LoadingBig Data and Sustainability - A Guide for Companies in 2024
In the quest for a greener planet, the convergence of big data and sustainability is heralding a remarkable shift towards clean energy – transforming how we harness, consume, and think about power.
This emerging relationship between sustainability and big data promises unprecedented insights into energy consumption patterns, unlocking innovative strategies to reduce carbon footprints and enhance energy efficiency on a global scale. Big data, with its potent ability to process vast amounts of information, is at the forefront of identifying sustainable energy solutions, enabling smarter decisions that drive the adoption of clean, renewable sources.
In this guide, we’ll discuss the ongoing dynamic between big data and sustainability, as well as existing examples, how big data can be used to measure and meet eco-friendly goals, and how it relates to environmental social governance (ESG) management.
An introduction to big data and sustainability
The current big data landscape
Big data, as the name suggests, is the name given to extremely large data sets that help reveal patterns and trends, while providing a company with the valuable insight needed to make successful decisions.
It’s these unique abilities which have seen the use of big data in corporate settings soar in recent years. Figures show that the market was worth $307.52 billion in 2023, with it expected to rise to as high as $745.15 billion by 2030. That represents a compound annual growth (CAGR) of 13.5%.
This growth isn’t restricted to one particular industry or sector. Almost every market has identified the value of big data, with key figures from a variety of industries showing:
Healthcare
Healthcare
Banking
Banking
Retail
Retail
Oil and gas
Oil and gas
Education
Education
Big data's geographic adoption
But while the market itself is varied, the same is less true of big data’s geographic adoption. Despite this initial hesitancy from other regional markets, change does seem to be on the horizon. Estimates suggest Europe’s big data market will reach $105.82 billion by the end of 2027.
A statistical look at the impact on global data centers
In order for this uptake to continue at a steady pace, the need for data centers to match this growth is important. As of the last count in 2022, the following five nations led the way when it came to this capacity:
- U.S
2,701 data centers
- Germany
487 data centers
- UK
456 data centers
- China
443 data centers
- Canada
328 data centers
Source: Brimco
ESG and the role of sustainability in business
As we evolve as a global society, heightened focus is being placed on ensuring everyone does their bit to protect the world around us. ESG first officially came into being in 2004, but the concept of companies taking the right steps to protect the environment has been at the forefront of corporate discussions for decades.
In essence, ESG compliance guarantees a business is doing what they can to limit the negative or increase the positive impact that they’re having on society, the environment, and how ethically their business is being run. As such, ESG is pivotal in supporting the wider sustainability efforts of an enterprise.
Each of the three core categories can be considered in the following way:
Environmental
Natural resource management
Carbon emission rates
Energy efficiency
Pollution and waste management
Societal
Human right factors
Workforce health and safety
Supply chain ethics
Diversity
Corporate governance
Board impartiality
Board diversity
The rights of shareholders
Corporate ethics
Management compensation
ESG data is collected and then reported by companies to show they’re doing what they can to support the conservation of the environment, as well as societal and ethical issues. It’s with the additional support of big data that ESG management can be optimized to ensure the best and most accurate monitoring and reporting standards.
ESG and sustainability statistics
The corporate adoption and engagement with the core principles of ESG reflects in the numbers. A report from McKinsey suggests as many as 90% of S&P 500 companies are now releasing annual ESG reports, while ESG-focused institutional investments are projected to reach $33.9 trillion across the board by 2026.
This need for greener thought processes to come to the forefront doesn’t just benefit the world around us – it’s also been shown to have a strong impact on the success of a company itself. Eye-opening figures highlight:
76% of consumers
Would stop buying from companies who neglect environmental, employee, or community well-being.
53% of the income for the top 500 U.S companies
Is generated from business operations related to sustainable goals.
88% of customers
Show increased loyalty to brands who advocate for social or environmental sustainability.
It’s not just the businesses themselves who are taking sustainability more seriously than ever before. Investors are now using ESG risks and opportunities as a means of determining whether or not to invest in a company. One report found that 79% of investors now consider this when making a decision, with 76% of them filtering out businesses according to these parameters.
Despite the increasing pressure to take these factors into account, some business owners are still hesitant. This is largely as a result of some of the complex barriers to ESG adoption. A recent survey found the following to be the greatest perceived obstacles:
Balancing ESG with growth targets – 40% (of owners see this as a hurdle)
Lack of consistent reporting standards – 37%
Lack of support from leadership – 33%
Difficulty tying ESG to potential ROI – 31%
Lack of funding – 30%
Lack of time – 29%
Corporate silos – 24%
Source: PWC
Closing the gap
Regardless of these challenges, it’s clear that the consensus is for heightened attention to be placed on all things ESG and sustainability related. This is a sentiment shared by owners, employees, and consumers alike.
With the message clear from all parties, it’s now more important than ever for organizations to take their approach to sustainability seriously.
PWC study*
83%
of consumers think companies should be shaping ESG practices
91%
of business leaders believe it’s their company’s responsibility to act on sustainability issues
86%
of employees actively prefer to work for businesses that care about the same issues as themselves
How big data is supporting corporate sustainability efforts
Why big data matters in corporate sustainability
With a resource like big data at the disposal of an increasing number of companies, many are doing what they can to link this transformative technology to their sustainability efforts. The relationship between these two very different facets of an organization is vitally important for any business. Here are a few examples of why that’s the case:
Optimized ESG reporting
Making sure that ESG reports are thorough, accurate, and genuinely useful is made easier with the help of big data. By its very nature, this approach to ESG management ensures that data is analyzed and monitored effectively, while also providing valuable metrics for companies to target and then report on.
Adherence with industry regulations
There are an increasing number of ESG regulations being introduced to encourage businesses to follow sustainable practices (in fact, you can read about them in this section). These make sure organizations toe the line when it comes to their environmental and social impact. Big data makes it far simpler to prove that they’re doing just that, while also serving to help achieve any company goals.
Pioneering innovative strategies
Technology is continuously evolving to change the way in which we think about the world around us. Big data is at the forefront of that shift, with capabilities that now make it possible to finitely measure and monitor key metrics. It’s this hyper-accurate approach to data which gives organizations the chance to proactively experiment with greener alternatives or policy changes which adhere more closely to the spirit of ESG.
Risk management and assessment
In a more practical sense, big data also allows for companies to carry out enhanced management of their ESG-related risks. These might extend to supply chain disruptions, environmental liabilities, or reputational damage. By analyzing a number of data sets and streams, a company can assess any potential red flags and develop a strategy to pre-emptively combat them.
Areas where big data is being used to support sustainability
While the definitive link between the two might not be immediately obvious, big data has the power to support the sustainability requirements of any business, regardless of what sector they’re in. Here are some ways that different companies or organizations can use big data to aid in any sustainability efforts:
Water management systems
Water refinement and conservation is one of the most important areas where big data can play a role. Data sets taken from satellites, sensors, or even social media, can all be combined together to provide a bigger picture regarding pH level, electrical conductivity, toxicity, Oxidation-reduction potential, and turbidity. Local authorities can use this data to react immediately to any changes which might be hazardous.
Waste disposal
Machine learning is capable of tracking, monitoring, and remembering specific patterns for garbage removal. It’s also able to draw on statistical information about roads and transport systems to provide an optimized route for waste disposal trucks to travel. This ensures an efficient management of all trash, while also reducing environmental factors like carbon emission.
Clean energy monitoring and production
Big data is being levied to support the clean energy sector in a host of ways. Machine learning (ML) and artificial intelligence (AI) has again been at the forefront of this. These systems make it possible to predict weather forecasts for optimal green energy production, use technical, financial, energy market and meteorological data to work out the cost of production, and even calculate the live uptake for hydrogen-powered fueling stations.
The fight against poverty
Aside from the ability to track the global rate of world poverty, big data can also identify life socio-economic changes, use satellite data to identify geographically specific poverty trends, and assess intrinsic factors which could result in someone falling on hard times. Breaking the root causes of poverty down on such a finite scale could be the most vital step in seeing it end.
Climate management
Arguably the first thing that comes to mind when considering sustainability, climate management and action is an area where big data plays a hugely positive role. This can extend to tracking changes in the Earth’s surface temperature, as well as tracking rising sea levels and ocean temperature.
In the education sector
While less immediately obvious, the education sector can also benefit from big data analytics. This can look to identify trends in geographic regions where students might be struggling, use algorithms to provide immediate and highly-tailored feedback on assessments, and even go as far as to automate and optimize the curriculum for a full term.
Current examples of big data being used to improve sustainability
Now you have a better understanding of what big data could be used to do, let’s take a look at some tangible examples. There are already a variety of ways in which different companies are utilizing this transformative form of data to support their sustainability and wider ESG approach:
Illegal fishing prevention
The illegal fishing of endangered or protected species is a destructive practice which has a long-term impact on the ocean. The Global Fishing Watch utilizes big data in the form of a world map, which uses satellite technology to track the movement of more than 35,000 vessels. This helps monitor protected areas, and provides accountability for any boats which fish unsustainably.
Climate change management
Life Under Your Feet is an existing tool which pulls information from all corners of the globe to assess the humidity and surface temperature of the Earth in different places. This not only makes it easy to track where changes might be occurring, but also helps optimize planning in the agricultural and construction sectors.
Seabed movement risk
Ocean activity is something which humans were forced to be reactive to for thousands of years, rather than proactive. The Ocean Observatories Initiative now exists to analyze the movement of and potential risk factors associated with the seabed floor. This provides marine scientists with an early warning trigger for natural disasters like tsunamis – ensuring steps can be taken early to reduce their impact.
Transport optimization and management
Danish shipping company Maersk has utilized big data to optimize shipping routes and reduce fuel consumption on their vessels. One discovery they made was that by reducing the speed of their ships by just 10%, they were able to save as much as 20% fuel per journey. Optimum routes were also discovered, with factors like sea current, weather conditions, and port congestion all put under the microscope.
Supply chain optimization
Despite not being the first name you’d associate with sustainability, Walmart has also branched out to see what they can do to be more environmentally friendly. They’ve reduced greenhouse gas emissions by optimizing every aspect of their supply chain. This extends to monitoring and managing the routes of their transportation fleet, converting these trucks to electrical power, implementing sustainable practices and governance from suppliers, and using renewable energy wherever possible during any manufacturing stages.
How big data can be used to reach corporate sustainability goals
With increasing pressure to ensure the right steps are being taken to adopt a responsible and ethical approach to sustainable development and growth, it’s become commonplace for organizations to introduce company-wide goals.
Whether businesses choose to introduce their own tailor-made metrics, or rely on the 17 core Sustainable Development Goals (SDG) laid out by the UN, big data makes it possible to better manage, track, and achieve these targets:
Defining key metrics to measure
The first step in any sustainability target is to find clear and defined metrics. These need to be in keeping with your overall company goals, as well as factors which you know the big data at your disposal will be able to accurately measure. The Global Reporting Initiative (GRI) has a series of targets you can draw on if you’re struggling to find one. Working backwards on this can be useful. Consider what your big data is capable of, then create goals which are in line with that.
Data collection
With a goal in mind, data needs to be collected. This will serve as the core of your target, so it’s important that all data is accurate, thorough, and complete. There are a number of ways in which these large data sets can be attained.
Data analytics
This is where your big data practices really start to come into their own. Analytics tools can be used to extract highly valuable insights from your core data, such as energy consumption, waste resources, and even the impact which you’re having in a wider social sense. This is where all the most important details and information can be absorbed. It will help to identify trends and patterns which tell an organization if they’re on the right track, and, if not, what steps they might need to take to rectify that.
Monitoring of progress
Big data analytics isn’t a one-and-done process. Companies can continuously monitor how key factors are performing with the use of real-time dashboards and performance indicators. This evergreen approach to sustainable data guarantees a proactive method of monitoring, which can help to make decision-making significantly easier.
Reporting results and ensuring transparency
Creating reports from big data is another important step that companies should be taking. These reports can be shared with stakeholders, or even the wider public, for transparency. They’ll give you a clearer view on how close you are to meeting goals, as well as showcasing what’s being done to take a step towards more sustainable development.
Suggesting innovative next steps
The big data processed through analytics shouldn’t just be used to chart progress or make a statement. It can also be a tool through which companies take action to change how they do this business on a day-to-day basis. This could extend to adopting greener technologies, developing green supply chains, or implement wholesale changes to existing policies and processes.
ESG management and reporting with big data
How to collect ESG data
In order to properly monitor, report, and learn from ESG data trends, it’s important that the right steps are taken when collecting it. There are several best practice steps and procedures which can be taken to ensure this is done correctly.
Establish a centralized data management system
Having one hub of information which everyone in an organization can access is crucial. This centralized system consolidates both data verification and updates, which is an important aspect of ensuring data integrity over time.
Encourage cross-department collaboration
Data management and collection can sometimes be the responsibility of a specific team, or individual. That doesn’t mean other departments should be excluded from the process, however. Each branch of a business can provide unique, insightful, and valuable ESG data. Some examples include:
A finance department providing data on fiscal integrity, compliance with legal standards, or ethical business conduct
HR departments can showcase diversity and inclusion, labor practices, workforce demographics, and employee satisfaction levels
Operations departments can offer data regarding energy consumption, waste management, resource utilization, and a business’ carbon footprint
Ensure standard operating procedures (SOPs) are in effect
Creating SOPs allows a business to have a tried, tested, and consistent methodology when collecting ESG data. This also heightens accountability, as it places roles in the laps of specific individuals or teams. SOPs should include details on frequency, quality check procedures, and data verification.
Operate regular training and awareness programs
Keeping employees up to date and aware of SOPs, as well as the wider ESG data process, ensures heightened accuracy and fewer risks. Training increases the chance of everyone in an organization fully understanding the ESG data process, which in turn means the collection of this data should be carried out to a more efficient and accurate standard.
Awareness programs can also be extended to suppliers and stakeholders, heightening commitment and helping to align everyone a business has a touchpoint with to the wider ESG goals of an organization.
Use automated tools to streamline the process
AI and ML have become advanced enough to collect and process large subsets of data automatically. They can draw on internal databases, allowing for real-time and immediate analysis of any data that’s being collected. Areas they can draw information from also extend to annual or quarterly reports, employee or customer surveys, and information from different points of the supply chain.
A brief introduction ESG reporting guidance and compliance
ESG reporting and management is complex. A lot goes into ensuring the right steps are being taken at every stage of the process. Here is a brief overview of some of the most important factors businesses have to consider for ESG adherence.
Compliance:
First and foremost, it’s pivotal that all data collected is accurate, reliable, and relevant. In order for a business to properly collect and utilize ESG data, they ideally need to follow this guidance:
Make sure ESG data is accurate
The meticulous evaluation of all ESG data is crucial in ensuring that data is accurate and reliable. Whether intentionally or by mistake, important figures such as office or overseas factory emissions are common examples of data that might be omitted from any report. Every aspect of a business needs to be run over with a fine toothed comb.
Create clearly defined data collection processes
These are the SOPs we spoke about earlier. Having a clearly defined and documented process for handling, storing, and collecting data means it can be used and accessed in a consistent and reliable manner. This makes it easier to process, as well as pull out the key figures you need when reporting.
Collect data on a consistent basis
Ad-hoc or even annual collection can lead to inconsistencies and errors. A regular pattern of data collection ensures the process remains streamlined, while providing a more rounded view of where a business’ ESG goals are.
Use advanced analytics to monitor risks
ESG risks are, in essence, areas where a company may be failing to meet the required ESG standards. These can have a negative impact on both financial revenue and reputation. Risk analytics tools exist which make it possible to trace and monitor any potential red flags, by reducing any potential errors and pre-emptively triggering alerts.
Reporting
Reporting data accurately and efficiently can help a business to increase their reputation by highlighting how much of a positive impact they’re having on the world around them. Some of the best things businesses can keep in mind here are:
Making information easily accessible
In order to best showcase an ESG report, it needs to be easy to understand, with clear results that are aligned to core goals, KPIs, and metrics. An executive summary is a helpful way to succinctly do this, providing an overview of what a business has achieved across a calendar year.
Keeping information impartial
Negative findings or outcomes should not be buried or kept hidden. Reporting on both the good and bad highlights the integrity of a business, as well as their commitment to change. The less favorable findings can be framed as areas to target for improvement in the future.
Providing insight into the future and next steps
Reinforcing any findings with actionable future steps is also an effective reporting method. This shows that action is going to be taken. Providing a timeline for this is an even more powerful way of showcasing a sustainable mindset.
Regulations
Rather than just relying on businesses to do their bit, increasing pressure is being put on companies to follow set guidelines. Regulations are being introduced all the time to ensure that’s the case. Here are just a handful of big changes to ESG regulations which companies might have to think about in 2024 and beyond.
The Global Plastics Treat
With buy-in from governments across the world, this treaty will introduce a golden standard for how businesses produce, reuse, and dispose of plastics at every level of their supply chain. It would introduce binding rules which ensure that companies are correctly monitoring and tracking their plastic usage.
The SEC’s climate disclosure rules
This groundbreaking legislature enforces the reporting of greenhouse gas emissions and other climate change risks. The idea here is to rapidly accelerate the ESG reporting process for corporations.
The Sustainability Accounting Standards Board (SASB)
This board guarantees that businesses across 77 industries are held accountable for any sustainability-related risks, with an expectation to carry out independent research and report to SASB on any findings.
Future trends for ESG reporting
The way in which we think about environmental, societal and corporate governance is constantly shifting. While there’s no guarantee of what the future of ESG compliance might look like, there are reasonable predictions we can make in relation to trends that are already shaping how ESG is managed and reported.
A common standard of compliance and reporting
Consistency and accuracy is expected in an ESG report. But, ironically, there are still yet to be totally coherent and universally adopted standards of reporting for companies. The International Financial Reporting Standards (IFRS) are currently working to fix that, with more clearly defined practices set to become the norm in coming years.
A wave of new regulations and standards
It’s the ongoing, and expected continued, slew of new regulations which drives this demand for reporting commonality. New rules mean business owners have to continuously monitor and report data for a number of different areas, making it harder than ever before to do so without relying on adequate big data analytics practices.
ESG as a competitive advantage.
While ultimately a way to ensure the right steps are being taken for sustainable development, ESG can also be leveraged into a chance for genuine business growth. In fact, a recent survey discovered that 70% of businesses which doubled down on ESG efforts found it has a positive impact on their financial bottom line.
How to future-proof a business’ approach to sustainability
If you’re worried about being caught out by a shift in ESG policy, there are steps you can take to future-proof a business. Here are some approaches to consider:
Create a compliance strategy
Having a clearly defined strategy for ESG compliance means you’ll be able to adapt, regardless of what new changes or policies might be introduced. This could include having a designated compliance officer, following set processes for ESG data collection, analysis, and reporting, or even having rolling sustainable KPIs.
Embrace new technology
In an age where technology is becoming a necessity more than a luxury, it’s vital to keep an open mind to how ML, AI, and other technological advances can be leveraged to support ongoing sustainability efforts.
Continue to follow best practices in reporting
Ensuring you’re remaining transparent, honest, impartial, and detailed in ESG reporting will also see a business prepare for any future changes to regulations. It’s also important to remember to give every stakeholder a voice. Giving everyone a voice and keeping things transparent means people will be more committed to the overall cause.
Useful links
We’ve discussed a lot in this guide, but there might still be more you want to discover about how big data impacts an organization’s overall sustainability efforts. Browse this collection of secondary reading materials to discover more about the intricate relationship between big data and a company’s sustainability efforts.