Wolters Kluwer Enablon’s Sustainable Performance Forum (SPF) 2024 event in Houston featured a panel of speakers from leading companies, including AGCO, Cummins, and Georgia Power, discussing how Environmental, Social, and Governance (ESG) criteria can impact strategies and interactions with teams within their organizations.
This blog post shares some of the tactics used by these leading firms to ensure data quality and reveals how ESG has affected collaboration with stakeholders.
ESG drives change and collaboration
A new CEO hired by AGCO in 2021 brought a new vision and purpose focused on farmers and the importance of sustainability. After exceeding initial emissions reduction targets in 2022, AGCO set new targets to reach the next milestone of their long-term climate goals: reduce enterprise-wide absolute Scope 1 and 2 emissions by 55% by 2033 and by 90% by 2050. This coupled with the fact that company investors are increasingly inquiring about ESG requirements moved sustainability to the top of AGCO’s strategic agenda: to improve the company’s value proposition to the industry, their customers, and the world. AGCO looked to Enablon for help in meeting new and emerging ESG requirements and managing data.
Georgia Power must meet certain compliance obligations within its operations and has prioritized ESG and sustainability concerns. Recognizing the extent to which ESG and sustainability touches everyone’s lives, Georgia Power believes ESG concerns cannot rest solely with its compliance department but must also involve a broader coalition of business units and the investor community to bring fundamental changes to the company and the world.
In 2018, Cummins published 2050 Aspirational Targets with its investors and stockholders, committing to bring a new positive impact in every community where they operate. The targets include being a near-zero local environmental footprint company by 2050, through the execution of a vision called Planet 2050. This vision also details intermediate goals for 2030, including a commitment to a 50% reduction of greenhouse gas emissions in absolute terms. To meet its Planet 2050 goals and address ESG regulations introduced in recent years, the company believes having a single source of truth for all data is of utmost importance. To that end, Cummins leverages Enablon as that single data source for Scope 1 and Scope 2 emissions, which provides greater data scrutiny and promotes more interaction among stakeholders.
Data quality is key
ESG requirements are an opportunity to collaborate and promote greater data ownership within AGCO. To ensure high quality data, the company conducts internal audits to prepare for external assurance and is finalizing an internal ESG data policy. AGCO has appointed an ESG controller to develop comprehensive reporting processes and controls for ESG data and works closely with the sustainability and finance teams supported by a strong ESG governance structure to ensure data quality from sources to disclosure.
To ensure data is of high quality at Georgia Power, the company has made its systems simple to use and user-friendly to minimize data-entry barriers. To ensure compliance and keep data quality high, Georgia Power continually communicates to its ever-changing workforce what needs to be done and stresses the importance of entering accurate data.
Cummins has a multi-step process to improve data quality. They first built several data models and analyzed scenarios to find instances with the fewest number of data issues to be addressed right away. Next, every data point undergoes manual validation by people familiar with individual facilities from where data is obtained. Third, Cummins conducts internal and external audits along with limited assurance to ensure there is complete traceability of data from the source. Last and most importantly, Cummins communicates to its end users, sites, and environmental leaders the importance and necessity of entering ESG data, which has already resulted in better quality data.
Working towards improvement
ESG reporting requirements provide an opportunity for the sustainability team at AGCO to work alongside other departments, functions, and teams. In fact, every project taken on by the sustainability team is always in collaboration with at least one other AGCO team. In 2022, the company completed double materiality and climate risk assessments that involved stakeholders from across the business, interviewing and gathering their perspectives. By involving many teams and stakeholders, AGCO obtains a greater understanding of the positive environmental impact it can make as a company, not just as one person or one corporate team.
Reporting on ESG helps teams at Georgia Power learn more about their business and industry, expanding the conversation beyond merely compliance. They have improved their understanding of what’s trending, what to expect, and what impacts their business. While teams at Georgia Power focus on everyday compliance tasks, inspections, and audits, they are also learning how ESG and sustainability impact the company’s business performance.
Cummins recognizes that ESG reporting and more accurate data do not guarantee achieving the aspirational targets on their own. There also needs to be customer demand and infrastructure and regulatory frameworks to support their products. Technology on its own won’t change the world and must be combined with supplier and customer collaboration to ultimately create a more sustainable world.
Contact Wolters Kluwer Enablon today to learn more about software that supports efforts to gather data and report on ESG criteria.