Introduction to Sustainability for Data Architects, Modelers and Engineers

Introduction to Sustainability for Data Architects, Modelers and Engineers

First, some context

While many large companies have issued sustainability reports on a voluntary basis for over 20 years, the stakes went up in 2023 as regulators around the world began requiring these data to be part of auditable financial statements, signed off on by the Chief Financial Officer. This has generated anxiety and some backlash, especially among companies that felt caught off-guard.

All the noise has masked the fact that companies are being asked to report on sustainability metrics that represent material risk or opportunity to their business which, by definition, represent data that has business value and should be examined anyway. For example, an operator of casino resorts in Las Vegas (a desert city) may be asked to assess the impact of water shortages and rising heat levels on their operations and explain their mitigation plans, while a consumer goods company with a large presence in China may need to rethink their growth plans in the light of projected population decline and the resulting shrinking market.

In other words, sustainability data is valuable business data independent of reporting requirements. But the regulations are driving action and heartburn which is leading to headlines like the following:

-????????? Deloitte: Trust the Numbers? Data challenges complicate ESG reporting

-????????? KPMG: Solving the great sustainability data challenge

-????????? Forbes: Businesses Confront the Data Challenges of Sustainability

There’s No Need to Panic!

This is where data professionals can help. A lot of the difficulty stems from the fact that sustainability professionals are left fending for themselves with spreadsheets as their only tool. While spreadsheets clearly have their place as an important business analysis tool, they were never intended to be a database. In fact, the journey towards trustworthy sustainability data mirrors the one that the Office of Finance (and FP&A – Financial Planning & Analysis) have taken in the last decade with financial data.

If you are a data professional who is ready to play your part in helping your business or your clients build long-term business value while mitigating risk from extreme weather events and other factors, I have put together a series of short articles to get you started so that you can usefully engage in a productive conversation with your sustainability colleagues.

Sustainability Cheat Sheet for Data Professionals

Start with these three short blog posts on the Tensor Research website:

-????????? What is the Difference between Sustainability and ESG?

-????????? What’s with all the Sustainability and ESG Reporting Frameworks and Standards?

-????????? Commonly used Standards and Frameworks for Sustainability Reporting

The third blog contains links to the standards which can be used as (among other things) “recipe books” to figure out which sustainability topics are material to a business which is important for prioritizing any data organization effort.

Since greenhouse gas emissions feature heavily in all sustainability reporting frameworks, next you should review the Greenhouse Gas Protocol which is the prevalent carbon accounting standard. At minimum, you should get an understanding of emission factors and the definitions of Scope 1, 2 and 3 emissions.

If you are looking for a strategic overview I recommend Matthew Sekol’s book ESG Mindset and his blog The ESG Advocate.

The Role of an Enterprise Performance Management (EPM) platform

I mentioned earlier that the sustainability reporting and performance management journey mirrors the one taken over the last decade by the Office of Finance, especially FP&A. Any company that has already invested in a software platform to support financial planning, forecasting and reporting can deploy the same platform for sustainability.

This could be done on either a tactical or strategic basis depending on circumstances. The advantage of EPM platforms is that they are generally business-user friendly and often integrate well with spreadsheets, which enables something to be prototyped quickly without a huge software or development effort. This exercise can help scope out the scale of the challenge and determine whether a larger data management effort (such as a data warehouse/lakehouse, or investment in a specialized sustainability reporting platform is warranted). In some cases, the EPM platform may be all you need.

This blog post on Sustainability Data Strategy: Three Tips for Finance delves into this a bit more.

While these comments can be applied to any EPM platform, here is some content specific to the IBM Planning Analytics with Watson platform, also known as TM1:

-????????? Blog: Using IBM Planning Analytics for ESG Reporting and Performance Management

-????????? IBM TechXchange 2024 Conference Presentation Replay: How IBM Planning Analytics with Envizi and AI Enable Sustainable Business Success

Call to Action!

Governments, businesses and investors are on-board with the need to take action to solve, mitigate and adapt to the effects of climate change and other sustainability factors. None of these programs and efforts will be successful without accurate measurement and monitoring, which can only be done as a collaborative exercise that includes sustainability experts, the finance team, technologists, and data practitioners.

If you are reading this as a technologist and data practitioner, I hope this helps to get you started on playing your part!

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