Enterprise Data Technology Part 4 — Sustainability Data

Sustainability involves meeting present needs while preserving the environment for the future, including reducing carbon emissions and creating eco-friendly products. Accurate data plays a crucial role in achieving sustainability by enabling businesses to track progress, identify areas for enhancement, make informed decisions and guide resource usage. Data-driven insights help leaders set meaningful goals, monitor performance and build stakeholder trust.

I’d like to distinguish between two terms here: sustainability data and sustainable data. Sustainability data tracks resource use and environmental impacts, such as energy, water, materials, waste and costs. It helps organizations monitor progress toward sustainability goals and improve resource use. On the other hand, sustainable data refers to collecting, managing and storing data in an eco-friendly manner, using energy-efficient data centers, renewable energy sources and intelligent data management techniques. Sustainability data focuses on what you collect, while sustainable data focuses on how you collect it.

In this segment of my EDT series, I’ll discuss how leveraging sustainability data enhances organizational sustainability. I’ll examine sustainability data practices and the value this data delivers to help organizations meet their overall sustainability commitments. In the first installment of this series, I started with an overview of internal and external data sources, followed in the second installment by a discussion about EDT’s key components and benefits. In my most recent article of the series, I wrote about how change management affects a company’s use of EDT and its broader success in data management.

For the current piece, I have also asked my Moor Insights & Strategy colleague Melody Brue to weigh in from the environmental, social and governance perspective, given its importance in today’s corporate world.

EDT Sustainability Data Practices

Organizations implement sustainability practices to fulfill their corporate responsibilities and to meet the rising demand from consumers, investors and regulators for sustainable and environmentally friendly operations. These practices require systematic data collection, monitoring and analysis. Through the intelligent use of data analytics and other technology, organizations can track their sustainability performance and uncover areas for improvement and innovation. Here are some significant sustainability data practices:

1. Regulatory Compliance and Reporting — Many governments require companies to report their environmental impact, energy use, carbon emissions and more. Sustainability data helps companies comply with reporting guidelines and regulations. Non-mandated initiatives such as the Global Reporting Initiative, Sustainable Accounting Standards Board, International Sustainability Standards Board, Carbon Disclosure Project and Science Based Targets initiative also aim to provide frameworks and guidance for companies to measure, report and improve their sustainability performance. Meanwhile, the Corporate Sustainability Reporting Directive has established legally binding sustainability reporting requirements within the EU.
2. Operational Performance — Through sustainability data analysis, companies identify ways to reduce energy, water and raw material consumption, decreasing their environmental footprints and cutting costs for their operations. Companies also use this data to measure operational performance against peers and industry standards, identifying areas for improvement and tracking progress over time.
3. Supply Chain Management — Companies can use supply chain data to evaluate suppliers’ environmental practices, labor conditions and ethical business practices—plus identify any inefficiencies. Data transparency within the procurement process is essential for companies to fulfill their responsibility to extend sustainable behaviors to their value chain and to society.
4. Risk Management — Sustainability data helps companies identify and manage risks connected to their ESG performance. For instance, the Dutch asset management firm Robeco uses sustainability data to manage ESG risks relevant to its portfolios, which strengthens its knowledge as a sustainable investor and generates positive impacts for its clients. In another example, BNP Paribas Asset Management applies sustainability data to better assess the long-term viability and risk of managed assets, taking into account their environmental, social and governance profiles.
5. Cloud Computing — Global companies are using the cloud to collect and analyze sustainability data to track their environmental impacts. These companies also promote sustainable data practices by efficiently utilizing resources, adopting green data centers and responsibly managing data through secure handling practices. Leading cloud providers including Google Cloud, Amazon Web Services, Microsoft Azure and Oracle Cloud have created sustainability programs for data center operations and applications.
6. Financial Reporting — Sustainable data is used within enterprise systems to help with required financial reporting, and new technology is making this easier. For example, in a recent article, Melody Brue highlighted SAP’s Green Ledger, which tracks carbon emissions similarly to financial reporting. This helps simplify the complexity of calculating and managing carbon emissions data.

EDT Sustainability Data Benefits

Organizations are increasingly relying on sustainability data to drive improvements and build value, affecting both environmental and economic performance. This suggests the critical role of sustainability data in steering business strategies, creating operational efficiencies and ultimately promoting a sustainable future. Here are several specific examples demonstrating the benefits of sustainability data:

1. Climate-Positive Supply Chains — The United Nations has issued a challenge to 140 countries, including China, the United States, India and the European Union, to achieve net-zero sustainability goals by 2050. For companies in these countries, this includes cutting emissions not just from their own operations but also from their suppliers’ operations. For example, IKEA uses sustainability data to reduce its climate footprint, increase renewable energy across its value chain and improve its waste management. Ikea has developed a climate action plan that aligns with the Paris Agreement, reducing greenhouse gas emissions across its value chain to help meet the 1.5-degrees Celsius target.
2. Asset Management — Sustainability data enables organizations to enhance asset lifecycle management and identify areas for improvement, particularly for production equipment. This includes analyzing production schedules to avoid peak energy usage times, adjusting equipment settings for energy efficiency or replacing outdated equipment with more energy-efficient models. Sustainability data also guides the environmentally responsible disposal or repurposing of equipment at the end of its life, such as recycling components, safely disposing of hazardous materials or refurbishing items for other uses. All of this reduces waste and other environmental impacts. One example of this comes from Ingersoll Rand, which leverages sustainability data to fine-tune equipment usage, schedules and upgrades, leading to better energy consumption, asset longevity and decision-making in sustainability efforts.
3. Inventory Management — Optimizing inventory is essential for cost control, and one way that companies can promote this is by leveraging sustainability data. For instance, Timberland improves its inventory management by using sustainability data to identify products made from recycled materials or those that require less water and energy to produce. These specifics help the company focus on more sustainable and cost-effective materials, optimize stock levels and streamline operations, benefiting both Timberland and eco-conscious customers.
4. Schedule Optimization — Airlines use data analytics to better plan flight schedules and predictive maintenance, making operations more sustainable while also improving efficiency and safety, cutting costs, better satisfying customers and increasing profits. As one example, Alaska Airlines uses Airspace Intelligence’s Flyways software for shortening flights, reducing fuel usage and contributing to environmental sustainability goals. While airlines and logistics companies are the most obvious candidates for these improvements, schedule optimization can also create benefits for many other companies that manage vehicle fleets.
5. Lifecycle Analysis of Digital Products — Considering the environmental impact of data and digital products across their lifecycles, from creation to disposal, is crucial for addressing sustainability concerns. This approach helps organizations lower carbon emissions, improve energy use and manage resources responsibly, aligning technological advancements with environmental guidelines. This lifecycle approach continues with e-waste management, through which organizations establish policies for responsibly recycling or repurposing electronic waste to minimize environmental harm. Effective use of data aids in identifying recycling opportunities, optimizing resource recovery and supporting circular-economy models. To achieve this, Amazon, for example, gathers data from sources across its operations, including information on carbon footprint, energy usage, packaging efficiency and customer interactions.
6. Carbon Footprint Tracking — Software tools are being used to comprehensively measure and track carbon emissions from direct and indirect sources. Some technology providers are even turning this function into value-added products. For example, Dell’s CloudIQ, a cloud-based app for monitoring Dell infrastructure, now tracks energy use and carbon footprint at different organizational levels. Using sustainability data from sources like this helps IT pros make informed decisions by combining insights on system health, capacity, performance and cybersecurity. Ultimately, this helps customers reduce their environmental impacts by improving workload efficiency, consolidating resources and upgrading to energy-efficient technology when necessary.
7. Product Design and Innovation — Sustainability data helps companies develop greener products by utilizing eco-friendly materials, extending product lifespans and ensuring recyclability or biodegradability at end-of-life. Cisco, for example, incorporates circular design principles in its product materials, prioritizing product longevity, reduced energy consumption and packaging efficiency. In another example, Tesla utilizes sustainability data to create more energy-efficient vehicles, which helps reduce lifecycle emissions. Additionally, Tesla operates an in-house recycling system, ensuring that 100% of the batteries it receives are recycled, with up to 92% of their raw metals reused.
8. Brand Reputation and Customer Loyalty — Companies utilize sustainability data to communicate their environmental commitment, enhancing their brand reputations. Companies such as T-Mobile do this to acknowledge the importance of sustainability to their customer bases.

Summary

Managing sustainability data can be complex and resource-intensive, particularly without universal standards for comparison. Despite these obstacles, harnessing sustainability data can benefit companies significantly. Accurate sustainability data provides insights into environmental and social performance, helping with overall decision-making, cost reduction and compliance with regulations.

Sustainability reporting is changing dramatically as new requirements drive wholesale revisions in the nature and scope of corporate disclosures. In fact, expertise in using this data will inform how companies compete amid sustainability-driven market forces. Companies can no longer use casual, manual approaches for collecting and using sustainability data. They must systematically collect verifiable data suitable for compliance auditing. Upgrading systems and processes to meet these standards will take significant work, and companies need to move quickly, especially those in the EU, where the CSRD reporting requirements will soon apply.

The good news? As outlined above, businesses can reap myriad benefits by taking a strategic approach to sustainability data. Indeed, doing this properly can enhance efficiency, build resilience and drive long-term value creation across companies.

Note: Moor Insights & Strategy vice president and principal analyst for modern work and ESG Melody Brue contributed to this article.