As the information age meets the low-carbon transition, forward-thinking companies are learning to leverage the power of data and analytics in the realm of ESG. We spoke to two ESG experts about the importance of ESG intelligence and how AI-based technologies can help companies monitor evolving ESG risks, plan ahead, and develop a competitive advantage from ESG strategies.
What is ESG Intelligence?
What do we mean by ESG intelligence? “Not all data is intelligence,” explains Cvete Koneska, head of advisory at Dragonfly. “Intelligence is timely data. It’s data that is specific to your needs and concise enough that it helps you decide on a course of action.”
So while access to data and information is helpful, true intelligence requires that the data be refined, filtered, and presented in a particular way to be highly relevant to the organization. “Intelligence is the result of making an assessment based on appropriate data,” Koneska adds.
Why ESG Intelligence Matters
“Most companies just move along following the status quo. In certain industries, that can work for a short time,” says Melissa Gipson, former ESG & climate strategy associate at FiscalNote. “But in a world that’s changing very quickly regarding the interaction between climate and the economy, monitoring ESG risks and trends helps organizations prepare for the future, anticipate incoming regulations, and adapt to whatever the future brings.”
With so many frameworks, standards, questionnaires, and ratings, alongside new scientific research published almost daily and geopolitical events influencing market forces, finding a trusted source of highly relevant updates and insights is crucial.
But monitoring these trends in real-time requires the right mix of technology and domain-level expertise. “Using a service for ESG intelligence can help companies go through the process of collecting, analyzing, and managing data,” says Gipson. “Most companies have a nebulous idea of how they’re doing on ESG — but intelligence services can help companies identify opportunities to share and improve what they’re doing on ESG, while also identifying risks for their company and industry.”
“Whether companies care for compliance reasons, gaining access to capital, or for ethical reasons,” says Koneska, “good ESG intelligence is the key to enabling companies to deliver on their ESG commitments.”
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The Benefits of Strong ESG Intelligence
“The most obvious benefit of having strong ESG intelligence is that it helps your company plan for the future,” says Gipson. “The long-term survival of a company is about more than just a business plan. ESG is coming to the forefront of the conversation. People are talking about resilience – about the ability to plan for the ESG and climate change risks that threaten companies and industries.”
Developing a Competitive Advantage
“Getting good ESG intelligence is important because it helps companies stay competitive,” says Gipson. “The companies that can demonstrate that they are resilient, adapting for the future, and able to comply with different reporting regulations will show investors, consumers, and current and future employees that they’re capable of adapting to the changing needs of their industry.”
Exercising Ethical Agency
“It’s not all about regulatory requirements; ESG is about who you are in the global corporate society,” says Koneska. “Businesses do have ethical agency — and they need to take that seriously. That means thinking about risk, reporting, and your obligations as a company.
The Consequences of Inadequate ESG Intelligence
Miscalculated Risk Management
“Without the right intelligence, you will either under-scope or over-scope your risk, and therefore, you won’t be able to manage and mitigate your risk accordingly,” says Koneska. This could include many risk factors such as reputational risk amid a public scandal, climate risk, or market-based risks such as decreasing demand for carbon-intensive products and services.
“Without the right intelligence, you are likely to fundamentally miscalculate your company’s exposure to ESG risk. You also won’t have the insights you need to understand and manage risk. And, as ESG becomes increasingly embedded into operations, those risks will grow. They’re no longer peripheral; they go to the heart of the business model.”
Disruption to Business-as-Usual
A changing climate and a transitioning economy mean business-as-usual may no longer be an option for many organizations. For example, a company may use a certain resource in its operations but may have yet to analyze how the global market is changing around using that resource.
Gipson poses the example of a company that relies on concrete for its business operations. “Concrete is one of the biggest polluters in heavy industry, and it’s about to be accountable to a number of different regulations. If our company relies on concrete but hasn’t paid attention to what’s happening in the concrete industry and doesn’t have the capital to cover these changing costs, they’ll be exposed to serious risk,” she says.
Exposure to Reputational Risk
ESG risk also directly translates to reputational risk. “People care so much more about these topics than they used to,” says Gipson. “Especially as younger generations get more spending power and enter the workforce. Young people don’t necessarily want to work for a company with a poor track record on ESG.”
So the pressure for companies to step up their ESG performance is not just regulatory — it’s economic pressure, investor pressure, and general concern from stakeholders who care about ESG and want to know that companies are heading in the right direction.
Whether companies care for compliance reasons, gaining access to capital, or for ethical reasons, good ESG intelligence is the key to enabling companies to deliver on their ESG commitments.Cvete Koneska, Head of Advisory
How Technology Transforms ESG Intelligence
Intelligence Monitors Are Always Up to Date
With ESG regulations changing constantly, access to an ESG monitor is crucial. “These tools are constantly updated with new information on trends and regulations,” says Gipson. “They’ll help people in companies who might not be working on ESG daily and aren’t up to date with the latest trends. They’ll be able to quickly grasp what’s significant to their operations and what they need to spend more time on.”
Intelligence Platforms Filter Out the Noise
“There’s a lot of data out there, but not all of it is equal,” explains Koneska. “It’s not all clean and structured in a way that conveys clear and meaningful insights.” Quantitative data can be easily transformed into statistical analysis and historical trends, but other types of data pose challenges.
Not all ESG data sets are quantitative; much of the data available is non-traditional and unstructured. For most ESG teams, extracting valuable insights out of large, unstructured data sets would take far too long. Intelligence platforms streamline and simplify the analysis of both quantitative and qualitative data, allowing ESG teams to focus less on monitoring and more on strategy and implementation.
FiscalNote ESG: Your Best Bet for ESG Intelligence
FiscalNote’s ESG intelligence comprises a range of ready-to-use and bespoke solutions to help organizations stay on top of emerging trends, risks, and opportunities. Our customized ESG updates and data offer highly actionable insights to inform your company’s next steps. Meanwhile, our global expert ESG advisors help you get the most out of our platforms and craft meaningful ESG strategies.
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