“I skate to where the puck is going, not where it has been.”
Wayne Gretzky, Source.
Here at GLYNT we talk with more than 50 sustainability directors each month. And we’re noticing a gap in their thinking. Because so many directors have been brought on board during the last year or so, they are still getting their sea legs and figuring out how emissions data has been processed in the past. This is where the hockey puck has been.
But what about where the hockey puck is going? Here’s the GLYNT view on carbon emissions data for the next few years.
1. Upcoming SEC regulations change risks.
The Security and Exchange Commission (SEC) is actively engaged in preparing ESG reporting requirements, including requirements for carbon emissions data. The US Chamber of Commerce has started its comments and sees a key risk at hand for the C-suite:
“Disclosing second-hand emissions data from suppliers and partners could also expose companies to litigation by both the third parties and investors, if the information transpires to be misleading.”
Today, bad emissions data is simply an annoyance and can harm the brand. In the near future any executive officer signing off on carbon emissions disclosures is personally liable for unfortunate outcomes. The sustainability director should be bringing high-quality, automated and accurate carbon emissions data solutions to the C-suite.
2. Investor interest in ESG keeps growing, and the current data and software system wants to serve.
As Bloomberg keeps reporting, investor demand for ESG-certified investments is increasing rapidly. The market is now expected to exceed $53T assets under management by 2025. This is about one-third of all assets, and the impact spills over into the other two-thirds. Companies that use disclosures to attract investors will see valuations increase and companies that lag behind, or put out opaque disclosures will see valuations suffer.
With this huge valuation shift, there could not be a stronger pull on demand. And the current software and solution integrators are scrambling. Is there a bigger opportunity at hand to drive new profits and engagements? Doubt it, they are focused on ESG. And with the arrival of these new entrants, who have established business practices and know how to operationalize existing software flows for the new carbon emissions data, sustainability directors will be asked to vet their capabilities. It’s an entirely new world.
3. Data quality becomes paramount.
Finally, when the C-suite carries the liability for bad data, and when investors want to ensure they invest in companies with active emissions reduction programs, today’s way of gathering and processing emissions data won’t work.
Sustainability directors can check their data quality with two simple questions: Will the data support year-over-year reductions? Can the data be audited? Too often industry average emissions data is used and a mess of spreadsheets is the process by which reports are made. Averages don’t lend themselves to tracking reductions. A pile of spreadsheets will drive audit costs up and increase the possibility of failing the audit.
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