ESG data and risk managers – the problem and the solution

ESG data and risk managers – the problem and the solution

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ESG data and risk managers – the problem and the solution

 

Introduction:

  • 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.

Industry-Specific Challenges:

  • 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.

Conclusion:

  • 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.

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