In the field of sustainability, effective ESG data management and governance enable businesses to comprehend their sustainability performance, handle problems effectively, and communicate more fully with stakeholders.
ESG data governance?
ESG data governance is more comprehensive than ESG data management since it is a significant sector of a company that needs regulation and control. The Data Governance Institute states “Data Governance is a system of decision rights and accountabilities for information-related processes, executed according to agreed-upon models which describe who can take what actions with what information, and when, under what circumstances, using what methods.” ESG data governance guarantees proper management, use, and disposal of data. Data governance includes ESG data management, which offers the “how.” Genuinely sound data governance is the cornerstone of high-quality data.
“ESG has always been the top priority for data centers, with industry operators being extremely focused on operational efficiency. “
–Asher Ling, Managing Director, Singapore, Princeton Digital Group (PDG).
How Data Governance can help companies
A set of procedures called “data governance” is used to actively manage and oversee the usage of data inside an organization. To assist guarantee that data is accurate, consistent, and utilized appropriately, requires developing internal data standards and rules as well as the methods for enforcing them. Here are the main advantages that a business can get from a good data governance program.
1.Greater efficiency
You can increase operational efficiency in many areas if you have well-governed data and the capacity to use business analytics on it. According to a general rule, 20% of your customers account for 80% of your revenues. By properly analyzing which clients are ideal for your company, you may more effectively target your marketing and sales expenditures. You may eliminate underperforming product lines and put more money into those that have been promised by assessing product profitability. Business process analysis may identify possibilities for improvement, but only if the data that drives those processes is trustworthy.
2.Better data quality
Keeping high data quality is still a challenge despite large IT investments. 95% of firms experience the effects of poor data quality, according to a 2019 research by software provider Experian Data Quality; in more specific terms, respondents to a 2020 Gartner poll indicated that low-quality data cost their organizations an average of $12.9 million annually. Data quality problems may have significant implications, which is why data governance organizations prioritize efforts to enhance data quality. Analytical accuracy and operational error reduction are both aided by improved data quality. There are no silver bullets, but establishing a data quality mentality and routinely monitoring and assessing data quality levels as part of the governance process are solid places to start.
3.Better compliance
Poor regulatory compliance carries severe consequences in healthcare, financial services, and other industries. For instance, tracking marketing and advertising expenses are mandated by law for pharmaceutical businesses. Since 2009, violations of rules have resulted in many settlements with the U.S. Department of Justice totaling billions of dollars and hundreds of millions of dollars. With these kinds of numbers at stake, data reporting that is accurate and auditable is essential. The use of personal data on customers in many industries is subject to new compliance requirements added by the GDPR, the California Consumer Privacy Act, and other data privacy laws. Without strong data security and privacy safeguards supported by efficient governance, businesses risk penalties and legal action.
4.Better decision making
Your company will be able to confidently make better business judgments if it has a solid database. Executives and employees may make more educated decisions on how to plan, monitor, and take action on marketing campaigns, pricing changes, product strategy, customer service, and other business operations-related activities. But for applications like corporate intelligence, sophisticated analytics, and strategic planning, end users must have access to correct data.
5.Enhanced business reputation
Effective data governance has the potential to improve an organization’s reputation with consumers in addition to providing measurable financial benefits. For instance, good data helps sales and customer service representatives communicate with clients more effectively. That should result in greater levels of client happiness and loyalty, which should further encourage advancements in corporate performance.
Believe it or not, the process of simply cleaning up an organisation’s data – ensuring that only the necessary, timely, accurate, and relevant data is stored – can free up massive amounts of storage capacity, subsequently reducing energy needs. Deduplication and compression of data, efficient back-up processes, moving unused data to offline media – all contribute to a lower carbon footprint and energy usage. At the same time, they also provide business leaders with high quality, timely data to make better business decisions.
There is therefore an intrinsic link between a data-driven approach, business outcomes, and sustainability. CIOs that make this link when cultivating a data-driven organisation will be ahead of the competition, given more weight is being given to businesses that prioritise sustainability in their operations.
– Stephen McNulty, President, Asia Pacific & Japan, Micro Focus
Leveraging good ESG data governance and strategy
Data governance should be integrated into an organization’s governance framework and coordinated with how the rest of the business is currently managed, as should everything else connected to governance. Making ensuring it supports your organization’s strategy and goals is the greatest approach to taking advantage of strong data governance. Ensuring correct data quality and definition enhances management processes as well as reporting’s dependability and credibility.
Data governance may play a crucial role in broader programs like digital transformation or change management as businesses attempt to become more data-centric. It is a step in a process of continuous development, much like starting a path toward sustainability, which calls for a cultural attitude shift and the establishment of a solid infrastructure for managing and utilizing information.
“This can come in the form of more robust sustainability reporting, with proper disclosures across sectors that outline activities and choices companies make to engage in and promote sustainability.”
– Jan Wuppermann, Chief Digital Officer, APAC, NTT Ltd
It’s also a difficult assignment; according to a Wharton Business School assessment of hundreds of decision-makers, just 24% of senior decision-makers were data literate . It takes educating personnel, building skills, and fostering a culture where choices are based on facts rather than just gut instinct to make your firm more data-literate.