Unleashing Power of Data

Unleashing Power of Data | 57 [ POWER OF DATA TO FAST-TRACK ESG GOALS ] ESG risks that they face, businesses can develop strategies to mitigate these risks. Data can also be used to monitor the effectiveness of these mitigation strategies. Fina l l y , bus inesses can use data to communicate their ESG performance to stakeholders. By sharing data on their ESG performance, businesses can demonstrate their commitment to sus ta i nabi l i t y and soc i a l responsibility. This can help to attract and retain customers, employees, and investors. In March 2022, Dun & Bradstreet c omm i s s i o n e d F o r r e s t e r Consulting to evaluate the current state of ESG data and analytics and the benefits of mature ESG strategies. To explore this topic, Forrester conducted an online survey of 268 decision-makers in compl iance, sustainabi l ity, procurement, finance, and risk roles at global enterprises in the US, Canada, and the UK. ESG IS QUICKLY BECOMING A TOP PRIORITY Env i ronmen t a l , soc i a l , and governance (ESG) data and its management has rapidly become a front-and-center global business concern. As business leaders come to recognize that the benefits of effective ESG strategies go well beyond compliance, companies that invest in maturing their ESG data and analytics practices stand to differentiate themselves in a changing business landscape. ESG data is a critical asset: As compani es face new ESG-related reporting and disclosure rules coupled w i t h g r ow i ng p r e s s u r e from investors, employees, customers, and partners, high-quality ESG data is an increasingly important asset. Only 20% of respondents said that using ESG data was very important to their company three years ago; 44% said it ’s very important today. Astoundingly, 90% said they expect it to be very important to their company three years from now. Supplychain teamsare turning to ESG to increase resilience: As global supply chains face unprecedented disruptions, bolstering resilience has never been more important. To that end, 79% of respondents’ companies use ESG data to create more res i l ient value chains, for example, by avoiding suppliers with unsustainable practices. Companies are relying on ESG data to mitigate risks across the business: Beyond the supply chain, business leaders use ESG tounderstand and manage diverse risks. Looking internally, four in five respondents said their companies use ESG data to mitigateESGrelatedcorporate strategy risks, such as blind spots due to a lack of diversity among leaders. ESGmitigates ESG-related operational risks and disruption for 75% of respondents’ firms and helps keep businesses running. But it doesn’t stop there. 76% of respondents reported that ESG data is an important tool to mitigate their companies’ ESG-related investment risks. ESG data bolsters innovation: Though creatingdifferentiated offerings was the least-cited pr ior i ty , over two- thi rds of respondents (69%) still reported it is an important or very important goal for their company. This order of priorities is in line with the relative immaturity of many ESG strategies and is to be expected. But it must be noted that such a strong emphasis, even if it’s at the bottom of the list, reflects that many companies recognize the opportunity to create value by taking a forward-looking approach and embedding ESG performance in product design. ESG DATA GAP COULD LEAD TO HIGHER RISK P r e s s u r e t o i mp r o v e ESG performance is not a passing fad. Companies focused on sustainability outperformed their peers, even during the COVID-19 pandemic. But still, firms face many s igni f i cant chal lenges meeting their ESGgoals, and those challenges can impact bottom lines. It was found that: Failing to meet ESG goals exposes f i rms to higher operational andfinancial risks: 81% of respondents said that their firms have experienced negative consequences by Dun & Bradstreet