Solving data hurdle in sustainability reporting to avoid reputational risks

Organisations face numerous challenges when preparing their sustainability reports. One challenge that stands out is having the correct data for reporting.

Organisations must deal with large amounts of data, whether performing materiality assessments, impact assessments, climate risk management and scenario modelling, measurements and estimation of targets and KPIs such as emissions.

There are many aspects to the data challenge, such as defining the data required, assigning a custodian for the data where applicable, storage and analysis of the data to deliver insights and reporting this information can be a very complex process that requires a careful approach to ensure that the sustainability reporting process is seamless in a business as usual manner.

Failure to solve the sustainability reporting data challenge could result in errors, misstatements and reputation risks arising from inaccurate disclosures. It is also costly because it makes every period of sustainability reporting time-consuming and inefficient, which puts a strain on the human resources and capacity within an organisation. Organisations should consider the following to solve this data challenge.

Commencing with a crucial step, organisations must establish a robust data strategy for sustainability reporting, led by a dedicated team with a good understanding of the data requirements within the context of the organisation's data architecture. Having a data strategy in place ensures a comprehensive implementation of sustainability reporting.

The subsequent step involves designing the necessary data systems and processes for sustainability reporting. This step also includes assigning specific data to data owners and identifying the appropriate storage, processing, and analysis database. It is also the stage where proactive process redesigns are implemented to ensure a seamless process with necessary controls and assurance for data accuracy.

A Deloitte survey of executives at publicly owned companies underscores the data challenges in measuring scope 3 GHG emissions, such as data accuracy and availability. One significant challenge identified was a lack of confidence in data received from vendors.

Finally, organisations should establish a governance process with clearly defined roles and responsibilities for monitoring and reporting. This process includes the assessment of sustainability data against set targets and KPIs.

Organisations are already taking concrete steps to address this challenge, such as investing in new technologies and tools and creating new roles or responsibilities to prepare for potential increased sustainability reporting disclosure requirements.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.