Sustainability Data Practices with Microsoft Fabric

Part 1- ESG Lakehouse

In this Sustainability data practice with Microsoft Fabric blog series, we will cover ESG data concept, need and its relations with Sustainability. ?In the first blog of this series we aim to focus on the ESG Lake house foundation and concept of Microsoft Fabric Sustainable data solution(SDS/ Overview of Sustainability data solutions in Fabric - Microsoft Cloud for Sustainability | Microsoft Learn ). In the next blog we aim to go deep dive into Microsoft Fabric SDS. Let us first understand the Sustainability trends we see everywhere.

What are Sustainability trends?

?We start with the few areas that are top of our mind when we think about Climate change. Those areas are intense drought, storms, heatwaves, rising sea levels, melting glaciers and warming oceans. Humanity and all living being face new risk with Climate changes. Some facts about Sustainability are (Some reference- 50 Facts for 50 Years | Sustainability at Georgetown University | Georgetown University )

• As of 2023, the concentration of carbon dioxide (CO2) in our atmosphere was 419.3 parts per million — the highest it has been in 3 million years.
• A modern glass bottle takes 4000 years or more to decompose.
• A plastic bag that is used for shopping for an average of 12 minutes will remain in the environment for 1,000 years before it decomposes.
• Scientist predicts that temperatures will rise by as much as 10 degrees Fahrenheit by the end of this century.
• A large data centre uses a few hundred thousand gallons per day of water.

?In 1987, the?United Nations Brundtland Commission ?defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs. Till then more than 100 countries participated in this journey. One of the most recent important events in the global effort to combat climate change is the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC), which has taken place in Abu Dhabi, United Arab Emirates, in November 2021. ?As per UN Climate change website, COP is where the world comes together to agree on ways to address the climate crisis, such as limiting global temperature rise to 1.5 degrees Celsius, helping vulnerable communities adapt to the effects of climate change, and achieving net-zero emissions by 2050. In Singapore, national water agency PUB had launched a campaign titled "The climate is changing", which aims to spotlight?Singapore’s water sustainability efforts and awareness Water Conservation | PUB, Singapore’s National Water Agency . Following illustrative picture is from Singapore PUB campaign (2019).

What is ESG and its importance?

So, what is ESG? It stands for environmental, social and governance. This is a framework that helps stakeholders to understand environmental, social and governance impact. ESG framework comes with quantitative measure for sustainability and are used by investors, stakeholders, companies to assess the sustainability and ethical impact of an organization.

• Environmental- This aspect focusses on Climate, Water and Waste management, Carbon emissions, energy efficiency related to a company.
• Social- This part emphasizes employee satisfaction, diversity, inclusion, human rights and community engagement. This also covers labor practices and diversity.
• Governance- It looks at the company’s internal practices, policies, anti-corruption, and leadership structure.

ESG is broadly a framework for reporting purpose’s metrics monitoring reporting is critical to organization due following facts-

• Regulatory Requirement - ESG data and metrics need to be reported to different regulatory boards like European Sustainability Reporting Standards (ESRS), UK Sustainability Disclosure Standards (SDR), International Standard on Sustainability Assurance (ISSA), Global Reporting Initiative (GRI)?standard, Corporate Sustainability Reporting Directive (CSRD). There are 1000+ new ESG reporting standards globally. In Singapore SGX has introduced a phased approach to mandatory climate reporting based on the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”).
• Investors Expectation - Investors demand to disclose sustainability metrics, hence meeting stakeholders’ expectation is dependent on ESG data. Investors use this data to assess carbon footprint penalties, reputational damage, potential bans, employee satisfaction and other aspects.
• Operational Efficiency- Improve operational efficiency in various ways, example reduce resource consumption cost. Monitor and identify how to reduce water, utility, raw material, energy consumption of organization.
• Risk Management and Reputation-ESG related issues come with legal and financial consequences and thus affect the company reputation. Many corporates align their business strategy with Sustainability Risk Management to avoid fines or lawsuits that could result in them not addressing ESG issues. Social risks like the unsafe and unhealth work environment and discriminatory hiring need to be avoided through this SRM frameworks. Unethical business practice and corruption can be avoided through SRM framework.
• Social responsibility -Organization can reduce their greenhouse emission, carbon footprint, water emissions thus enhancing CSR (Corporate Social responsibility).
• Attracts talent-An employee is keener to work in an organization that adopts sustainability practice. Example more diverse workforce, employee retention, greener offices.
• New Business opportunities- Sustainability creates new business opportunities like Eco friendly retail (example sustainable textile), Organic food sales, Bicycle rental service in city, Eco consulting for experts and many more.

?ESG-a Big Data Challenge, hence the need of Data Lakehouse-

Some examples of ESG regulatory reporting metrics are GHG (Greenhouse gas) related reporting. Many companies want to reduce emissions towards the road of net zero. As per definition net zero is organizations goal to negate the amount of?greenhouse?gases ?produced by human activity. This has to be achieved by reducing emissions and implementing methods of?absorbing ?carbon?dioxide?from the atmosphere. Greenhouse gas protocol (GHG) defines three types of emissions.

• Scope1- This type of emissions that an organization owns directly, Example- emissions generated by burning fuel of organization equipment.
• Scope2- This type of emissions organization is indirectly involved. Example - electricity, steam, heat, cooling system that organization is using from utility provider for their business.
• Scope3- This is the rest of the emissions that are not part of Scope 1,2. It includes business travel, waste, purchased goods, rest of the upstream process.

Organization needs to do reporting based on such protocols. Thus ESG-related data management is evolving fast to address those reporting requirements. Framework reporting need to interact with humongous sources of data volume and silo data sources. Some examples of Scope 1, Scope2, Scope 3 data sources are as follows.

• Example Scope 2 based electricity consumption data can be found from Utility bills.
• Expense management data can be used to report Scope 3 data related to travel and carbon emission.
• Data from Learning Management system, Employee health safety system can be used to track Employee metrics.
• Human resources data as employee diversity, retention.

Every organization goes through/ideally needs to go through following steps/maturity curve of ESG data practice. Those steps are.

1. ?Understanding ESG data for example learning carbon emission data of the org.
2. ?Adopt native solutions for recording and reporting sustainability metrics.
3. Create unified data foundation with ESG Lakehouse.
4. Data quality check, enable audit ready reporting, regulatory readiness and disclose to reporting.
5. Identify existing challenges, provide recommendations related to Sustainability. (Medium maturity)
6. Aligning organization strategy with Sustainability goals. (high maturity)

Mostly Organization faces challenges like hyperlocal sourcing, large volume of data which is not integrated, lack of holistic view, lack of ESG Common data models and standards, large scale ESG high performant analytics computation capability requirement, out of box ESG data analytics and AI tool kit not available easily, real time ESG streaming capability and many more to build ESG foundation. Such challenges of any organization are addressed by ESG data Lakehouse. ESG Lakehouse can help organizations too:

• Assess their current ESG status and identify gaps and opportunities for improvement.
• Set and track their ESG goals and targets and align them with the international standards and frameworks, such as the UN Sustainable Development Goals, the Task Force on Climate-related Financial Disclosures, and the Science Based Targets initiative.
• Implement and evaluate the impact of their ESG initiatives and projects and report on their outcomes and achievements.
• Engage and collaborate with their internal and external stakeholders, such as employees, customers, investors, regulators, and civil society, and demonstrate their ESG leadership and responsibility.

In the next section we would focus on the Microsoft Sustainability landscape to solve these challenges.

Microsoft Sustainability solution landscape

Microsoft Sustainability solutions consist of few key pillars.

1.?Microsoft Sustainability Manager- Its integrated and automated Sustainability management solution(Microsoft Sustainability Manager | Microsoft ) which enables organization to record ,gain visibility on organizations emission data ,report and then help reduce organizations waste, water or emission. Microsoft. Sustainability Manager can extend its capability with Azure and Power platform solutions. This capability helps to facilitate data collection process using its native SaaS foundation, provides pre-built calculation methods (and service-preview) for Scope 1,2 &3 for accurate calculation and help improve sustainability Goal tracking.

?2. Purview Compliance Manager- Microsoft Purview Compliance Managers(Overview of CSRD reporting regulation - Microsoft Cloud for Sustainability | Microsoft Learn ) helps you automatically assess and manage compliance across your multiload environment. This helps to simplify compliance by doing continuous assessment based on pre-built or custom-built assessment templates. This is done through few click-based workflow which generates compliance score and alert in advance. Purview compliance manager provides CSRD template which can connect with Fabric SDS based ESG metrics and continuously measure against CSRD disclosure requirements.

?3.?Microsoft Fabric - Microsoft Fabric(Microsoft Fabric documentation - Microsoft Fabric | Microsoft Learn ) is a cloud-based solution that can serve as the foundation for ESG Lakehouse, as it provides a scalable, secure, and flexible data platform that can ingest, store, process, and analyze any type and volume of data. Microsoft Fabric SaaS enables easy integration with other Microsoft services, such as Power BI, Azure Synapse Analytics, Azure Machine Learning, Azure Cognitive Services, and more. Microsoft Fabric Sustainability data solution (SDS) provides unique capability to unify, harmonize, pre-built ESG metrics and pre-canned reports required for regulatory requirements like CSRD. Additionally, Microsoft Fabric can be leveraged to create end-to-end ESG solutions that can address the specific needs and challenges of different industries and sectors. In this series we will focus on Microsoft Fabric SDS mostly as shown in the top part of the following diagram.

?Microsoft Fabric Sustainability Data solution for ESG Lakehouse

Microsoft Fabric offers Sustainability data solution (Currently preview during the writing process- Overview of Sustainability data solutions in Fabric - Microsoft Cloud for Sustainability | Microsoft Learn )? which provide following offerings ?broadly inside SDS solution (as we can see in next picture).

• Sustainability ESG Data estate - This consists of sample demo sustainable dataset such as water, waste, emissions, and social, notebook to load the data in Lake house.
• Microsoft Azure emissions insight – Demo data for azure emissions and prebuilt insights/dashboard
• Environmental metrics and analytics- Demo data for sustainability manager, notebook to load the data in Lake house.
• Social and governance metrics reports-Prebuilt visualizations.

By using Microsoft Fabric SaaS as the ESG Lakehouse foundation, organizations can leverage the power of data and AI to enhance their ESG performance and contribute to the global climate action agenda. Key capabilities of Microsoft SDS Solutions are as below.

1.?ESG Data model-? This model includes 400 plus table to build your EG analytical data estate based on use cases ?and covers following subject area overview of ESG data model Microsoft Learn - Microsoft Cloud for Sustainability | Microsoft Learn

?2.?Demo data set- Microsoft Fabric SDS provides demo data aligned with previously mentioned ESG data model for quick demo ESG Lake house deployment purpose inside Organization environment over few clicks. Set up demo data for Sustainability data solutions - Microsoft Cloud for Sustainability | Microsoft Learn

?3.?Native connector with Microsoft MSM- For organizations adopting Microsoft Sustainability Manager, it provides Synapse link to integrate the data directly via Dataverse. ESG data estate (preview) - Microsoft Cloud for Sustainability | Microsoft Learn

?4.?Prebuilt Notebook (Code package)-Once data is harmonized and unified using ESG Common data model, Solution provided prebuilt notebook can be used to create and populate the table and metrics required for CSRD regulatory need.?

5.?Prebuilt Reports and Dashboards-Prebuilt dashboards are provided inside Microsoft Fabric SDS solution to align with regulatory boards. Example CSRD reporting dashboard shown in following screenshot, example- Social and governance metrics and reports (preview) - Microsoft Cloud for Sustainability | Microsoft Learn

In the next part of this series, we will focus on the deep dive of Microsoft Fabric Sustainability Data solution each capability with more details. Meanwhile learn more about Fabric Sustainability solution- Overview of Sustainability data solutions in Fabric - Microsoft Cloud for Sustainability | Microsoft Learn .

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