December 28th, 2021 by Dakota partner, Scope 5
Once the province of only the most high-profile corporate brands and community-oriented companies, sustainability disclosure is now a best practice employed by companies worldwide. Today, 95% of the Global 250 issue sustainability reports that outline their Environmental, Social and Governance (ESG) performance.
Firms continuously seek new ways to improve performance, protect reputational assets, and win stakeholder trust. Benefits like increased efficiency and waste reduction feature prominently. In a global survey of sustainability reporters, 88% indicated that reporting helped make their organizations’ decision-making processes more efficient.
Sustainability reporting is here to stay. But how does it impact your bottom line?
Traditional approaches to sustainability data management complicate greenhouse gas reporting and submission to reporting organizations like Carbon Disclosure Project (CDP) and Global Reporting Initiative (GRI).
Consider this typical scenario:
A global organization may operate hundreds of facilities around the world. If the company is reporting greenhouse gas emissions each year, the director of sustainability or project leader needs to track usage of electricity and various fuels at each facility, then multiply those numbers by some emissions factor, which may be location-specific.
Often the process starts with a spreadsheet. Managers worldwide are asked to fill out a copy of the spreadsheet for their facility. Cost data may be required too. As responses trickle in, the challenges mount.
Revised spreadsheets are received from multiple facilities containing corrected or previously missing data. Other respondents may have written comments into cells requiring review and deletion. Some data appears in units not anticipated.
Other responses may appear so inconsistent that a mistake is assumed. Some entries appear duplicative—but which one is correct? Some respondents provide cost data, and others don’t. Some provide it in USD, others in various foreign currencies.
After hundreds, if not thousands of collective hours, a pile of corrected spreadsheets exists sufficient for a specific report like CDP, but the data can be used for little else.
For example, perhaps a lot of money is being spent on fuel. How is the cost distributed across the facilities? Is it evenly distributed? Are there facilities at which the cost per unit fuel is very high or very low? Is there an audit trail? How reliable is this data? Did everyone provide the numbers requested? Or were some missing? Fine-grain analytics are elusive because the pile of spreadsheets was combined with one purpose in mind.
Many of the problems described trace their roots back to the management task of dealing with multiple copies of the same spreadsheet. A cloud-based reporting solution like Dakota Metrics greatly simplifies efforts, saving valuable time and making the organization more productive in many ways:
With a cloud-based sustainability reporting application, there’s no need to email spreadsheets around. Each ‘data provider’ logs in to the application and enters their data. Because a single database underlies the application, the sustainability data is always up to date and coherent. No more sending spreadsheets back and forth and trying to combine many into one.
Maintaining multiple spreadsheets with multiple users and multiple data sources is error-prone. Data must be copied and pasted. Duplicates must be identified. The right application incorporates error checking and warns of outlying, missing, or duplicate data. Unit conversion is built-in. The application quantifies the quality of the data so that the user can decide whether he or she can be confident in the data.
The application provides an audit trail. Since each user logs in under his or her credentials, the application ‘knows’ exactly who created or updated each data record and when. An audit trail should also allow users to upload files or images with each record to substantiate the data.
Data in spreadsheets is relatively static. The data is difficult, if not impossible, to mine for insight. But data resident in a relational database and accessible through a quality application, ‘come to life.’ Users with different needs and interests can chart one variable as a function of another. Data is segmented and visualized in ways that reveal key insights.
With a cloud-based reporting software like Dakota Metrics, the administrator can add categories of sustainability data and can configure the detailed parameters around each category in a manner that supports specific business processes. This exercise does not require a team of experts to customize the application at significant cost but should be doable with a few clicks, by any authorized user.
A cloud-based application can automate the tedious process of data collection. In many cases, data can be periodically retrieved electronically from other data stores, such as online utility accounts or other systems that are already part of an organization’s infrastructure. If this isn’t an option, data can be imported from third-party spreadsheets in varying formats.
Sustainability reporting software can deliver ROI behind intangibles like innovation leadership and brand reputation. These reporting solutions can help boost performance across supply chain management as well as operations. The following example illustrates how sustainability software helped a global organization reveal waste and take action that saved money and boosted operational resiliency.
The company is an industry-leading provider of storage technologies and solutions that enable people to create, leverage, experience, and preserve data. The company’s products are marketed under well-known named brands to OEMs, distributors, resellers, cloud infrastructure providers, and consumers.
Like many others fits and starts characterized this organizations’ early approach to sustainability reporting. One year there was a budget for initiatives. The next year there wasn’t. Cost savings on individual projects got airtime but missed bigger payoffs that come from linking progress across departmental boundaries.
The company chose Metrics to streamline data collection, and to inventory and track improvement. Work started with electricity. After reducing electricity costs at one site, the company embarked on an initiative to systematically reduce costs across all manufacturing sites in Asia-Pacific and the United States. This grew into a broader strategy for improving resource energy management that included water and waste.
The company has saved over $10 million in operating expenses and is poised to save even more while making its business less susceptible to risk. Accrued savings are improving net margins and net revenue by eliminating wasted resource cost, and local employees are proud of providing environmental and social benefits to their communities.
Many companies continue to use spreadsheets as the backbone of their sustainability reporting initiative. The work of tracking and reporting such data is tedious and error-prone. Cloud-based sustainability reporting software like Dakota Metrics makes this work far easier and more accurate. In addition to saving time and money, these reporting applications increase the quality of the sustainability data and can surface powerful insights.
And as the case study shows, tools like this can deliver return on investment that boost the bottom-line and improve competitive position.
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