At the start of 2021 BlackRock, the world’s largest asset manager, wrote its annual letter to corporate CEOs. The letter, penned by Blackrock CEO Larry Fink, asked companies to disclose a plan for how their business model will be compatible with a net zero economy and achieve net zero emissions by 2050. It is important as this shows a huge shift in expectations from investors for corporate Boards of Directors to consider, report and plan for the risks of climate change.
And CEOs are listening. Over 2,000 businesses globally have joined the United Nations Race for Zero campaign, that asks companies to commit to achieving net zero carbon emissions by 2050 at the latest. Climate action is becoming mainstream, and momentum towards net zero is accelerating.
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Data and climate action
One thing the BlackRock letter highlights is the vital importance data plays in devising plans and ultimately meeting the milestones on the road to net zero. Data clearly shows us the need for urgent climate action to avoid the worst catastrophes of climate change, but data also has a role to play in the solution. It is key to successful net zero transition because it facilitates action and change, beyond just a commitment.
Having data that is comprehensive, precise, trustworthy and secure is the foundation for companies to confidently communicate with stakeholders, deliver on climate ambitions and effectively transition to net zero.
Selecting the right systems and processes is essential for collecting, analysing and reporting the right data to fully understand where emissions are generated and the opportunities to reduce them. Using carbon data systems enables users to compare and integrate datasets, accurately forecast emission reduction scenarios and visualize results to inform stakeholder engagement and decision-making. I see establishing the right business specific system as critical to optimising budgets and achieving an organisation’s specific objectives; aligning with existing systems and databases is an important consideration.
The importance of a data strategy
But managing data is often cited as one of the pain points of sustainability directors. For example, assessing the emissions of the value chain, which could contain thousands of suppliers and related numbers of datapoints, can be hard to navigate. This is where devising a data strategy up front optimises success in the transition to net zero.
There are three important things that I think need to be considered when devising a data strategy for net zero:
- Firstly, be ambitious. For many companies, the myriad data collection systems and processes already in use can sometimes be a challenge in itself. But developing insight across the different emissions scopes, climate change trajectories and emissions reductions initiatives allow organisations to fundamentally understand their progress in a holistic way. Digital can be leveraged to simplify and automate emissions collection, calculation, reporting, data analysis and visualisation across the value chain.
- Secondly, define the net zero roadmap with data – and work out the costs. Setting and achieving any target involves a wide range of initiatives and a certain amount of financial investment. Data virtualisation can clearly summarise your options and present the best course of action. Data for all emissions-generating activities such as energy usage, business travel and supplier interactions can be held to provide a full picture of baseline emissions and a business-as-usual scenario.
- Thirdly, align your business objectives with your net zero objectives. A goal of net zero carbon emissions by 2050 is vital for all businesses. But achieving it will require a full-scale review of a company’s business strategy, including products, operations, vendors and supply chains. Ensuring that the emissions data collected, reported and used within the organisation is relevant and aligned to business objectives is key.
Making a data strategy a central requirement to decarbonisation is more important than ever in a world where there is an ever-closing window to limit emissions output and global heating. Companies need integrated emissions data management systems and expertise to quickly and seamlessly analyse data, transparently communicate environmental results and accurately forecast reduction scenarios. By using data to drive decisions, business leaders across all sectors can significantly reduce their carbon emissions as well as improve efficiency, reduce costs, and drive innovation. More than ever, I believe climate action makes commercial sense and those businesses that act today, will thrive tomorrow.