Data Driven Sustainability Decisions

Gerald Trites, FCA, CISA

While companies have traditionally viewed sustainability decisions as separate from monetary decisions, this is changing. It’s partly because of generational changes, with millennials now being the largest component of the workplace and partly considerations driven by customer demand, investor demand regulatory requirement and common-sense observation of the destruction caused by climate change. Compelling reasons.

Companies have been moving more clearly to data driven decision making for several years. So it makes sense they would turn to data to drive their decisions in the sustainability area.  

To accomplish this, they need to first define their sustainability goals. This usually begins with industry trends and information from stakeholders about their sustainability concerns and the development of a sustainability strategic plan. Second, begins the process of data modelling and analysis drawn from internal and external sources. Many organizations have well defined data gathering processes already in place, but these need to be modified to take into account sustainability goals. Finally, the adoption of data driven sustainability decision making requires the adoption of AI techniques to automate data gathering, modelling and reporting functions.

Established enterprise systems are moving in this direction, the availability of which, as well as their compatibility with existing systems, is an important consideration.

Overall, a creative combination of data management, analytics, AI and integration of sustainability processes with established corporate processes are crucial to a successful outcome – the creation of a truly sustainable enterprise.

The Momentum Towards Addressing Climate Change

ESG reporting has been with us for some time. And will likely continue into the future. The focus has recently shifted however, to net-zero reporting, i.e. how companies are planning to achieve net-zero emissions in their business activities. Net-zero involves identifying all the activities of a business that produce emissions and those that mitigate it. The objective is to achieve a net of zero between these two forces.

Mark Carney put it well when he said, in an interview with CPA Canada, “We cannot get to net-zero without proper climate reporting. Full stop. It is just too complex. [Getting to net-zero] involves every company in every sector, every region of the world. We need that information. We need to know who has a plan, who needs capital, and who is lagging behind.”

The CPA Canada survey involved reviewing the net-zero disclosures of 20 companies. The results show that 65% of the companies had some disclosure of net zero goals. 60% have established long-term forward-looking transition plans and 35% have aligned their plans with the Paris Agreement. There were other important findings and the survey includes areas where improvement can be made. The report is available from the CPA Canada website.

Another incentive for companies to act in this area comes from the Canadian Securities Administrators, which recently issued a paper for comments on the subject of climate related disclosures, with the intention of addressing some of the shortcomings of existing disclosures and moving towards more consistency. The paper can be found here.

A foundational document for much of these activities is the report of the Task Force on Climate Related Disclosures issued in June 2017 and chaired by Mark Carney. It’s available on the TCFD website.

The CPA Canada report is definitely worth reviewing, along with the other documents cited in this brief write-up. 



CPA Founding Partner

Chartered Professional Accountants of Canada (CPA Canada), one of the largest national accounting organizations in the world, has chosen to become a founding partner of ThinkTwenty20.