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ESG Performance Data Disrupts The Way Money Moves

Organizations across industries have tackled a majority of the low-hanging fruit for improved sustainability in physical asset and company performance over the past few decades. The attention on green buildings has impacted our world, improving everything from enhancements in building codes and certifications for energy efficiency, to health & wellness and corporate programs. 

For decades, green buildings and sustainability initiatives have been focused on cost avoidance and operational in nature; now, the capital markets have shifted to focus on how ESG performance has a large impact on how money will move our global economy.   

As a result of this shift, ESG leaders have a new set of opportunities and risks to assess in order to optimize human, community, and environmental experience, referred to as ESG (Environmental, Social, and Governance). 

Over the next decade, ESG leaders need to look wider and deeper into performance data in these areas to maintain their competitive advantage, which will be founded on connected data infrastructure and investment-grade data. Here’s what this will look like: 

1. ESG performance crucial to measure companies’ worth

Whether it is access to debt, equity, or insurance, ESG performance is a key factor in managing risk, finding opportunities, and – soon – measuring a company’s worth, at least according to Larry Fink, CEO of BlackRock. Companies with superior ESG performance are attracting more capital, reducing their risks, and are receiving higher returns on their investments.

This trend among sustainable operations will continue to drive data forward in the coming years and become increasingly important in corporate evaluations. The need for organizations to measure, manage, report, and act on ESG data to comply with investment and stakeholder requests will continue to push the adoption of ESG forward. 

While this is a great trend for humanity, we must still address the challenges of delivering investment-grade data to the markets. We will need to take a deep look into data, technology, and learn from the experiences of Accounting professionals

2. ESG Technology Stack Development

 ESG data transfer currently relies on offline exports that are prone to human error, difficult to quality assure, and have no source of truth. This leaves little room for professionals to accurately capture and implement changes in a cost-effective way.

Most of the time, the data exists – it just lives in many different places and is owned by different teams within the same organization. Every organization must unify data so they can better collaborate on continued improvement. Technology solutions must work with data partners to create data-sharing channels or integrations to make this process easier, and companies can better communicate between departments to share this information. When we work smarter together, everyone wins.

Technology enables close to real-time performance and action, which opens access to capital and improvement. However, most organizations been stuck in an era of estimated data and or worse no data at all. We need to collect and use data that is verifiable and investment-worthy.

3. Shift to Investment grade ESG data

With interest from capital markets and with a connected technology stack in place, professionals will be able to analyze performance, set goals, and act on the data to drive improvements. Particularly with the integration of data systems, ESG data will be able to flow smoothly across platforms so teams can better collaborate to make necessary improvements. With stakeholders reviewing the same data sets, each organization will make data-driven decisions

As investors in both private and public entities request ESG performance data, organizations will be able to pull results of physical assets and company-wide initiatives, just as they do for financial performance. Investment-grade ESG data is crucial to company financial performance; is your company ready for this reality?