Organizations are challenged in their efforts to gather EHS and ESG data and poor data quality hinders their ability to improve EHS and ESG performance.
The ability to collect data and be assured it is of high-quality are essential to environmental, social and corporate governance (ESG) reporting and compliance success, according to speakers at a webinar outlining recent North American ESG and environment, health and safety (EHS) research.
Traditional and ad hoc ways of collecting ESG and EHS data are not enough, according to one speaker. Virginia Hoekenga, deputy director for the National Association for Environmental Managers (NAEM), says companies must move from Excel [spreadsheets] and paper approaches to systemic and holistic management of ESG and EHS using information technology and digital systems.
Hoekenga was speaking during a presentation of 2022 research from Vance and Bourne conducted on behalf of Intelex that explores how EHS and ESG professionals are dealing with their evolving challenges. The resulting report on the research – Big Ambitions. Complex Data. Limited Visibility – analyzes results of a survey of 450 ESG and EHS professionals at North American public and private organizations representing 17 business sectors.
Confidence in ESG Data
Organizations are challenged in their efforts to gather EHS and ESG data and poor data quality hinders their ability to improve EHS and ESG performance, according to the research. Vance and Bourne Research Manager Fern Beauchamp says, “Only four in 10 respondents say they are confident in the accuracy of their ESG data.”
Hoekenga believes a big part of that problem may be a lack of specifically designed technologies and applications for ESG data monitoring, management and reporting.
“We’ve got to arrive at a place where companies have data management,” she says. “Organizations need to track and have a multidimensional view of [ESG] performance. We still see a lot of data silos that slow down that ability to get a multidimensional view. A big push in our conversation about maturing ESG management is having the ability to analyze and compare data from different systems…and providing better systems integration, such as with enterprise management and HR [human resources].”
Research revealed that organizations struggle to comply with ESG and EHS regulations and data challenges are a part of that struggle. Since most companies wrestle with efforts to gather and work with good data, Hoekenga notes, “We see organizations finding it difficult to understand and measure the impacts of their improvement activity.
“While most have awareness of the importance of ESG and the negative impacts if they don’t improve their performance in this area, they are also seriously challenged to measure impact, performance and ESG return on investment,” she says.
ESG in its Infancy
Still in its infancy, particularly in North America, ESG is a growing strategic requirement for many of today’s companies and a catalyst that’s moving EHS professionals to take on a more prominent role in their business organizations, Hoekenga says.
She explained that, before 2020, ESG was “the language of Wall Street and the investment world” and a niche concern among a fairly select group of investors looking to drive transparency in corporate reporting. The changing conditions of business that happened during the COVID-19 pandemic saw an increased focus placed on employee health and wellness and moved ESG issues and concerns to the fore.
“Coming into 2022, ESG management is now a mainstream conversation among investors…and with business leaders in boardrooms around the world,” Hoekenga says. “We are about to experience a move from ESG as a voluntary set of reporting and requirements to a regulated and required part of business.”
Issues such as diversity, equity and inclusion moved EHS from its primary focus on safety culture and performance management to also include the support of inclusive and equitable workplaces.
“We saw EHS leaders coming to the table and assuming this incredible leadership role and also be recognized for their critical and strategic role in business continuity during the peak of COVID,” Hoekenga says. “On the flipside, there was a huge increase in their workload, responsibilities and stress.”
EHS Leaders Taking on ESG Roles
Many current EHS systems support ESG data collection efforts and in the past few years many EHS professionals have assumed at least some partial responsibility for ESG strategies. A direct link can be drawn between the two areas, says Trevor Bronson, director of portfolio strategy for Intelex. Much of data required for ESG reporting comes from EHS efforts, he explains, listing managing hazardous waste, air emissions, employee safety and supply chain safety among the areas reported on by EHS.
“These are all things that EHS professionals have been doing for decades,” Bronson says. “But now there’s a different spin because it’s for a different audience under a different set of rules and we’re calling it ESG. So, this is a real opportunity for EHS professionals to take the bull by the horns…and seize the opportunity to elevate their status with their organizations [by supporting ESG].
“ESG is presenting opportunity to the world of EHS,” Bronson adds. “EHS has historically been critical but not strategic and now [with ESG] it is critically strategic. ESG is a value creator. Strong ESG scores can give you access to capital, they can give you major reputational gains, access to talent – there are so many benefits from it.”