How to Collect Environmental Data on Your Company

One of the top contributing factors in investor strategy today is ESG data. The year 2020 will go down in the history books as a disaster with the COVID-19 pandemic and the stock market slide at the beginning of 2021. It is interesting to note that Environmental, Social, and Governance investments were not impacted as much as others, and for good reason. Investors value companies with similar sustainability practices and values as their own. Market conditions have been resilient with stocks that feature solid Environmental, Social, and Governance data. 

Companies should start paying closer attention to these trends as this data can revolutionize funding and investments globally.

According to the Economist Intelligence Unit (EIU), from the end of 2019, one significant risk of reputational ruin for businesses is the increase in consumer and investor activism. The growth in activism can be directly attributed to the younger generation. The EIU notes that most young investors agree that one of the top determining factors in managing assets is robust Environmental, Social, and Governance data. 

Older generations of investors agree at a rate of 37% that the best way to manage a portfolio is to include positive Environmental, Social, and Governance data. 

The question is to measure and make Environmental, Social, and Governance data comprehensive. Generally, ESG scores are calculated using a considerable amount of quantitative data and utilizing corporate information and disclosures. Many third-party ESG businesses will estimate data that cannot be determined. There are also rating providers for ESG that choose what and how data is used. Investors need solid investment knowledge on Environmental, Social, and Governance data. They need to know how it relates to their investment strategy and how it is measured. 

Diligent offers business software that defines, reports, and tracks its data with an emphasis on detail. The technology can access valuable procedures and standards, provide algorithm analysis, and leverage artificial technologies. It also gives clarity in adding accountability and transparency to the scoring of ESG. 

Environmental, Social and Governance Data – What Is It?

The business world is growing as a society, and there is more focus on the impact on people and the planet. Environmental, Social, and Governance data is valuable information that measures a corporation's dedication to sustainability and accountability. Socially aware and responsible investors make use of this data to identify these kinds of investments. 

Investors make these decisions based on the following factors: 

  • The business is socially responsible in dealings with resources and people

  • The company is environmentally conscious of nature and dedicated to sustainable practices

  • In governing, the industry has ethics in business, management, and leadership practices

As this crucial data becomes more in demand by investors, ESG scores will become more readily available references to validate a company's impact on social, environmental, and governing practices. When a company defines a real-world plan for ensuring ESG data, it will have better chances of attracting capital investors to its project. 

ESG data can reflect much more than a company's sustainability practices; the data can also divulge information on the internal culture, which includes its employees, community, and its customers. 

There are many challenges to gathering and evaluating Environmental, Social, and Governance scores, including the many scoring systems due to lack of transparency and policies. Many providers create their evaluation styles and use highly proprietary data to calculate these scores. 

The key for investors to determine relevance in the ESG score is to look for quality data when using third-party providers. 

Investors should look for the most well-researched information and scope out popular discussions from other stakeholders to determine what data to consider and how to implement this into their investment strategy. 

Third-party Environmental, Social, and Governance data contributors can mistakenly create inconsistencies by using so many different methodologies, proprietary data, and business viewpoints. Market infrastructure is fluid and not structured. Businesses do not offer this level of transparency, divulging how their data is scored. Divergent software technology has a tool to remedy this gap in the market. 

Ensuring You Have Access to the Same Data As Your Investors

Your company should have all the necessary skill sets needed to thrive in the age of technology and data. Ensuring that your board is inclusive and composed of people who reflect the company's philosophies is essential. Having a software tool that can provide fast access to this data will help board members identify issues that need to be corrected. It is crucial not to cause doubt among activists and shareholders. 

There is an ebb and flow to investment trends; however, sustainable social, governance and environmentally ethical practices are here to stay. Corporations should remain aware of investors' commitment to sustainability. 

It is essential to have the right tools and technology when building a solid Environmental, Social, and Governance data plan. The technology should accurately measure accountability and harness valuable insights into market viability which is beneficial to investors.