3 Ways to Make Long-lasting ESG Goals with Data and Analytics
Blog: The Tibco Blog
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Environmental, social, and corporate governance (ESG) seems to pop up everywhere lately, with many large companies announcing sustainable and social initiatives. But how does a business decide what kind of initiative to focus on?
The short answer is data. ESG data provides enterprises with the information they need to decide where to focus their efforts to improve environmental and social impact. Your company needs accurate reporting to make informed decisions because your customers are watching.
According to Edelman, 86 percent of consumers think CEOs should speak out about social issues. Not only are customers choosing companies with ESG initiatives, but data shows that more money, over 50 billion per this CNBC article, is being invested in ESG initiatives. Not only that, but McKinsey found that companies with greater diversity perform better financially.
Common Approaches to ESG
Why does your business need to invest in ESG? ESG goals improve operations. And more customers chose to do business with companies that reduce their impact on the environment, promote social initiatives, and report with transparency.
In 2020, 58 percent of investors showed a greater interest in ESG investments than before per a survey conducted by Investopedia and Treehugger. In addition, in that same survey, 67 percent of respondents planned to increase investments in companies with strong ESG initiatives. To capture more of those investments, companies must show progress in reducing environmental impact, increasing diversity, and have the reporting to back it up.
Environmental
Environmental initiatives are not just limited to reducing carbon emissions, even though decarbonization is trending. It can also include reducing waste, responsibly disposing of toxic waste, reducing energy consumption, purchasing responsibly sourced raw materials, and more. Environmental stewardship is at the core of these goals and aims to reduce the business’s impact on the planet in at least one way.
Social
Social responsibility initiatives include donating to charities, employee quality of life and benefits, diversity, and volunteer rates across the company. Some examples of social responsibility may include partnering with a specific charity or creating a charity fund. Leadership may also organize volunteer opportunities for employees or provide donation matching programs.
Governance
Ensuring diverse representation on boards, diverse leadership, transparent reporting on ESG initiatives progress, reporting on environmental impact, and accurate financial reporting all fall under governance. Without proper governance, there is no concrete way to show that a business has made progress on its goals.
3 Ways to Make Smart ESG Goals
Once an organization decides to invest in ESG goals, the first step is to identify the issues that face that particular organization or industry. By looking at business data, leadership can see which areas need the most attention, like carbon emissions from shipping or land deterioration from farming.
For example, a food and beverage company could use data to see that it produces 20 tons of plastic waste per year and aim to reduce plastic waste by using more recycled packaging. A manufacturing company could use data to determine how much manufacturing waste it creates and then set a goal to reduce industrial waste and energy consumption. To determine the most appropriate goal, an organization should start by researching ESG issues that could affect supply, shareholders, and industry.
Once an organization has determined its goals, the next step is to define KPIs to measure success. And once those KPIs are determined, how will an organization know it reached its goal? By measuring and recording data related to that goal.
1. Optimize Your Supply Chain
Reaching your ESG goals may not be as simple as installing more energy-efficient lights in your office and water bottle fountains for employees. Looking up and down your supply chain for opportunities like creating more energy-efficient shipping routes, initiating more eco-friendly farming practices, and improving office energy efficiency can create a bigger impact. Setting KPIs and tracking the impact of each program can help your business reach its ESG goals.
2. Test New Solutions
Solutions will not always work the first time. For example, when switching from plastic to more eco-friendly packaging, glass is a great alternative. However, glass is breakable and heavier to ship. Testing glass packaging will determine if it can work for your business, and if it does not work, try testing other more recyclable alternatives like aluminum, recycled paper, and bioresin until a functional alternative is found. In addition, more environmentally friendly packaging solutions like bioresin usually need to be recycled in special facilities, so consider testing collection programs and free recycling programs for customers and supply chain partners.
3. Prioritize Transparent Reporting
No matter what progress your company makes on its environmental and social goals, without transparent and reliable reporting, there is no way to demonstrate that impact. Some businesses find that independent reporting companies are the most effective way to illustrate their progress to board members and investors. Others track internal data with SaaS reporting tools to show goal progress over time. Clear evidence of progress towards improvement will also help businesses show regulatory bodies that they are working towards meeting environmental standards, diversity requirements, and any other regulations that exist or are created.
Businesses Make a More Sustainable Impact
Meet your ESG goals with cutting-edge technology. Data monitoring and reporting tools can not only help your organization set goals but also measure the impact of environmental, diversity, and reporting initiatives. The TIBCO platform helps customers in all different industries manage ESG goal data, such as those listed below:
Waste Management uses the TIBCO platform to aggregate customer and internal data, determining what waste can be recycled or diverted from landfills.
The Scottish Environmental Protection Agency (SEPA) chose the TIBCO platform to collect new data, aggregate old data, and run data analytics all from the field. With TIBCO solutions, SEPA created dashboards that help monitor environmental pollution and cleanup, as well as help the water utility deliver cleaner water to residents.
Hemlock Semiconductor used TIBCO Spotfire visual analytics to manage its energy usage data. With this information and a goal to reduce energy consumption, Hemlock reduced energy costs by over $300,000 per month and reduced emissions by ten percent.
If your business is interested in reaching attainable sustainability, read more about how enterprise integration platforms can help.
The post 3 Ways to Make Long-lasting ESG Goals with Data and Analytics first appeared on The TIBCO Blog.
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