Good data underpins robust decision-making, but there are core issues around ESG data gathering, processing and reporting. These issues include:
- Only larger organisations are mandated to report certain ESG data, but that's an ever-changing situation.
- There's no single regulatory framework, with the UK's regime consisting of domestic and EU-derived laws and regulations.
- Disclosure reports lack reliability because there's no standardised auditing and no universal system or 'single source of truth' to verify reported data.
- Public reports highlight positive ESG contributions while underplaying or leaving out less flattering data.
- Greenwashing gives a false impression of sustainability efforts - at best misleading and at worst deceitful.
- There are difficulties defining ESG terminology, definitions and metrics across various bodies, be it the GRI, TCFD or ISSB.
- No regulation exists around ESG scores because agencies like MSCI and Sustainalytics have their methodologies that change over time and aren't openly available, plus ratings diverge substantially, generating confusion.
- Internal data collection is time-consuming and arduous while gathering external data like Scope 3 emissions is often complicated and met with resistance.