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Why Decarbonization Depends on Digital

March 6, 2024
A successful sustainability journey requires breaking down data silos across functions to drive informed decision-making.

Companies today face heightened pressure from regulators, customers, investors and the supply chain to prioritize decarbonization. But while businesses need actionable environmental insights to meet their sustainability goals, current methods of gathering and leveraging data are often time-consuming and manual.

Policies and regulations are evolving quickly, as are investor expectations. New corporate reporting requirements in the EU mean the largest US companies listed on European stock exchanges must now begin compiling information on their climate strategy, emissions and risks. More expansive European rules set to take effect in 2025 will apply to a broader group of companies.

Companies without European operations aren’t exempt: California recently passed climate disclosure legislation set to take effect in 2026, and the US Securities and Exchange Commission is contemplating its own disclosure rule. At the same time, many voluntary disclosure frameworks require third-party assurance, and the financial sector is beginning to demand a single source of truth in order to deliver investor-grade, auditable ESG data.

Many organizations already have the data needed to report out for voluntary and mandatory frameworks, but it’s often siloed, in the wrong format, or hard to access. Data collection is often still largely a manual process, one that involves gathering a mix of qualitative and quantitative information. This can be a roadblock in the sustainability journey for many firms. In fact, one in five construction materials leaders (21%) surveyed recently by Trinity Consultants and Verdantix say data collection systems or poor data quality is either the “most significant” or a “very significant” challenge to their ESG reporting workflows. A further 61% of respondents said they see data collection as a significant obstacle, making it a key priority for the near term.

As a result, companies across industries are increasingly looking for digital solutions to power their sustainability journeys. And they’re already reaping the rewards—in fact, a recent study found a strong positive relationship between companies strategically prioritizing digital technologies and their environmental performance.

Here’s what you need to know and do to feel confident that the data you’re collecting, sharing and using for decision-making is consistent, investor-grade, accurate, timely and auditable.

Put Strategy before Software

The market for environmental and ESG-specific tools is exploding with niche solutions, but there’s no single software that fits every organization—or even all of the sustainability needs within a single organization. That makes it imperative to start with a solid sustainability strategy. What are your goals? What data do you have, and what data do you need to get? How are you going to use data to meet requirements or drive improvements? And what processes do you need to put in place to achieve your goals?

If, for example, you purchase software designed to calculate Scope 2 emissions for your organization but don’t collect site-specific electricity consumption information because it’s bundled with your facility lease, that software won’t help you. You first need to establish a process to get or estimate site-specific electricity usage.

Once you’ve defined a strategy and ironed out your business processes, you can determine where you have gaps. This will help you decide what kind of software you need.

Think of Software as an Enabler

Technology can help you drive action by automating manual work, ensuring the completeness and accuracy of data, and performing aggregation and analysis functions to improve decision-making. It enables more accurate and timely calculations by reducing spreadsheet errors and manipulation and allows you to collect data more frequently, so you can track performance throughout the year. It also breaks down silos by integrating data from across the organization, promoting a single source of truth and facilitating real-time data trending and analytics.

But software alone is not going to tell you the six places you can most cost-effectively reduce emissions or the five things you need to do it—you also need critical input from people for those types of complex analyses. Technology can make existing business processes more efficient to free up your sustainability team to perform higher-value, strategic activities. Rather than focusing on getting complete and accurate data, they’ll be able to spend time on the projects that will drive the incremental improvements you need to make progress toward your overarching decarbonization goals.

Leverage Technology to Get Granular

The primary focus today is on collecting and reporting sustainability-related information, but the next step will be using that information to set goals and targets and track performance. Look at your data and consider breaking it down to the lowest level, whether that be by geography, business unit, facility, or even individual source, equipment, or asset.

Even if you don’t need data at that level now for reporting, you’ll soon need that level of granularity to set (and demonstrate progress toward) targets and evaluate mitigation strategies.

Tracking data more granularly allows you to identify both poor performers as well as best practices from a greenhouse gas (GHG) or sustainability perspective and find opportunities for targeted emissions improvements, for example through asset replacement or modification. Collecting data at the asset or equipment level also allows for consistency between air emissions reported for regulatory purposes as well as sustainability reporting purposes.

You’ll also need to ensure that every input you’re using is the best available information. It’s not as simple as knowing the inputs—for example, getting a measurement value from a specific flow meter; you also need to have confidence that the flow meter is accurate because you know when it was last calibrated and have a holistic view of the quality checks and standard operating procedures in place. Digital solutions have functions to help provide data integrity and enable auditability, which is becoming increasingly important.

A successful sustainability journey is a team effort—one that requires breaking down data silos across functions to drive informed decision-making. But it’s a journey that doesn’t need to be undertaken all at once. By digitizing data, you can not only effectively and efficiently meet new demands for climate disclosure but also shine a light on the small, incremental improvements that will move you along the path to a more sustainable future.

Christi Wilson is manager of sustainability services with Trinity Consultants and Meghan Foley is principal consultant, digital solutions with Trinity Consultants.

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