The IMF recently drew attention to the impact that a lack of high-quality climate data is having on the investment community’s ability to “evaluate risks and support the transition to a low-carbon economy.”
They pointed out that “financial market participants face a lack of high-quality, dependable, and comparable data needed to efficiently price climate related risks and avoid greenwashing—spurious attempts by financial or non-financial companies to burnish their environmental credentials ”.
Closer to home the AFR reported on September 12th of the Billion-dollar blowouts looming over bank carbon bills with a major bank disclosing the “scope 3 emissions are several times larger than thought”.
Strengthening “climate information architecture” in order to close the data deficit gap is an urgent to call to action by the IMF. They reference three necessary building blocks ; i)high-quality, reliable, and comparable data, (ii) a harmonized and consistent set of climate disclosure standards, and (iii) a broadly agreed upon global taxonomy.
Today’s ERP systems offer a sound basis from which to start addressing the data deficit gap, in particular in terms of accessing quality, verifiable comparable data.
In fact, many Australian businesses first began leveraging their ERP data to support NGERS reporting for Scope 1 and 2 emissions, as early as 2008 given the then mandatory NGERS reporting thresholds, and over time, these solutions have proven both robust and reliable.
The challenge today however, is extending data collection coverage to include Scope 3 emissions use cases, use cases which typically sit outside an organisation – on both the upstream and downstream sides.
Addressing this will require taking a macro Business Process solution architecture approach, that models and tracks processes across organisational and ERP system boundaries. Such an approach will enable organisations to enrich their data sources as necessary from their co-dependant process partners.
Enriching process data with scope 3 requirements will serve as a solid basis for modelling what-if scenarios not only related to emissions, but also to other financial and non financial metrics such as costs and delivery time performance.
The challenge is significant and the urgency for robust solutions to help close the data deficit gap will only intensify.
“This data deficit poses a serious obstacle to the energy and ecological transition, which requires migrating capital toward low-carbon industries and massive new investments in mitigation and adaptation. It also makes it more difficult for financial supervisors to assess risks to financial stability given uncertainties and challenges to quantifying climate-related impacts. Therefore, policymakers urgently need to ensure that better climate data are made available.” IMF.
TEC150 is partnering with Swiss Based EcoWise GmbH to help clients close their emissions data deficit gap.
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