In the realm of corporate sustainability, effective data management plays a pivotal role in driving tangible impact and fostering transparency. As apparel and footwear companies strive to integrate environmental, social, and governance (ESG) considerations into their business strategies, the need for robust data management solutions becomes increasingly apparent.
In my previous role as a sustainability performance lead at On, I integrated Life Cycle Assessment (LCA) and environmental footprinting into our sustainability framework.
This article explores the thought process of assessing the benefits of utilizing ESG data management platforms and presents key insights derived from past industry-wide experiences in ESG reporting.
Initially, we hired external consultants to assist with our greenhouse gas reporting requirements. Despite the perceived ease of outsourcing, the experience resulted in suboptimal outcomes, including:
These difficulties sometimes led to complicated discussions with our stakeholders, who were accustomed to very clear and transparent financial data where calculation methods were much more mature.
Transitioning to internal GHG footprinting improved data accuracy and understanding of emission drivers.
However, reliance on manual processes using spreadsheets posed several challenges:
It was a challenge to maintain our internal tools in terms of capacity and elevate their use for customer-facing reporting, compliance with upcoming requirements such as PEFCR, the French ECO SCORE, and user interface for non-experts.
Recognizing the need for a comprehensive solution, On opted for an ESG data management platform.
These platforms offer a range of features to streamline data collection, integration, validation, and reporting. The main features of these tools are:
Sustainability information often exists in a dispersed format, scattered across emails, Excel files, and in-house systems—or it may not be collected at all. The tools we discuss provide a centralized platform for monitoring and collecting data, offering integration with existing systems whenever feasible. They excel at compiling a broad array of ESG data points from diverse sources, streamlining data entry as needed.
This functionality manifests in several ways, including: 1) the deployment of pre-built or custom surveys via a centralized interface; which facilitates tracking and the dispatch of reminders, offering a more structured approach than the ad-hoc use of Google Sheets disseminated through emails; 2) the exchange of data through the import and export of files, such as CSVs, from other reporting systems; and 3) the automation of data collection through direct API connections to other internal systems, ensuring a seamless data integration process.
These tools are equipped to automate the integration of data from the aforementioned sources, transforming it into the necessary formats. They come equipped with pre-established calculation and data conversion logics, while also providing the flexibility to develop custom methods. This capability is particularly beneficial for ensuring consistency in results over time and across reporting as well as for replicating outcomes accurately. Additionally, it supports transparent documentation of the processes involved, enhancing the reliability and traceability of the data.
The systems are designed with features that validate the input data and perform comprehensive quality checks. These functionalities are crucial in confirming the data's reliability and precision.
The companies responsible for these tools maintain and compile extensive libraries of life cycle inventory datasets and emission factors from various sources. These can encompass up to 100,000 data points coming from Environmentally Extended Input-Output (EEIO) tables, as well as process- and activity-based databases. They continuously refresh and update these libraries, guaranteeing access to the latest data. This not only ensures the application of current and relevant data but also streamlines its utilization through a unified interface. Moreover, they undertake harmonization procedures wherever feasible to enhance data consistency and comparability.
Beyond offering secondary data, these tools incorporate logical frameworks and execute calculations to bridge data gaps, ensuring a comprehensive dataset. The methodologies applied are meticulously designed to be documented, compliant with reporting frameworks and replicated annually, fostering consistency and reliability in data enhancement processes over time. This systematic approach to data enrichment ensures that users can maintain and build upon their data infrastructure with accuracy and confidence, year after year.
The tools provide versatile formatting options, enabling users to tailor data presentation to meet various standards and reporting requirements. The core concept is that once the raw data concerning organizational activities is inputted into the system, it can be seamlessly transformed and utilized across multiple reporting frameworks. This is achieved by adjusting the data to align with the specific format required by each framework, facilitating straightforward and consistent report generation.
The tools enable users to generate customizable reports based on various attributes, including business unit, country, and production site. This flexibility allows for targeted analysis and reporting that caters to specific organizational needs and objectives.
As regulatory scrutiny intensifies, these tools present a significant advantage through their audit-friendly features. They offer capabilities to meticulously document and store data along with the methodologies applied during processing. This ability to track changes and maintain comprehensive records bolsters auditing processes, making them more straightforward and effective. Such features are especially valuable in the context of evolving towards more rigorous assurance reporting standards.
Users can export their final data models for integration with internal data management systems. This feature ensures that sustainability insights are propagated throughout the organization, enhancing informed decision-making and strategic planning.
The tools include benchmarking functions that compare an organization's data against that of peers in the same industry. This comparison helps assess the plausibility and competitiveness of the data, providing essential insights into industry standards and positioning.
These tools are continually updated and maintain an extensive collection of ESG standards, laws, and regulations. This dynamic repository ensures that organizations have access to the latest compliance requirements and sustainability best practices.
Navigating the complexities of reporting mandates can be challenging. ESG management tools simplify this process by deconstructing the reporting requirements into specific, manageable data points and providing step-by-step guides tailored to various standards and regulations. This approach enables users to effortlessly align their reporting practices with current compliance demands.