biodiversity. Throughout 2023 it will be more important than ever that businesses have the best and most reliable ESG data at their fingertips. 

So why does it matter?

At Profusion we understand that taking action on sustainability offers a huge opportunity for businesses, but it can be a challenge to identify and access the data necessary to prioritise action and meet minimum reporting requirements.

One thing these standards all have in common is that they require disclosures from across the value chain. That means - not only is ESG important for larger companies, through providing e.g. access to cheaper capital – but it’s important for smaller businesses too. Clients increasingly expect and require high quality data and information from their supply chain. This doesn’t just mean disclosing ‘basic’ information about GHG emissions (scopes 1-3) but also how the company is set up to tackle risks associated with issues like Climate Change and what plans are in place to take action. With another round of negative ‘greenwashing’ headlines (related to carbon credits), all businesses are under extreme pressure to get their data and disclosures right.

Can’t I just buy a tool to do my disclosures?

With the crowded ESG reporting landscape and the range of voluntary targets and initiatives, it can be daunting and time consuming to work out what to report and then collect the necessary data. Technology does exist to help with these problems, but choosing the right tool or technology can be confusing. At Profusion, our approach is to help you better understand how you can get the most out of data. We help businesses navigate ESG standards and frameworks and consider the data implications of each step involved in developing an ESG strategy. That way we help businesses build their own data capacity and literacy, utilising the technology they may already have in- house to organise and automate data collection. These solutions will speed things up, reduce the risk of errors, and free up valuable staff time to use data to prioritise and take-action.

Applications are almost limitless – you can work out where your suppliers stand on paying a living wage, use machine learning to optimise your buildings energy use or use AI to analyse wildlife species in the South American jungle. Specifying what you need will be key.

Can I put this off until after the cost-of-living crisis?

It may not seem like the best time to be implementing new standards or embarking on an ESG strategy. Yet the potential benefits for businesses are significant. While ESG funds reached $2.7trn in 2021, marking a 53% year-on-year increase, there was also evidence that they outperformed more traditional investments during the last crisis – the COVID pandemic.

Companies that are performing on ESG are more likely to handle issues that have caused the current crisis, notably energy and resource use and supply chain issues. In a constrained labour market these companies should also be more attractive and better able to recruit and retain younger staff.

We know that consumers are feeling the pinch, but we also know that they are more discerning - especially generations Y and Z, who have high expectations of the companies they work for and buy from.

What about the Social side of ESG?

The pandemic and the cost-of-living crisis are adding momentum to interest in the ‘S’ of ESG. I’d expect this to grow in 2023 with businesses needing data to evidence how they are impacting the lives of all stakeholders – consumers, local communities and their workforce. Organisations have a lot to gain. A diverse and motivated workforce will be more productive. Similarly spending on workforce wellbeing pays dividends – with every £1 spent on mental health in the UK, employers receiving £5 back.

Will this make ESG better?

The potential for more standardised, reliable disclosures will help all stakeholders make better decisions. Transition Plans in the UK are a welcome shift from measurement of performance to action, and for me offer a blueprint for reporting progress on all topics, not just climate. We are also getting clarity on when to (and when not to) use Carbon Credits. The Competition and Marketing Authority’s new Green Claims Code - giving advice on how to avoid Greenwashing - is welcome.   

No doubt the effective use of data, analytics, AI and machine learning will be vital. As we get better at automated data collection and reporting, we will only see a growth in the value and use of data in applications like climate related scenario analysis and predicting the action we should take. In short - helping deliver the change we all want to see. 

Interested in taking control of your ESG reporting? Check out our lastest Data Academy programme, Managing ESG Data or get in touch with our Academy experts to discuss your ESG needs: dataacademy@profusion.com

About the author - Patrick Feehily

Patrick is supporting Profusion to help organisations understand how they can better use data and AI to realise the full potential of their Environment, Social and Governance (ESG) strategies.  

With 18 years technical experience as a sustainable development professional, he is motivated by translating big strategic concepts into projects that benefit people and the environment.  Patrick has experience developing sustainability frameworks, associated KPIs and translating complicated new regulation into action. Prior to working in the private sector Patrick headed up the Mayor of London’s Environment team which produced the first integrated London Environment Strategy and a Net Zero, 1.5C Compatible Climate Action Plan – a first for a UK city. 

Patrick’s passion is understanding how things work and absorbing new knowledge. Currently he spends the rest of his time working on projects in the electrification space.