What is ESG Reporting?
Environmental, Social, and Governance (ESG) reporting is a method by which companies disclose their governance structures, societal impacts, and environmental footprint.
As a Data Scientist, how can you support your organization in improving its ESG score with analytics?
As stakeholders increasingly demand corporate social responsibility (CSR), ESG reporting has become critical to companies' long-term strategies.
In this article, we will delve into the details of ESG reporting to highlight its associated challenges and explore how data analytics can improve its accuracy.
Summary
I. Understanding ESG Reporting
1. What is ESG Reporting?
2. ESG Reporting supported with Data
II. Advanced Analytics for ESG Reporting
1. Lack of Standardization
2. Accuracy and Reliability of ESG Data
3. Fighting Greenwashing with Data Science
III. Data Science as a Game Changer
1. Sustainable Sourcing
2. ESG-Friendly Budget Planning
3. Supply Chain Network Optimization
4. Circular Economy for Fashion Industry
IV. Conclusion
Open the window on Business Intelligence and Sustainable Development Goals
1. Business Intelligence to Automate the Process
2. Beyond ESG, Towards Sustainable Development Goals (SDGs)Automate ESG Reporting with Data Analytics
ESG reporting is a form of non-financial reporting where organisations communicate their environmental performance (E), social responsibility (S), and governance structures' strength (G) to their stakeholders.
These three dimensions provide an in-depth understanding of a company's sustainability and ethical impacts.
For instance, a company might report the
- Carbon emissions of its supply chain (E)
- Initiatives for community development (S)
- Diversity of its board members (G)
Let's look at this reporting from the data analytics point of view.
You are a data scientist in a fashion retail company.
ESG Reporting Supported with Data
We can consider a hypothetical global fashion retailer: I&N.
I&N is a fast fashion retailer that produces garments, bags, and accessories in factories located in Asia.
Stores (located in Europe) are delivered from local warehouses that factories directly replenish.
I&N is committed to sustainable practices (circular economy, renewable energy) and aims to build trust with its stakeholders through transparency.
Therefore, it regularly discloses its ESG performance in its annual sustainability report.
In its latest report, I&N discloses several key ESG metrics.
(E): For the environmental segment, I&N reports
- The total greenhouse gas emissions (kg CO2eq)
- The percentage of energy usage from renewable sources (%)
These indicators, which require advanced data processing, allow stakeholders to understand
- The environmental footprint of the products sold.
- The efforts to transition to cleaner energy sources.
How do measure these environmental indicators?
Product Life cycle assessment (LCA) is a data-driven methodology for evaluating environmental impacts from a product's perspective.
The idea is to analyze each process, from raw material extraction to product disposal.
For each process, we have a look at the
- Consumption of natural resources, raw materials and energy
- Emissions of pollutants and CO2
- Waste generated
