Insights from ESG leaders: The benefits of an in-house data-driven ESG strategy
At GreenBiz23 Datamaran spoke with Byron Austin, Head of Corporate Responsibility & ESG Management, Organon, a spin-out pharma company that needed to quickly develop an ESG strategy from scratch.
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"With ESG and sustainability you are making trade-offs all the time, you can't focus on 30-plus issues so how you prioritize and set targets and goals is important - Datamaran has enabled us to do that in a sophisticated way.”
What is your advice to companies starting out with ESG?
“Think about material risks to start with, maybe their enterprise risk management system, but really talk about materiality and materiality assessment and encourage folks to think broadly about risks across the E, the S, and the G. Really helping break down what some of our colleagues in corporate finance and in audit, or in enterprise risk management say is an aggregate ESG risk, which really does not exist, it's really an amalgamation of 30 plus risks.”
Has technology helped you improve your approach to ESG?
“I remember doing a materiality assessment years ago, where it's your typical, talk to a whole bunch of different stakeholders on the phone, playing phone tag with all of them. Usually, those experts are talking to other companies, you may get a response or you may not, and then there were surveys, and a whole bunch of Googling."
“So I really appreciate how technology has enabled us to be more data-driven, more evidence-based, and get a more accurate sampling of what the various perspectives of different stakeholders really are.”
Which roles within your organization can benefit from a materiality assessment?
“When I think about who is the audience for materiality assessment, I think that has also changed over the years. I think that used to be a centralized ESG or sustainability function and then no one else would see it. Now it has really enabled me to have conversations with my internal auditor, my head of enterprise risk management, with senior leaders from various functions, the head of operations, etc., who are all really interested."
“They are interested in not only understanding what are those risks but how are they prioritized and how those risks get mapped out. It's not really here's your output and this is the right answer. No, this is actually an input into our strategy.”
Why is it important to monitor ESG issues?
“Materiality is dynamic, issues move. We saw that particularly in 2020 when an issue like diversity, equality, and inclusion was in one place, and after May 2020, was in a different place. And I think climate as well, I couldn't talk to any senior leader about climate probably five to 10 years ago, but now that's all they want to talk about."
“I think it's really important to track these issues over time and a platform like Datamaran enables you to do that. To make sure that your materiality sensor is not obsolete, and that you're not setting your strategy in stone. Because once you're there, you're left behind.”
What are the downsides of not making ESG decisions based on data?
“You're talking to senior leaders who are looking at data for all kinds of business processes, to make informed decisions about the future. Now, thanks to technology and tools, we can have the same conversation about sustainability. I don't think my head of operations would just kind of do a thumb suck and say, let's go this direction, you know, he is looking at operational data all the time, and now we can have the same and it's a real conversation about ESG.”
How have expectations on your ESG team changed the way you work?
“Now that there's regulatory risk around sustainability there's a higher expectation to make sure that we're prepared for that."
"There is a time, efficiency and cost saving measure to doing it internally...external providers, they're great, but they don't understand the daily machinations of how business works or how priorities are shifting, daily or weekly. So to do it in house is cheaper, it's faster and it lets you be more responsive."
“How do we meet the expectations of various stakeholders or investors?” Not only meeting their expectations but going beyond that."
“Having a tool that's informed by data means I know what my peers are doing, I can go beyond that. I know what the bare minimum is, I can go beyond that. And that really has led to an opportunity to differentiate and really prove out that we are a mission purpose-driven company.”
Is there an advantage to owning ESG internally?
“There is a time and efficiency cost-saving measure to doing it internally. I've worked with many external providers, they're great, but they're not internal. They don't understand the daily machinations of how the business works or how priorities are shifting daily or weekly."
“So to do it in-house is cheaper, it's faster and allows you to be more responsive.”
Is your team helping the entire organization to avoid greenwashing?
“I think regulators are asking us, as issuers, as companies, to ensure that our ESG data rises to the same quality level as our financial data. And that has inspired us to really look at our processes and operations to ensure that we are delivering on the targets that we set out for ourselves, as well as the opportunity to be really assured that we're making decisions based on really good high-quality data.”
Has Datamaran helped determine what a governance structure might look like?
“Investors have responded positively to the fact that we have an AI-driven data tool, that really is not as qualitative as other processes are. It really has strengthened our credibility on how we're prioritizing certain issues.”