ESG data and risk managers – the problem and the solution
- Environmental, Social, and Governance (ESG) standards have become a top-tier risk for companies, with high-profile legal challenges and mandatory exposures on the horizon.
- Many risk managers are aware of ESG exposures but face challenges in starting their ESG reporting journey.
Challenges in ESG Reporting:
- Risk managers often struggle with locating and consolidating ESG data, which may be scattered across various systems and sources.
- Data related to electricity usage, HR, and finance systems can be fragmented, making data collection and reporting challenging.
The Role of Technology:
- Risk management technology providers like Origami Risk aim to assist risk managers in efficiently initiating their ESG reporting journey.
- Instead of offering a one-size-fits-all “ESG solution,” they focus on guiding risk managers to identify data sources and gaps.
Getting Started with ESG Reporting:
- Risk managers should identify the Key Performance Indicators (KPIs) needed for ESG reporting, as this determines the required data.
- Collaboration with technology providers helps in understanding data availability and addressing data gaps.
- ESG reporting requirements vary across industries and regions, making it crucial to tailor approaches to specific business contexts.
- Core challenges for risk managers involve data collection, consolidation, and ensuring data accuracy.
Progress in ESG Reporting:
- As companies work to pull together data from diverse sources, ESG reporting will evolve.
- Initial attempts may yield approximately 60% of the required data, with the remainder based on estimates and guesswork.
- Navigating ESG reporting challenges requires identifying KPIs, understanding data sources, and addressing gaps.
- Technology providers play a role in assisting risk managers with data collection and consolidation.
- ESG reporting will continue to evolve as companies enhance their data management practices.