More than 47 per cent of the ASX-200 have made net zero commitments, but with the threat of a global recession poised to make their transformations more challenging, to stay the course companies need to control what they can, and that starts with data.
Australian retail electricity prices are predicted to soar by at least 35 per cent in 2023 due to the unprecedented cost of wholesale energy.
As the system grapples with the transition to clean energy amid a global supply crisis, accurate energy data can help organisations monitor their energy daily in real time, keep their bills down and keep their business and sustainability commitments on track.
Adding to the cost of doing business, it was recently uncovered that bill inaccuracy within the energy sector is pervasive.
Between 2014 and 2021, households and businesses were overcharged A$10 billion by the Australia Energy Regulator (AER) on their electricity bills making households and families bear a financial burden far greater than they need to amid heightened supply chain crisis and a tightened economy.
Some of the biggest challenges companies face today relate to data – access to data, data integrity, validation, and interpretation.
This is particularly true of companies trying to establish a Net Zero baseline and seeking real-time visibility over their energy use.
Last year, EY research found that most companies use between two and five different providers (some even using up to 10 different third-party vendors!) to cover their ESG data needs.
Such an approach is likely to result in inaccurate and inconsistent data that does not tie back to a single source of truth.
Indeed, research from Engie Impact found that only 18 per cent of organisations have been found to have a single source of “truth” when measuring their sustainability data, with only three per cent having confidence in the data reported. Many major brands have their reputations squarely resting on spreadsheets and manual data capture.
Now is the time for companies of all sizes to be prepared. While data integrity is widely accepted as the bedrock of any organisation’s pathway to net zero, currently, only 14 per cent of Australian businesses are “well on their way” to delivering data capture and reporting strategy, according to Schneider Electric’s research released this year.
Companies cannot risk being caught with an incorrect baseline or inaccurate data informing their ESG strategy and decision-making.
Whether intentional or not, more companies will get called out for greenwashing, as recent policy directives from the AICD, ASIC, and ASX signal harsher penalties for those whose words no longer align with their claims.
Particularly those companies that overstate their green credentials to attract ethical investors.
Stakeholder demands for transparency make accurate data critical to establishing and maintaining trust.
Stakeholder expectations on climate risk transparency will continue to rise in the coming years, so organisations should assess their existing claims and the baseline data underlining their credentials.
This year, a study from the RIAA found that while most of the Australian investment market claims to be responsible, their investors increasingly demand greater transparency over such claims because they are attuned to the threat of greenwashing.
Ensuring the data and assumptions underpinning organisational sustainability statements is critical to prevent reputational damage and meet rising stakeholder scepticism head-on.
A robust, accurate, and assured Net Zero data baseline is a vital way in which companies can demonstrate trustworthiness to their investors, consumers, and regulators.
Accurate data solutions are critical for a net zero transition within an unstable energy market and the backdrop of a tightening economy.
Preventing the worst impacts of climate change requires organisations in every sector to shift their investment away from potentially harmful activities toward projects that support their transition to net zero.
Access to high-quality, reliable data is the most significant barrier businesses will have to confront over the next five years to address climate risk.
As companies race to net zero amid higher regulatory scrutiny, a company’s ESG strategy is only as good as the integrity of its data.
