Tune in to Episode 27 of the Data Empowerment Experts Series
Environmental, social and corporate governance (ESG) is an emerging topic for CDOs, CFOs and data stewards —and for some, a controversial topic as well. Investors and other stakeholders are demanding transparency into not only how organizations protect and use data effectively to create value, but increasingly how they achieve long-term sustainability with a focus on corporate social responsibility and environmental impact.
This is a new twist on the historical view of data governance to control risk exposure or as an enabler of digital transformation. It involves promoting a new definition for sustainability that goes beyond economics and profitability. Businesses are now scrutinized to better understand their purpose, such as data use from an ethical viewpoint.
Looking back on governance, risk and compliance (GRC), it’s no surprise to see a convergence with ESG. Data governance programs in the past focused primarily on the risks of data misuse and loss, solved by keeping data locked down and secure, and in sync with regulatory compliance policy. However, we saw a shift more recently during digital transformation that sought to better balance risk with needed growth opportunities. A prime example is using analytics to leverage data intelligence for improving business outcomes.
As such, the need to use data to drive growth and profits brings up an interesting new intersection of ethical stewardship, beyond simply avoiding risks. The emerging question is whether data is achieving a sustainable world and work environment. This may be a new and potentially controversial concept to many traditional data stewards, grounded in the world of IT security and data protection. But it can be seen as a re-balancing of risk vs. reward to help ensure ethical outcomes from data to help prove organizations are doing good. And in return, it can inspire investors and others with this updated definition of sustainability.
The Next Era of Data Governance: Understanding Data’s Purpose
Here’s a quick snapshot of how CIOs, CSOs and CDOs have deployed tools and capabilities for data governance over the past few decades, with a focus on:
- 2000s – Managing risk exposure, protecting data access from misuse or external abuse, and simplifying audit and reporting (the era of Sarbanes-Oxley, PCI-DSS, HIPAA, and more)
- 2010s – Achieving digital transformation, creating value such as product and service personalization through data analytics, and avoiding violating consumer trust (GDPR, CCPA, and other privacy mandates)
- 2020s and beyond – Demonstrating ethical use of data and AI towards sustainability and expanding data literacy to support social and environmental responsibility goals (ESG, EU AI Act)
Organizations today are increasingly impacted by a responsibility to achieve a sustainable world and workplace, while still navigating a business environment filled with risks and opportunities. At its core, a clear understanding of data and its purpose has always been key to determine appropriate use. With the rise of ESG regulations, we’re now seeing mandates that enable investors to make informed choices by demanding corporate stewardship that goes beyond profits at any cost.
Navigating ESG: What to Consider in Your Journey
As an emerging area of concern for today’s data governance programs, and with ESG mandates still a work in progress, there are core data management capabilities and considerations that can help lay a foundation for success ahead. The good news is that many of the tools and programs that address the data governance core charter can extend and apply to the expanded ESG scope — even if the future is still to be determined more fully.
As part of our Data Empowerment Experts series, we recently sat down with Federated Hermes, a global financial firm on the leading edge of addressing ESG. Here are some key insights from their ESG journey:
Data Culture and Literacy: Takeaway #1 – Educate teams on the importance of ESG to build awareness and adoption. To support an evolving definition of data governance that includes ESG, organizations need to understand there are ethical concerns that impact investors and other stakeholders, beyond protecting data or driving value from it. Avoiding data-led decisions that enable a toxic workplace or programs that harm the natural environment is core to ESG.
Data use should underpin value creation opportunities that align to ESG policies. To drive home the importance of ESG, leverage existing data governance programs that have training tools to improve data literacy. The programs should also treat data as a valued asset, with an emphasis on protection and enabling ethical use.
Data Transparency: Takeaway #2 – Report on compliance with ESG policies for visibility. Data governance tools such as data cataloging, data lineage and data quality can not only help improve the reliability of data. They can also shed a light on how data is being used, help uncover data sources and data movement throughout the organization and offer insights for ESG reporting to measure and improve compliance with policy. With a foundation of trusted data, reporting back accurately and fully to the business can help demonstrate whether gaps in data handing and use need to be addressed. This will prepare the organization for sustainability, as investors and regulators demand visibility in the years to come.
Data Democratization: Takeaway #3 – Share data responsibly to balance risk and reward with purpose. The last mile of responsible data use is often the hardest — connecting organizational data consumers with the data intelligence they need to drive ethical and responsible data-driven decisions. To be a data-driven organization requires trusted data — not just the quality and protection of the data, but its fitness for purpose.
Automation that can help remove risk and uncertainty against implementing ESG-driven policies is key. This is true whether the goal is to make the best decisions from qualitative data or to achieve the best outcomes knowing data assets are reliable. A data marketplace can help accelerate business outcomes based on a foundation of trusted data. This makes ESG requirements easy to integrate and fulfill, and provides a framework for how data will ultimately be delivered to users.
Join our Data Empowerment Experts: Fireside Chat with Federated Hermes
While there are still open questions about implementing ESG — as well as how the legislation of AI and data will play out to ensure their ethical use — progressive organizations are not adopting a “wait-and-see” approach. Rather, they are formulating new best practices and updating existing ones to better understand their data landscape, gain transparency to close gaps in data governance, and educate corporate citizens to be mindful of the new paradigm ahead.
Join our next Data Empowerment Experts webinar featuring Federated Hermes to learn more about their journey and how to accelerate yours. Learn how:
- ESG impacts you and your data governance program moving forward
- Federated Hermes embraced ESG compliance while keeping data open for business
- You can deliver trusted data with data governance, cataloging and marketplace capabilities
In this Data Empowerment Experts webinar, you can discover how to usher in a new era of data responsibility and sustainability with the power of an AI- and ML-driven data governance platform. You can also find out how to improve data literacy to support ESG, increase trusted and responsible data sharing, and improve business outcomes. Register today.