Businesses need to implement environmental, social and governance (ESG) frameworks to fully understand and measure how sustainably the organisation is operating and then undertake disclosures in line with regulatory requirements. The importance of this has grown in recent years, particularly as regulators legislate for these obligations and organisations embrace the holistic view that sustainability stretches far beyond its more traditional environmentalism sphere and stakeholders.
ESG can be described as a framework that assists stakeholders in understanding how the organisation manages its risks and opportunities related to environmental, social and governance criteria. A common misconception is that ESG only focuses on investing as it has been rapidly adopted by financial organisations, but it is important to remember that stakeholders include customers, suppliers and employees – all of whom are increasingly concerned with sustainability in its many forms.
When developing an ESG framework, major obstacles include inconsistent metrics and indicators. To combat this, professional services advisory experts at Grant Thornton UK have developed a bespoke ESG data and analytics screener platform which aids organisational ESG journeys.
A hot topic
“The spotlight is on ESG,” said Niresh Rajah, managing director, head of data, regtech and digital advisory practice at Grant Thornton. “The market is responding to public and regulatory pressure to move beyond traditional growth indicators. Financial services firms are seeking to better understand and justify their ESG positions, including existing and future investments, as well as trading positions. However, unlike financial reporting, which is standardised and focused on growth, corporate reporting on ESG and the underlying data required to report remains vague and complex.”
Data plays a pivotal role in ESG development to create flexible, robust, scalable and future-proofed platforms. As the business environment continually evolves, the insights data provide are key to ensuring the long-term success of ESG goals and platforms. When combined, an ESG data and analytics platform can minimise interpretation bias from humans, strengthen ESG strategies and metrics, standardise data and improve calculation models.
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