11 Nov '21

UK Chancellor Rishi Sunak Turns Up The Heat Through Data At COP26

The UK government recently fired the starting gun for ESG corporate disclosures by announcing that from 2023, all UK listed companies will need to publish their plans to transition to a low carbon business model. This initiative is designed to give additional impetus to the legally binding commitment for the UK to achieve net zero by 2050.

Chancellor Rishi Sunak highlighted the government’s ambition to make the UK a leader in climate change during a speech made at the COP26 in Glasgow on the 3rd November 2021. The UK government announcement added that “there will be new requirements for UK financial institutions and listed companies to publish net-zero transition plans that detail how they will adapt and de-carbonise as the UK moves towards a net-zero economy by 2050.”

Whilst some 450 organisations (at the time of writing) have already started to publish their climate commitment plans, the announcement will add additional focus on this important and topical area for the remaining in-scope UK companies. The objective behind the plans, which require targets to mitigate climate risk, is to increase environmental reporting transparency so that investors and consumers can allocate their funds and spending accordingly based on their preferences. Note that these new requirements are in addition to the existing ESG regulatory reporting requirements with are highlighted in the chart below.

One of the well-known challenges within ESG reporting is commonly known as ‘greenwashing’ where organisations may intentionally over-emphasise their environmental credentials to the external market. In order to help combat this, a ‘Transition Plan Taskforce’ has been set up to produce a robust standard for environmental reporting that seeks to minimise this practice, making credentials and ratings more accurate, transparent and more easily comparable. 

With the significant new transparency and reporting mandates announced by the Chancellor, organisations will need to quickly consider their action plans in order to meet these requirements. Whilst these may vary from firm to firm, a constant theme for all will be the importance of data within the response. Data is the backbone of any successful reporting exercise and firms will need to assess and strengthen their data management capabilities to be ready for the changing requirements whilst also having to manage challenges specific to ESG reporting. These capabilities include data governance, data quality management, data and technology architecture, as well as business and data architecture. DTSQUARED are leading members of the EDM Council and actively engaged in ESG initiatives with clients, meaning we are uniquely placed to combine industry leading data management practices with an in depth understanding of the key ESG data challenges. Practicality this means offering services such as the Data Maturity Assessment, the recently launched Cloud Data Management Capabilities Framework as well as our own ESG Data Reporting Lifecycle Framework.

One of the key challenges firms are facing is the need to source and onboard new datasets, both internal & external, combine them with existing data and make this available to relevant systems and stakeholders; something that will need to be overcome to ensure compliance with the Chancellors plans. A strong data management program/framework will not only help meet the regulatory requirements and tackle related challenges but also simultaneously support other business goals such as improved operational efficiency, reduce operational risk and improved business insights. 

To find out more about how DTSQUARED’s ESG framework can help ensure your business can effectively respond to these new requirements and at the same time, create opportunities from this new landscape, then please get in touch and we would be happy to set up a complimentary session tailored to your business.

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