ESG disclosure: Using fancy data, not fancy words

April 21, 2022

What does a digital revolution in ESG disclosure mean to business?

Shareholders are making it abundantly clear that a company’s approach to sustainability can make or break its investment prospects. Moreover, investors are increasingly requiring companies to back their sustainability claims with hard evidence. Corporates can’t just claim they’re sustainable, they have to prove it now too…

Mo data, mo problems

This proof will need to come in the form of quantifiable, current and easily accessible data. As even the smallest companies can produce vast quantities of the stuff, it is clear that the cognitive powers of human analysts will not be enough to meet the growing demands put on businesses. In response, AI technologies are increasingly being harnessed to supercharge ESG analysis, and countless new software applications have emerged, promising to pick up the slack and strengthen internal data management systems. Businesses will need to engage with these new digital tools, or risk being left behind in the impending ESG disclosure “arms race”.

Nowhere to hide

A digital revolution in the ESG disclosure space, will bring much-needed transparency to the market, an undeniable “good” that will encourage ambition and action in equal parts. Free, open-access tools are already making it easier than ever before for data-seekers to access and compare companies’ disclosed information, while software programs begin to harvest “alternative data” from media outlets, NGOs and watchdogs, to provide unprecedented 360º insights into a company’s business activities.

Easy identification of dubious or outright inaccurate disclosure will soon become mainstream, with catastrophic consequences for the unscrupulous who try to hide their true impact on ESG. From this point on, PR spin will not be sufficient to deflect public and investor concerns. Instead, undertaking well-resourced, strategic efforts to develop (and deliver on) meaningful sustainability goals, and embracing a role of genuine environmental stewardship, will be the only way forward for businesses.

The digital revolution is coming, the only question now is: are companies prepared to put their data where their mouths are?

Author: Joe Gosney