ESG Data: The Long Road Towards Standardization

According to a poll taken during Shared Assessments’ ESG Risk: What TPRM Needs to Know webinar on Sept. 15, 36% of attendees reported that their organization did not have a formal environmental, social and governance (ESG) program in place. While that figure has more than likely declined since mid-September, the need for organizations to develop and continually refine their ESG programs continues to rapidly intensify.

This month, a new global alliance announced the launch of a central source for “accessible and digital corporate sustainability information, with the aim of shaping the future of ESG data.” The ESG data repository is called “ESG Book,” and it was developed by Arabesque, a global asset management firm, with the support of a global alliance of financial services companies, services firms, and other organizations.

ESG Book will be made available to all companies, investors, standard-setters, and other organizations, according to a press release. ESG Book supports the Ten Principles of the UN Global Compact, and its primary purpose is to make “sustainability data more widely available and comparable, enable companies to be custodians of their own data through a digital platform, provide framework-neutral ESG information in real-time, and promote transparency.”

To date, the limited accessibility, and inconsistency of ESG data has impeded “the acceleration of capital allocation towards low-carbon and sustainable business activities,” according to Arabesque. The same issues are hindering efforts to assess ESG risks inside companies and among their third parties.

Shared Assessments held its recent webinar to examine this issue along with other aspects of third-party ESG risks. The presentation also emphasized that it makes sense to view ESG as an opportunity as opposed to treating it as merely another risk to be mitigated.

TPRM teams are not alone in their hunger for ESG risk-assessment clarity. Corporate finance groups, IT teams, risk management functions, compliance teams, and operations units (especially those managing global supply chains) are also clamoring to understand how current and forthcoming ESG reporting requirements affect their organizations, what ESG data needs to be collected and reported, and how ESG activities square with organizational strategy.

“CIOs have an opportunity to flex their data management expertise, serving as a trusted advisor on the quality and value of ESG data,” notes a column by Maryfran Johnson. “At the intersection of sustainability and financial performance, the CFO is in the best position to define and communicate how a company’s management of ESG risks contributes to value creation,” notes a Deloitte paper that addresses the CFO’s role in corporate ESG matters.

“When your CFO is well-versed in sustainability, it goes a long way,” the Deloitte paper emphasizes. The same holds true for TPRM leaders and their teams.


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