Four Ways to Ensure Environmental Reporting is Data-Based and Repeatable

Understanding the data sources is just the first step, but what are the others?

• By Jane Ren
• Jan 06, 2023

As the impact of climate change becomes more apparent, the world is becoming more conscious of the need to act. No longer is there an expectation but now a demand that corporations play their part in reducing carbon emissions and mitigating the effects of climate change. With that increased public awareness comes a greater understanding of what is genuinely “effective” action and what is simply greenwashing. 

Companies need to become more aware of the impact of sustainability statements' and work to ensure that traceable and repeatable data backs up any claims.

So how can companies ensure that their data strategy creates an environment of transparency that allows them to back up and be confident with their statements?

Understand the data sources. Organizations must have an inventory of their data sources that will be used for calculating their ESG reporting. These must be put in a document to ensure that people know how data sources change over time. These data sources should then be mapped against a list or inventory of their emission sources, so it becomes more traceable or checkable at the granular level, and there is a clear understanding of which data feeds link to which emission source.

Build clear procedures or defined processes. This must set out how to repeat the calculations yearly. It is useless if you scramble around for a series of data, add it to the timeline and publish a report. When you do the same thing next year, few people will remember how they did it, or people may have changed jobs. Therefore, the process for collecting, storing, aggregating and computing the data needs to be in place to be repeatable and checked over time.

Develop a transparent methodology. This is an extra burden for companies and also one of the reasons there can be a lot of confusion or a lack of understanding because there are different methods to calculate emissions. For example, to calculate Scope 3 emissions from raw materials, you can say that “every dollar spent translates into specific emissions,” which is relatively crude but acceptable. But some companies want to get very specific about their suppliers and how they are doing business, which is no longer an industry average method, it becomes a supplier-specific method.

When these methods change, they should be documented because that helps you explain why your emissions numbers vary yearly, even though you have not adjusted or reduced them. To be clear on these methods and the factors called the multipliers, emission factors are very important for companies to explain how they arrive at specific numbers.

Create an effective organizational structure. When you compile an ESG report, it will only have one layer of information that reflects the entire organization. This figure is a result of many aggregations to achieve the top-level figures. It is tough to repeat if you only care about that number and do not have clarity of what is going on under it.

When companies gather and compute environmental performance data, it is better to have a granular level view through the organization, counting carbon by the facility. If each facility has its number, and it is evident which facility has which emission source, then the truth behind the overall number is much more substantial. That organizational structure behind the data requires a company to calculate carbon consistently across its different sites. All these structures help that final number to have a traceable record across all these lines of computation and data sources so that they can start to verify and provide assurance to auditors.