In 2022 alone, pressure groups and regulators accused Royal Dutch Airlines, Burger King, Walmart, H&M, Mercedes Benz, Oatly and FIFA of greenwashing. These are some of the best-known brands in the world. Next to litigation, official inquiries and bad press, they now face losing reputation and investor confidence. In a world where Net Zero, carbon neutrality or responsible and environmental business are becoming mainstream, trustworthy sustainability reporting is essential. The accusation of greenwashing tarnishes brands’ reputations and can have severe consequences. Unfortunately, accurate sustainability reporting for large companies, especially those with complex supply chains, is not an easy task. Especially collecting all the required data.
Large companies like car manufacturers can have tens of thousands of suppliers, and retailers easily have one hundred thousand suppliers, each with their suppliers. The only way to achieve reliable sustainability reporting out of such vast and complex ecosystems is the massive exchange of trustworthy Environmental, Social and Governance (ESG) Data.
New laws and regulations require detailed reporting on their environmental impact, scope 1, 2 and 3 emissions and many other sustainability metrics.
Customers and investors also demand ESG disclosures. But preparing this information and sharing it with all stakeholders can often be time-consuming and labour-intensive. It’s also difficult for large companies to audit and assess sustainability reports from their suppliers or business partners, given the enormous amount of data they have to process and the lack of a standardised method for sharing this data.
A year ago, Visma Connect contacted Signify, the world leader in lighting, to discuss the ESG Clearing House initiative for sustainability reporting. Signify decided to join as a co-founder of the ESG Clearing House, together with ABN Amro, because they saw the value in developing a platform that enables the automated exchange of ESG Data points. This blog discusses how the ESG Clearing House can benefit sustainability data reporting by allowing companies to share more data points automatically and efficiently.
How will the ESG Clearing House improve sustainability reporting for large companies?
For large companies with dozens – sometimes hundreds – of suppliers, getting all the supplier data they need for their sustainability reporting is difficult. Emissions data, material data, resource and energy usage and transport information are just the tip of the information iceberg that must be collected and processed.
Many companies still rely on sharing PDFs or reports, sometimes incomplete, with data in different formats and information from all over the supply chain.
That’s where the ESG Clearing House comes in. The ESG Clearing House facilitates companies to exchange standardised ESG metrics with their supply chain partners, capital providers and other stakeholders. The standard XRBL format provides a common language for all data entry. XBRL ensures consistency and transparency and improves data quality. Companies that prepare their sustainability report can request all kinds of ESG data from suppliers. The ESG Clearing House acts as a multiple-access data exchange. Stakeholders like investors and business partners can request data from suppliers, for example, scope 3, but they can also offer data. A company may wish to share relevant information with investors, or a supplier may want to share data proactively with his clients. Some companies must periodically share sustainability information with their clients as performance indicators. For all these examples, the ESG Clearing House would speed up the process and save time and cost for its users while raising the quality of the data exchanged.
The benefits of the ESG Clearing House are numerous, from attracting investors looking to finance companies with robust ESG data quality, reducing time spent on reporting and lowering costs to improving your company’s reputation or attracting new, environmentally and socially aware customers.
The ESG Clearing House is solely for data transfer – not storage and provides a centralised non-profit data transfer platform for the common good.
Our core principles
- Common, inclusive and neutral
- Open partnership shared benefits, fee-based
- Transaction cost sharing
- Public accountability and transparency
- Entrepreneurial, hands-on and agile approach
- Data preparers will always own their data. The ESG Clearing House will never sell data and is not responsible for its contents.
- Most importantly, data preparers will always own their data. The ESG Clearing House will not sell data nor be responsible for its contents.
Accelerating data exchange
For companies participating in the ESG Clearing House, the main benefit of the ESG Clearing House is access to centralised and standardised sustainability data.
Today, there are many tools for ESG reporting and many ESG data providers, but none of these is a genuinely centralised data exchange, and the ESG Clearing House is precisely that. The ESG Clearing House also helps companies understand the type of data required for their reporting and how to present it.
If the ESG Clearing House is for the common good, it can’t be for free. There will be a participant fee, and considering the collaborative nature of the project, the more participants, the lower this fee will be. More participants also reduce the number of contact points for data collection and help make the ESG Clearing House a single point of access to ESG data directly from the source.
Juliette Gaussem, Head of ESG reporting at Signify