Environmental, social, and governance (ESG) reports are a critical consideration for many institutional investors seeking to evaluate companies’ long-term sustainability and decide whether companies’ internal values align with their investment goals. And, according to a recent Bloomberg report, ESG investments are predicted to reach up to 53 trillion USD by 2025.
Given the size and importance of this market, investors reviewing ESG environmental reporting data such as emissions and water use reports, expect companies to provide both comprehensive and accurate information.
This is where information governance comes in. IG best practices allow ESG reporters to manage their data effectively, efficiently, and in compliance with regulatory requirements.
Here are 4 critical information governance themes that every ESG reporter should be aware of (and implement):
Data Standards and Governance Policies: ESG reporters should establish clear data standards and governance policies that govern the collection, processing, and storage of ESG data. This includes defining data elements, data quality rules, and data validation procedures to ensure data consistency and accuracy.
Centralized Storage: Centralizing the storage and management of data through, for example, compliant, robust records management repositories enables companies seeking accurate ESG information to rely on a single source of truth for that data, which promotes both quality and searchability.
Data Quality Controls and Audits: Using systemized data quality controls such as access controls, data validation, uniform records taxonomies, data cleansing, and data helps ESG reporters to ensure that the data in their reports are accurate and complete. Regular process audits help companies seeking ESG compliance to identify data errors, inconsistencies, and gaps in their ESG reporting and to correct them.
Junk Data Removal: ESG reporters need to both find data quickly and ensure that their reports do not contain outdated or obsolete information. And, of the data stored by a typical company, about 70-80% is comprised of “junk” data that has no retention or business-use value. IG processes help companies to get rid of this data defensibly, which both enables legal compliance and allows companies to find the right data that they need for their reports quickly and effectively.
The upshot is that deploying effective information governance best practices enables companies to ensure the accuracy and reliability of their ESG data, making it easier for investors to evaluate their sustainability and make informed investment decisions – and, at the same time, reducing ESG reporters’ liability and risk, promoting compliance, and helping critical knowledge worker personnel find highly complex data quickly and easily.