The increase in sustainability reporting requirements for corporations has led to a massive surge in the amount of data that needs to be reported and cataloged. The Corporate Sustainability Reporting Directive (CSRD) and other global sustainability standards mandate that companies disclose information about the impact of their operations and supply chains on the environment, social issues, and governance practices. This will include data related to climate change, pollution, water resources, workforce safety, human rights, and more. The challenge for businesses lies in accessing, organizing, and interpreting this vast amount of data to align with reporting standards.
The European Sustainability Reporting Standards (ESRS) require companies to report data according to a detailed taxonomy developed by the European Financial Reporting Advisory Group (EFRAG). This data must be tagged and shared digitally so that it is universally accessible and interoperable across all stakeholders. The legislation also mandates that the data be made available via the European Single Access Point (ESAP) to facilitate access to relevant information for financial services, capital markets, and sustainability. Companies will need to brace for a data deluge as they navigate these new reporting requirements.
The sheer amount of sustainability data that will be generated as a result of these reporting requirements is staggering. It is projected that in three years, the amount of sustainability data in the marketplace could be five times larger than the total universe of financial data currently available. This poses significant challenges for businesses as they need to not only collect and organize this data but also analyze and make sense of it. Data governance has become a crucial focal point for sustainability and regulatory compliance teams as they strive to accurately capture real-time information from global operations and supply chains.
Data quality and volume are becoming the number one priority for C-suites as organizations strive to comply with sustainability reporting requirements. The ability to aggregate, analyze, and manage data from across the organization, including suppliers and vendors, is essential for survival in this new era of heightened transparency. Fortunately, there have been advancements in data analytics and cloud-based tools that can help businesses navigate the challenges of sustainability reporting. The key now is to harness these innovations to deliver the insights needed to stay competitive in this environment.
As companies navigate the complexities of sustainability reporting, data governance and management will be critical. With new reporting requirements on the horizon, businesses will need to invest in tools and technologies that can help them collect, organize, and analyze the vast amounts of data required for compliance. By embracing these innovations and adopting best practices in data governance, organizations can not only meet regulatory requirements but also extract meaningful insights from sustainability data to drive better decision-making and performance.
