#1 The days of voluntary, ad hoc efforts for sustainability reporting are over.
While the US SEC is not likely to proceed with sustainability and climate reporting, investors around the globe have found that sustainability data makes them money. Data from the supply chain is included in this reporting. So expect year-round requests for sustainability data and reporting from customers and investors.
#2 We’re at the convergence of energy, water and AI.
Trump’s picks for the head of EPA and energy czar have announced they will focus on AI. Why? Because AI runs in large data centers. When data center demand grows 2X, everyone is scrambling to secure the limited supply of low-cost energy and water resources. CFOs are in competition with each other and big tech. Granular, fresh data on energy and water use and costs for every location can be used to derisk operating costs, and more than pays for itself.
#3 Investors will select companies that are the best amongst peers.
Investors know a bad deal when they see it: Too much climate risk exposure; exposure to quickly rising costs for electricity and water; too little capital efficiency in decarbonization plans. No corner of the economy is unaffected by climate change, so investors are looking for the best-in-class opportunities within each asset class. For CFOs this means the strategy is no longer aspirational (how to make money from climate change), it is practical (how to be the best amongst 10 other companies).
#4 Sustainability data preparation is a back office efficiency play.
Once sustainability data is disclosed, it goes everywhere, including Bloomberg terminals. So the same rigorous data preparation and security used for financial data must be applied to sustainability data. In the past acronyms and jargon dominated the sustainability space; today the reporting standards are known, well defined and harmonized. One example: 135 stock exchanges around the world now require sustainability data for listed companies. It’s time to get those sustainability data flows efficiently automated and locked down.
#5 The business case is strong.
The ROI for sustainability is simple, with four key value streams: Back office efficiency gains; efficiency in meeting year-round customer, investor and regulatory reporting demands; increased investor confidence that leads to higher valuations; and derisking exposure to rapidly increasing energy and water costs.
