ESG Article

Esg Article

ESG Article

Rome wasn’t built in a day! Max Boon, Commercial Director at IBG, talks about how ESG is going to take time to work properly, and that reliable data is the key to that success.

What’s in a name? Data is the key to ESG

There has been some not insubstantial noise over recent months about ESG ‘losing its meaning’ and the term itself going off the rails. For a code of criteria that has been fundamentally tagged as the future of how businesses should conduct themselves, this is cause for concern.

However, I strongly believe that to say ESG has merely become an umbrella slogan is to ignore the fact that in its simplest terms, it is a guiding set of principles or best practices for organisations to strive toward.

Consider this. Up until relatively recently, businesses have always been able to remain politically detached and largely operate for the primary purpose of making profit. That’s been the case since buying and selling as we know it began around 7,000 BC – that’s a hell of a heritage to revolutionise and it’s foolish to ever think it was going to happen overnight.

Converting to the guidelines set out by ESG will very much be a marathon, not a sprint. Naturally, this means that some are reacting out of frustration in regard to the commitment required and the challenges posed by ‘doing better’, or rather ‘being better.’ 

Research carried out by index provider and consultancy Scientific Beta earlier this year, revealed that some companies that are rated highly on widely accepted environmental, social and governance metrics are polluting just as much some lowly rated firms.

Felix Goltz, research director at Scientific Beta, was quoted as saying: “ESG ratings have little to no relation to carbon intensity, even when considering only the environmental pillar of these ratings. The carbon intensity reduction of green portfolios can be effectively cancelled out by adding ESG objectives.”

While this is worrying, to highlight that greenwashing exists is not sufficient to advocate that ESG is meaningless, especially when those corporations that appear to have cracked the ESG code, having truly embraced sustainability etc, continue to prosper and outperform their counterparts who are merely seeking to “tick a box and hug a tree.”

I do, however, accept the point that ‘bundling’ the E, S, and G together might make it a little difficult at times to understand, objectively, how to best position yourself in relation to each of these challenges, but for those willing to do their research, there are still significant commercial and cultural benefits to be had from employing a strong, long-term ESG strategy.

By 2025, all large companies will be required by the Corporate Sustainability Reporting Directive (CSRD) to begin publishing reports on their environmental and social activities. Small and medium businesses are also included and no doubt all UK companies will soon follow suit.

The UK government’s target of being Net Zero by 2050 has also inspired many public sector organisations to commit to change. The NHS has set their own deadline to 2040, while more than 300 councils are developing action plans to meet the government target by declaring climate emergencies.

But how are these companies and organisations going to reduce carbon emissions enough to achieve these goals? The answer is by utilising properly accredited data.

A survey by Virgin Media O2 Business carried out in August, in partnership with Censuswide, stated that: “90 percent of senior business respondents say carbon transparency is important in their decision-making process when choosing products or technologies for their organisation.” 

However, it also revealed that: “29 percent of senior business respondents say they have difficulty in verifying the accuracy and reliability of data provided to them.”

This shows that even when businesses are asking for the relevant supplier data needed to assist in the decision-making process, approximately a third are questioning its accuracy.

Technological advancements have unlocked fresh avenues for companies to efficiently report ESG metrics. Submetering, for instance, offers a detailed breakdown of energy and resource consumption within assets. At IBG, we can provide real-time data on electricity, water, gas, or other utility usage, enabling energy intensive areas to be identified, anomalies to be detected, and energy-saving strategies to be targeted.

This granular data empowers companies to identify inefficiencies and optimise resource utilisation effectively. It also enhances the quality of environmental data available for investor reporting.

We have developed an Open API that allows clients to seamlessly extract data to third party systems. This solution provides comprehensive energy usage reports, carbon footprint calculations, and other relevant metrics required for certifications and reporting frameworks, showcasing a commitment to sustainable practices and meeting compliance requirements.

Furthermore, technology can also assist vital elements of social data. For instance, indoor air quality monitoring can track the impact of CO2 on occupant health. By deploying sensors and monitoring systems, building owners can ensure a safe and healthy environment for both occupiers and visitors, thereby contributing to positive social outcomes.

Love it or hate, you can’t just ignore it. ESG, in some form or other, isn’t just going to go away. As the Net Zero deadline gets closer and closer, the need for transparency and investment quality data is absolutely critical. Given that there is no ‘silver bullet’ to effectively meet all objectives at once, establishing a proactive, solution-oriented approach is the most logical step to tackle these challenges head on.

To learn more about our ESG data and monitoring solutions, contact us on 0330 912 5044 or email info@ibg-UK.com

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