Overview: Important Invoice Analysis Features Available to Users: Portfolio analytics Cost ($) Graph Summary Chart Property Analytics View Asset and building characteristics and supply contracts Review invoices with audits After automatic or manual invoice acquisition, WatchWire provides unique functionality to…Read full post
Sustainability Insights Gained from More Than 1 Billion Feet Under Management
In this article we will summarize the contents of our most recent webinar: Sustainability Insights Gained from More Than 1 Billion Feet Under Management, which can be viewed here. In this webinar, WatchWire’s CEO, Andy Anderson, discusses what he deems the top 3 strategic priorities to prepare your organization for success, and tangible steps to prepare for 2023’s reporting season. These real-world sustainability insights are taken from years of experience working with WatchWire clients and partners on their energy and sustainability data and reporting goals.
First, it is important to understand that data lacking a follow-up with action is useless. Yes, the act of simply collecting data and consistently measuring your footprint has been shown by the EPA to lead to a 2.4% reduction year-on-year. But that isn’t going to make a dent in SBTi goals, your journey towards Net Zero, or compliance with looming Building Performance Standards. That being said, data is where to start when laying the sound foundation for long-term sustainability success.
Good data is defined by accuracy, coverage, completeness, access, and governance.
When speaking of data accuracy, we are referring to how close what’s being reported in metrics is to the actual truth. According to a Deloitte survey from last month, Executives list ensuring quality as the top data challenge they’re facing. With the proposed SEC climate disclosure rule last year, and a final rule expected in April, companies are reviewing their current data infrastructure and finding it’s not sufficient for what’s to come, with respect to data accuracy, but also taking into account other data characteristics like completeness or access. In a separate survey, Deloitte surveyed 150 consumer companies and found that only 3% of them said their sustainability data was as accurate and verifiable as their financial data. Clearly, concerns about data accuracy are valid and companies have their work cut out for them on ensuring future data accuracy.
One of the biggest improvements typically made across our client portfolio is automating data access as much as possible. Aside from other benefits, automation is less error-prone, more scalable, and allows programmatic audits of the data to ensure anomalies are flagged and can be secondarily reviewed by a human.
The efforts toward increasing data accuracy are partially driven by the desire to have the data independently verified by a third party, and much of our client base is utilizing third-party assurance firms such as Deloitte, KPMG, DNV, SIG, Lloyds, and others. The metrics below are from a 2021 survey from the International Federation of Accountants, and from the same Deloitte 2022 survey mentioned above on data quality. Both findings confirm the market’s interest in third-party assurance. However, regardless of voluntary interest in assurance, both the SEC’s and EU’s CSRD will require limited assurance with likely a transition to reasonable assurance over time.
It is worth mentioning that there is a point of diminishing returns with data accuracy. Meaning, there are trade-offs as you work your way toward 100% data accuracy, with those trade-offs being speed, cost, and accuracy. At some point, the returns provided by focusing on action and engagement are much greater than squeezing a few extra % points in accuracy. On the one hand, having materially inaccurate data and producing misleading reports can be greenwashing if you’re overstating your metrics and results. On the other hand, myopically focusing on data accuracy at the expense of actual action is “greenwishing”, meaning you’re hoping for results by just focusing on reporting and not spending time on higher impact activities like full data coverage on your portfolio. We always recommend prioritizing the highest marginal impact activities.
Data coverage represents how much of a portfolio is represented by the data collected. On your company’s sustainability reporting journey, it is best practice to always be considering the bigger picture of what is being measured- ie. less hyperfocus on minimal accuracy improvements when starting out when there are higher marginal gains to be made in the coverage department.
Specific to real estate and infrastructure, GRESB also places a heavy emphasis on data coverage. Pure consumption and emissions data for energy, water, and waste make up 32% of the total GRESB score. It is more disclosure focused rather than performance (or accuracy), with 61% of the 32 points being energy, GHG, water, and waste related to data coverage. Simply put- it is just about having the data for the reporting period and disclosing it. Said another way, data coverage is 19.5% of the total GRESB score, while performance is just 6%, 2 each for energy, GHG, and water, and you can receive a maximum of 5.5% for externally assuring your energy, GHG, water, and waste data.
Data completeness is sometimes used interchangeably with data coverage, but we view completeness from the perspective of time periods or having all months covered with data and doing so in a timely fashion so it’s useful and can be acted on operationally. Data completeness is about possessing more than the lowest common denominator data, with a complete suite of utility consumption, demand, and cost data so again, it’s useful operationally and not just in reporting.
It is key to understand how you can acquire your utility data, and the pros and cons of each acquisition method including recurrence frequency, granularity, or lack thereof, of data, and availability of source data for assurance.
That rich data is extremely useful for operational action- in understanding what parts of your costs are driven by usage or demand, auditing sales taxes, and capturing meter-level consumption and demand. From a prioritization standpoint, knowing which hours of the day are prime targets for usage cuts or efficiency measures is likely a better ROI, rather than blindly trying to make cuts to total consumption without the granular data to reveal the nuances.
Data access is about putting the data into the hands of the teams that can use it, not just the sustainability reporting team. The granular data may mean nothing to your sustainability reporting analyst, but in the hands of your procurement team, engineering team, or property management team, that information can be used to drive real action, which then, full circle, impacts the sustainability reporting results in coming years. If you want to make progress on your goals, you can’t just keep the data in silos and hope the act of reporting will yield results.
Finally, data governance wraps all of these data concepts into one, with the added layer of security and controls. Each year we’ve seen increased questions from client IT teams regarding security, which prompted us to acquire SOC2 certification last year.
The second insight we can provide based on the wide range of clients we’ve worked with is the need for defined processes and a plan of action. Even as a software solution company we can admit that technology alone is not the answer. We often get the question “where should we start”, and our response is to follow a crawl, walk, jog, run approach. Don’t immediately chase after buzzword sustainability goals and get distracted., before building a strong foundation of sustainability data.
- Start with data: You need to first create an inventory of all properties and accounts, identify options for data access, and automate as much as possible so you have accurate and complete data to support the sustainability program.
- Democratize access to the data: Share the data with the teams that can use it so sustainability isn’t just a thing you report on, but something the entire team is involved in. Use the data for basic carbon accounting to understand where you are today and start planning out what needs to be done to get to where you want to be. Identify energy disclosure laws you must comply with now, and building performance laws you’ll soon need to comply with. In most cases, you’ll want to get your portfolio properly set up in ESPM so you can handle this compliance reporting. In certain parts of the country, this may not affect you, but odds are it does. With an understanding of your data and where you want to go, renewables procurement to reduce your Scope 2 market-based emissions is a strong next step.
- Reporting: Finally, you will be ready to delve into the ecosystem of voluntary, quasi-mandated, and soon-to-be mandated reporting. Acquiring limited assurance and even reasonable assurance is also key to consider (as it will be mandated in a few years for SEC and CSRD reporting). When you’re ready, adding real-time data can uncover additional optimization opportunities from both a cost and emissions standpoint. Only after addressing all of these steps should a company then approach the opaque and unstandardized landscape of scope 3 emissions reporting.
3. Future Proofing
According to the Deloitte survey mentioned earlier, 62% of companies believe they are already prepared or currently undertaking extensive preparations for the expected increase in mandated reporting requirements. To truly be prepared from a technology standpoint, your evaluation of your data infrastructure should consider its interoperability with other platforms: is it an open, communicative system? With the rapid evolution of sustainability reporting wants and needs, you’ll need to ensure that what you put in place today for operational sustainability will be able to serve your needs next year, and the following years to come. Nobody can predict the future, but we’ve found that by designing with the future in mind to enable reconfigurability and rapid integrations, we’ve been able to help our clients respond to the rapidly changing landscape.
Consider this: If a new reporting schema was mandated tomorrow that required asset-level information (carbon emissions, energy/water/waste consumption, asset characteristics) to be reported in a new format, would your company be ready to comply in 1 month?
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