As companies race to build out ESG and sustainability programs to measure their environmental and social impacts and set goals to address them, the critical element to starting their decarbonization journey is good baseline data. Without it, companies are forced to rely on assumptions, estimates and often far-apart observations. But putting systems in place to gather more detailed data or information on a wider range of areas takes both time and money.
We at Cleartrace often see companies struggling with deciding when to start gathering data, where to prioritize their spend, and how they can prove the value back to the business. With the help of a few Hollywood blockbusters, this post looks at why the answer should be “as soon as possible.”
With greater data comes greater transparency
The big lesson that makes Spider-Man a hero is “with great power comes great responsibility” – but for companies working to decarbonize, it could be, “with greater data comes greater transparency.” An annual matching approach, which adds up monthly utility bills, provides a very limited picture of the carbon intensity of grid-supplied power. In this approach, annual carbon data is used to procure equally opaque unbundled RECs to offset grid electricity consumption, which gives you little detail to work from in order to ensure the power you use is actually matched with clean energy.
By that same thinking, companies can’t manage what they don’t measure, but similarly can’t manage what they don’t analyze. Data shouldn’t stay in rarely-touched spreadsheets or data warehouses, strictly for the sake of pulling out top-line numbers for ESG questionnaire submissions. Companies that apply the right analytical labor to their carbon data can gain insights and inform their energy procurement strategy, as well as connect the dots to how that affects longer-range goals like achieving a net zero target.
Leading companies are working to source their best available granular data – be it sub-hourly, hourly, daily or weekly, depending on the source – because it enables them to see how their carbon impact changes hour by hour and formulate sourcing strategies to reduce that impact. Consider, for example, that the carbon emission factors on the electricity grid where your facilities operate change over time, not just across the year (or day), but within a grid region, depending on how granular of a view you can get about where they operate. More specialized data, including that used by Cleartrace, may be able to help a company understand their carbon impacts within a smaller area and the impacts of regional clean energy procurement on their footprint.
Stakeholders and rating agencies want “everything everywhere all at once”
A lack of standardization among ESG and sustainability reporting guidelines and frameworks means that much like the recent film, the range of customers and stakeholders cumulatively may ask ESG or sustainability teams to provide a wide range of data in a dizzying array of questionnaires and formats–”everything, everywhere all at once”–whether or not having absolute transparency is feasible or useful from a business perspective.
Meanwhile, fragmentation among ESG reporting frameworks and guidelines means companies are frequently picking and choosing which metrics or sets of metrics are applicable and gathering data according to rough guidelines that may or may not provide meaningful results.
The Global Reporting Initiative’s standards are considered a gold standard among reporting companies, and the Sustainability Accounting Standards Board (now part of the International Sustainability Standards Board) issues sector-specific reporting guidelines with technical appendices to outline for companies which metrics they suggest prioritizing and recommended methodologies for calculating them.
But such reporting is voluntary, and companies whose operations touch a range of industries are often encouraged to adopt the most meaningful metrics to them–but also report on metrics that may not be particularly material to their business.
The reality is that getting a firmer grasp of your energy and carbon footprint – and having a reliable, auditable and ideally automated data warehouse – enables you to make answering inquiries from customers, stakeholders, and ratings agencies easier, providing more detailed data that sets your team up to do deeper analysis and get more insights about your efforts. Answering inquiries becomes less a stream of fire drills and more manageable, because your teams are better able to access and integrate your energy and carbon data into your larger data warehouse.
When to source carbon data isn’t about speed to satisfy fire drills… it’s about planning
Without integrated data access in place, preparing for reporting season can become a rushed companywide hunting and gathering exercise–feeling like these workers from I Love Lucy struggling to do their task as fast as possible–with data gathered in a hurried fashion on spreadsheets, which can lead to data corruption, errors or inaccuracies.
If properly implemented, ESG or sustainability reporting should be thoughtfully executed, with teams getting the right lines of communication in place and the right automation of data gathering to make analysis, reporting, and target-setting easier.
Energy and carbon data are particularly important to access and understand on an ongoing basis if you have carbon reduction or clean energy adoption targets. Simply totalling monthly utility bills and purchasing unbundled RECs to offset your carbon footprint from electricity consumption offers little visibility into how much carbon reduction impact you’ve achieved.
Even if your company hasn’t set or doesn’t plan to set a 100% renewable energy or 24/7 carbon-free adoption goal, having greater visibility into your facilities’ energy use can help your company understand its overall load, purchase offsets as a first step, and tackle low-hanging fruit in terms of increasing building efficiency or reducing electricity use by your employees. Access to more detailed energy and carbon data can help you in a number of ways early on in your decarbonization journey:
- Prove to your investors, board and other interested stakeholders how your company is performing from a carbon perspective;
- Reduce the work your ESG team needs to put in on raw data collection–year-on-year reporting gets easier once you have better access to and understanding of your energy and carbon picture;
- Ensure strong access to data, which breeds confidence, enables companies confident in their efforts to move from “green hushing” to “green truth,” and positions them better to offer strong data-driven narratives on their ESG work and carbon disclosures.
Get access to granular data, so you can “level up” your corporate goals and decarbonization strategy
Many movie heroes start to “level up” once they learn more about the challenges they are tackling. In the case of ESG, sustainability, and energy procurement teams, having more detailed data opens up a range of ways you can reduce your impacts, at individual facilities even across your company’s broader geographic footprint.
Once you have access to detailed energy and carbon data, you can start to help you take advantage of green power/green tariff programs through your local utility or work with other companies to aggregate demand to buy clean energy directly through one or more power purchase agreements.
The clean energy transition, unforeseen events like the Russia-Ukraine war, supply chain disruptions and other regional and global factors continue to change the makeup of electric grids and make our energy system more dynamic. A firm foundation of granular data is a critical step in positioning your company to better understand those changes, what they mean for your company’s energy procurement strategy and, by extension, your ability to hit carbon reduction or net zero targets.