While most businesses publish at least some information about their emissions, the Boston Consulting Group…
Amid heightened societal awareness and intensifying regulatory scrutiny, the “E” or emissions component of ESG has become a focal point for businesses. Pressures from consumers, stakeholders, and investors amplify organizations’ need to adopt environmentally conscious practices, as the reporting guidelines from regulatory bodies such as the SEC further catalyze the momentum for ESG data and reporting.
Quite often, ESG data and metrics often tend to be qualitative, discretionary, and, in many instances, unregulated. As per the ESG Global Study conducted by the Capital Group, 46% of North American investors cite the insufficiency of comprehensive ESG data as a prominent challenge. Besides, 70% highlight the imperative of standardizing tools and data to assess and implement ESG strategies proficiently. Well, the result is a complex landscape that demands excessive time and effort from investors to interpret and compare data, thereby acting as a drag on investment decisions and market fluidity.
Understanding Energy Consumption for Different Businesses
While businesses may appear outwardly similar, their operations’ nuances can vary greatly. Factors like their location, the infrastructure of their premises, and the specific energy systems they employ—including heating, lighting, and energy efficiency solutions—all play a crucial role in determining their energy consumption patterns.
In 2022, Statista indicates that the US recorded an electricity consumption of 4,050 terawatt-hours, marking the most significant level since 1975, with a major proportion of this being attributable to business operations and activities. Energy usage can differ remarkably, even between seemingly comparable businesses.
ESG Reporting & Utility Monitoring
Utility data, primarily utility bill data, provides granular insights into an organization’s consumption patterns and environmental impact. Yet, for most companies, collecting and analyzing this data isn’t straightforward. The diverse nature of utility providers, the variability in tariffs, and the differing regional regulations together make this data a multifaceted challenge. Carbon accounting, energy management, and ESG reporting are challenging endeavors that require utility bill data. Gathering the data from utility bills has its own complexities and variabilities, including provider diversity, tariff differences, and regional regulations.
Yet, to successfully accomplish ESG goals, organizations must consider three critical elements – accurate and reliable data, data contextualization, and a centralized approach to managing ESG reporting and disclosure requirements.
Accurate & Reliable Data
Without a doubt, the foundation of any successful ESG strategy is the precision and consistency of the data. Utility data represents a critical barometer for an organization’s carbon footprint and energy consumption. Any discrepancies or inaccuracies can distort the entire sustainability narrative and hinder goal-setting and strategic initiatives.
As a domino effect, the errors in utility bill data can lead to incorrect ESG reporting, affecting stakeholder trust and potentially causing regulatory issues. Partnering with platforms that automate the collection of utility bills can help ensure the data’s accuracy by minimizing manual errors.
Beyond raw numbers, utility data must be contextualized to provide actionable insights. This involves understanding consumption trends, energy sources, and how the data aligns with broader industry benchmarks. Only with a clear context can a business make informed decisions, such as transitioning to renewable energy sources or making infrastructure enhancements for better energy efficiency. Tailor-made algorithms can help account for these variabilities, ensuring the data is comparable across different regions and providers.
Contextualizing data also involves comparing it against industry benchmarks and best practices, which can inform strategy and goal setting. Once you have accurate data, it’s essential to contextualize it. For INSTANCE, if the data shows high electricity usage, the contextualization process would involve understanding the energy sources used. This helps organizations target renewable energy procurement more effectively. Even more, data contextualization allows companies to simulate different energy-sourcing scenarios and their impact on ESG metrics
Centralized Approach to ESG Disclosure
As ESG becomes a core business consideration, its reporting and disclosure requirements are growing more stringent. A centralized approach ensures standardization, scalability, and cohesion across all ESG-related data points. This not only aids in compliance but also provides stakeholders with a clear and consistent view of the organization’s ESG performance.
Integrating a centralized platform often comes with dashboards and analytics tools that provide real-time insights. This is crucial for quick decision-making in response to ESG challenges or opportunities/ Plus, a centralized platform can map specific utility data to corresponding ESG metrics, making it easier for different departments within the organization to contribute to collective ESG goals.
Measuring Business Environmental Footprint through Utility Data
Tracking various sustainability metrics is crucial for assessing a company’s environmental impact and dedication to eco-friendly practices. For instance, keeping tabs on energy consumption from both renewable and non-renewable sources offers valuable insights into the organization’s carbon footprint and its ongoing efforts to transition to cleaner forms of energy.
Similarly, monitoring water usage can demonstrate the company’s commitment to water conservation and highlight any potential risks associated with water scarcity. Additionally, reporting on waste management—including the amount generated, recycled, or sent to landfill—indicates the company’s operational efficiency and dedication to minimizing waste.
Benchmarking, Target Setting & Risk Management
Utility data is a benchmark to measure a company’s performance against industry peers. Companies can use historical utility data to set future sustainability targets and demonstrate their commitment to improving their ESG performance. In addition, utility costs represent a significant operational cost for many businesses. Companies can identify potential cost savings and investment opportunities by tracking and reporting on utility data.
Verdafero – Your Software for ESG Data Utility Monitoring
Don’t know where to start with gathering your utility data for ESG reporting? Verdafero’s software diligently monitors and analyses your organization’s energy usage, natural gas, water, waste, and fuel to provide a thorough report.
Subsequently, the businesses collaborating with us received detailed ESG Scope 1, Scope 2, GHG, and Carbon Footprint reports. Take responsibility for your ESG performance and increase your commitment to sustainability with Verdafero through data-driven initiatives!