Four ESG data challenges to navigate 

Four ESG data challenges to navigate 

Tue 23 May 2023

The arrival of new and emerging technology tools such as artificial intelligence (AI) and machine learning (ML) gives organisations the power to grab and analyse vast amounts of data more quickly and efficiently. While this provides the temptation to collect as much data as possible, pausing to focus on what data you need for environmental, social and governance (ESG) purposes before you press the green button can help organisations avoid some common pitfalls. 

Focus on true value 

A fantastic data report or dashboard may give confidence that the information is accessible and on hand. But if it’s not understood or used to improve ESG-related business decisions, the benefits of data collected are reduced. By focusing on only collecting data that is material to your ESG strategy, organisations will improve the quality of data gathered. True value is based on the ability to transform ESG data into a sustainability performance driver that you have confidence in is vital. 

Privacy impacts  

With ESG data still a relatively new discipline, organisations need to be more aware of data sources. Often ESG data is from a third-party source rather than directly from an individual. This adds a level of opaqueness that makes it difficult to get permissions to leverage data held. A key requirement of the General Data Protection Regulation (GDPR) is that when collecting data, organisations have to be clear about its purpose and get explicit consent to use data for that purpose. Organisations need to build more precise consent and data protection mechanisms into their data collection models to avoid falling foul of privacy laws. 

Think about data storage 

While technology gives the ability to store large amounts of data, knowing where that data is and who has access to it is essential. With ESG data touching every aspect of an organisation, the potential for data to end up in different formats across different databases is high. By not keeping track of ESG data, organisations can fall foul of privacy laws that could result in significant fines or reputational damage.  

Cyber attack risks 

The ability to keep ESG data secure gives confidence to stakeholders. Organisations suffering a significant breach may find collecting data for ESG purposes more challenging, particularly if it is deemed sensitive. Organisations must also ensure that internet-connected technology used for ESG purposes, such as sensors, is secure and not used as a portal that hackers could leverage to infiltrate an organisation’s network.  

As reliance on technology increases, organisations need to ensure that ESG data aligns closely with sustainability strategy and that appropriate risk management and governance controls are in place to effectively manage the data challenges ahead.