How can effective Master Data Management improve your ESG reporting?

Read our Q&A with Matthew Cawsey, Product Marketing Lead at Stibo Systems

According to Gartner’s CEO survey, 2023 will see environmental sustainability become a top 10 business priority, with 9% of the respondents naming it as one of their top three.

But why?

It’s because the requirement for organisations to record and evidence their actions in support of their sustainability claims is more important than ever. In order to provide that evidence, reliable, trustworthy data needs to be shared with investors, trading partners, customers, business rating agencies and various environmental, social and governance (ESG) regulators.

Failing to back up sustainability claims with good data will lead to lawsuits, fines, reputational damage, investor withdrawal and lack of consumer trust.

We sat down with Matthew Cawsey, Product Marketing Lead at our partner Stibo Systems to find out their view of the impact data has on ESG and to discuss how having a robust data strategy should be at the heart of any ESG initiative.

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Which sectors are most affected by ESG reporting?

Everyone will be affected in one way or another, but in different ways. It’s very dependent on an organisation's country, their products, their product categories their brand and local laws.

It also depends on their point of focus. Are they focusing on net zero, greenhouse gases, employment rights or human slavery? Companies need to build their own sustainability profile and work out their priorities as it's impossible to do all of it at once.

Retailers and distributors will be at the sharp end of providing consumer information, whilst CPGs and manufacturers will carry the responsibility for the collection and calculation of all data related to their products, supply chains and processes.

At last count, there were over 600 different ESG standards available to different industries. And they break down into something between 4,000 to 5,000 unique assessments that need to be created and criteria that need to be met – some with greater (regulatory) urgency than others.

So, it will affect everybody. But there's no way we can say that it will affect everybody in the same way.

Do companies truly understand how much data they need to collect and manage for ESG?

I don't think there is a realisation of quite how comprehensive it is. The biggest challenge I hear from Chief Sustainability Officers is “I've got my blueprint. I’ve just got no idea how I'm going to manage all this data.”

Companies will have a lot of data themselves, but even that is typically scattered around the business because each line of business or function is doing their own data collation to meet sustainability credentials that their line of business needs. But it's not being federated within the company.

Some organisations might manage their own data really well, but they need to consider external factors too. With ESG, they need to collect data from outside the organisation and also provide data to companies they do business with.

We’re talking about a huge amount of data that needs to be collected, governed and managed and it will come in all different shapes and sizes.

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How can data management disciplines help Chief Sustainability Officers?

A successful sustainability strategy has to go hand-in-hand with a solid data strategy. Data provides the evidence and transparency necessary to calculate and demonstrate ‘green compliance’.

The Chief Sustainability Officer is often somebody who isn’t immersed in data management. They’re not an expert in data governance, data collection and data modelling. They will need guidance and support.

They'll need that support from their own internal people and a consulting partner like Amplifi to help them build their blueprint for what a data led ESG strategy looks like. They also need to consider how the right technology can help them collect and manage that mammoth amount of data, which is where a master data platform like STEP comes in. Organisations will need to apply the disciplines that we regularly assert and employ on traditional master data, to their sustainability data, since the data challenge is significant, and the governance and reporting process must be robust.

As is consistent with all MDM projects, sustainability data, like master data, is scattered across a variety of applications, departments and many external sources. It is therefore critical to deploy a system that can capture and govern not just product data but even supplier and location data and combine this diverse data into a 360-degree view.

This is what makes the difference between a multi-domain MDM, such as STEP, and a regular PIM, since sustainability data reaches well beyond just product information. A multi-domain MDM platform allows a CSO to create one-to-many relationships between sustainability metrics and multiple products, locations, suppliers, reports, assessments and public ESG submissions. This approach minimises redundant effort, centralises governance and stewardship, is scalable and ensures that the same (accurate) information is consistently and unambiguously shared.

To get ESG right, it has to be a team effort between the CSO and the data leaders in an organisation. Together, they can define the sustainability data policy and the configuration of the MDM to support the organisation’s sustainability KPIs.

Want to understand more about all-things ESG? Download our guide ESG Unchained: a guide to finding your ESG hotspots below to get the full story on how data management can impact your ESG initiatives.

ESG Unchained: A guide to finding your ESG hotspots