Data, Data, Data

In God We Trust ... Others better bring data
Tim Mohin
By Tim Mohin
March 12, 20215 min read
August 3, 2022, 5:52 AMUpdated
March 12, 2021Updated: August 3, 2022, 5:52 AM5 min read

Sadly, this is not an ode to the sublime android character from Star Trek: The Next Generation affectionally named Data. This is an article around what most of us already live every day – the ubiquitous nature of data in our information society.   

Most of us now recognize that the ascendence of data in our lives is not always a good thing.  We are tracked across the internet and fed a steady stream of information that matches our personal interests and views – or at least what some AI algorithm has been programmed to perceive as our views.  

Yet, when it comes to arguably the most important issues facing our world, the Climate Crisis, we have very poor data.  Sustainability, while an overused term, refers to the issues we must manage so that our children and grandchildren will inherit a better planet and standard of living.  And unless you have been living in a cave, you know that this promised future is threatened.   

So...Where is All The Great Sustainability Data?

Perhaps the largest and most pervasive threat around sustainability is climate change.  Not a month goes by without another “100-year” weather event.  Scientists have been raising the red flag on climate change for decades now, yet shockingly, we remain woeful at collecting, measuring, and thus most importantly, managing, our carbon impact.  

But that is changing — rapidly.  Suddenly, sustainability topics – with climate change in the lead  – have emerged from a niche area into the mainstream of global commerce.  Evidence of this change is everywhere. 

The head of the world’s largest asset manager – Larry Fink, CEO of the behemoth $8 trillion asset manager BlackRock – has warned companies to provide better climate data or face a vote against management.   

The International Financial Reporting Standards (IFRS) – whose standards are mandated for financial disclosure in most countries in the world – is now taking on sustainability standards and focusing on climate change first.   

And the U.S. Securities and Exchange Commission recently announced an ESG Enforcement Task Force with this very revealing statement from acting Chair Allison Herren Lee: 

“Climate risks and sustainability are critical issues for the investing public and our capital markets. The task force announced today will play an important role in enhancing and coordinating the efforts of the Division of Enforcement, the Office of the Whistleblower, and other parts of the agency to bolster the efforts of the Commission as a whole on these vital matters.” 

The message is clear: we need better sustainability information, particularly on climate change.  The inevitable focus is on data quantity and quality – better late than never.   

Some have been leading this effort.  Advocates like Felix Preston, Director of Sustainability Insights at Generation Investment Management, has written passionately and authoritatively about the need for better sustainability data for a while.  

Nevertheless, as someone who worked in corporate sustainability for many years, I am dumbfounded at how we have gotten to this place with such poor tools to measure and manage climate emissions, risks, and opportunities.  I believe this is because, until now, sustainability has been treated mostly as just a ‘reputational matter.’  

Today, more than 90% of the S&P 500 publish sustainability reports which are highly produced and lengthy recitations of corporate ‘good works.’ These reports help document company actions, communicate with stakeholders, and build the brand for customers and employees.   

But they are not the right tool for ‘investor grade’ information.  They do not provide sufficient data sets to truly manage these all-important issues.  For example, it is next to impossible for corporate leaders to make informed decisions about climate risk and opportunities with annualized data that is months if not years old.   

To get this right, companies need accurate, real-time information that can be forecasted into the future.  With this caliber of data, they will find cost savings and new business opportunities that will not only advance sustainability, but also corporate fortunes.   

In God We Trust, Others Better Bring Data

This call was echoed repeatedly at the recent “Private Capital ESG Conference” hosted by Boston Consulting Group, by some very heavy hitters from large asset owner and managers. 13 trillion dollars and ownership of more than 3,000 global companies were represented by those in attendance, and they expressed a need to know “financed emissions” – that is, the climate impact of their investments – so that they can use their market power to improve the situation.  And they can’t do that with data the way it is today. 

At the event, global investment giant EQT’s CEO Christian Sinding emphasized that while standard reporting frameworks like the GRI have been helpful, investors require better data sets to not just measure risk, but also — more importantly — to create value. 

Another leader in using investment leverage to drive change has been CalPERS CEO Marcie Frost.  She had two key recommendations: define what matters, because if you don’t, nothing gets tracked/measured, and focus on data, data, data. 

It has been said that “data is the new oil” to underscore the importance of accurate, up-to-date information in today’s digitally-driven economy.  If you have ever spent time with engineers, their axiom is, “In God we trust, others better bring data.”   

Now that sustainability issues – climate change in particular – are rapidly becoming integral to our economy and a sustainable future, we must work to improve the accuracy and timeliness of data.  The success we see here will have a direct impact on the success we all witness in our decarbonization efforts. 

Fortunately, the change is coming ... and not a moment too soon.