Working in the field of sustainable development fintech, the notion of ‘data is the new oil’ has been the overarching meme, driving the need to use innovative technology to gather and disseminate data. This meme continues to be true for sustainability or ESG (environmental, social and governance) data; but sustainability data has long been plagued with the notion of ‘greenwashing’ and lack of transparency thus tainting the meme. What is more, sustainability data has traditionally been understood as the data supplied to data users, known as downstream users; such as indexes, rating and scoring agencies, and impact investors, which rely on a variety of extensive databases to feed the voracious appetite of the models. Yet upstream data, that is supplied by the supply chain, is just as important for companies driving responsible business practices; what the supply chain is doing in terms of sustainability may be material to the business, of interest to investors and inform the business case for sustainable strategy which is articulated at the leadership level. In the face of crisis, such as the one we are currently experiencing, upstream data may be the first indicator of how resilient a company is, and downstream data the second indicator which highlights the effectiveness of resilient business practices.
In the absence of sufficient measures to guarantee business resilience, help is at hand, with solutions being developed using innovative technology that can evolve data to be more transparent and reliable. Technology can be used by companies and investors alike, in reporting those non-financial risks (sustainable or ESG) in a transparent, measurable and reliable way. Big Data and machine learning are just two of the technologies being seen as a way that ESG or sustainable data can be applied to complement financial data insights. Evolution is happening.
But there are some downsides to the use and the gathering of upstream data and supplying downstream data. With the desire for reliable and transparent data, data users are pressuring companies to deliver the data in a bespoke way. Standardisation has not yet arrived, adding to the burden of companies in supplying data in various forms to various organisations. In addition, the diversity of the data gathering process, begs the question, “Which elements of the data can be proved to be true? Where are the mistakes in the data?” Data users continue to struggle with ‘greenwashing’ and company practice of reporting only good news (or news that makes the company look good) and burying the bad. Technology could exacerbate this practice by making it possible for data providers to be even more sophisticated in ‘hiding’ or ‘greenwashing’ data. That same sophistication in receiving supply chain data can be experienced by companies wanting to be open and transparent with material risks facing the company from their suppliers. But if the supply chain can hide challenging risks, then the overall risk profile (risks that the company can control as well as risks driven by the supply chain) of the company is suspect.
But there is light on the horizon. World Wide Generation (WWG) is working on a platform uniquely placed to be an authorised data source. Gathering data at source (from companies’ geo-location or meterage) with supporting evidence and laying it down on an immutable chain powered by Distributed Ledger Technology (DLT) with all the necessary information to give comfort to all who rely on the guarantee of the provenance and accuracy of data. The platform allows for standardisation against the world’s largest challenges as highlighted by the UN Sustainable Development Goals (SDGs) and then disseminates the data in an ecumenical way. The data can be used to enhance data user’s models, adding gravitas to indexes and ratings, as data supplied by WWG is positioned to be the authorised data source for this type of data, adding transparency, reliability and robustness to the data. Once the data is laid down on the DLT, it becomes, de facto, the version of truth, making errors or disparities in the data and comparability across industry peers easily identifiable.
Whilst many data aggregators, frameworks and standards focus on supplying downstream data, the platform created by WWG can expand to include upstream data into the company’s data portfolio. Companies can encourage their major and minor supply chain to upload their data onto the platform, increasing transparency and reliability for further reporting and increased resilience.
The importance of data, via the viral meme ‘data is the new oil’, should encompass both upstream (company-specific data from a company supply chain) and downstream (which is used by investors, business decision makers and index/rating agencies) data. Understanding the holistic data flow for a company enables data users to assess how well a company is addressing its risk in driving towards resiliency and returns.
The mission of WWG’s platform is gathering, standardising and disseminating trusted and transparent data; reliability of the data is king. The WWG platform‘s taxonomy is dynamic, with the ability to gather upstream data in one place and disseminate downstream data to data users from a single platform. As an authorised data source for non-financial data, the WWG platform is ideally placed to gather granular data from the golden sources, upstream from supply chain and internal processes. The data can be transparently standardised against the SDGs, and disseminate it with an even hand to downstream data users. This allows for data users to trust the data, data suppliers to reduce their reporting burden with additional clarity of data from supply chain. This links back to the concept of holistic risk assessment, exploring both upstream data provisions and demand of supplying transparent downstream data. Resilience can be built through transparent, reliable and standardised data.