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Data is the fuel that drives sustainability programs, enabling companies to track performance, report to stakeholders, and make measurable improvements. Today, sustainability metrics continue to be a priority as investors, customers, and employees turn to them as a yardstick for measuring brand value and risk.
Many organizations are grappling with the question of how to measure progress against sustainability goals and how to gather those metrics. In addition, it’s important to first decide what will be measured and the approach for collecting the data.
This post reviews some best practices on data collection, the linchpin of a credible, transparent, and actionable sustainability program.
Identify the data
Before gathering the data, it’s essential to identify what to measure.
Given the vast data troves that live inside organizations today and the wide-ranging sustainability areas a company is likely to touch through the course of doing business, it’s easy to get sidetracked by all the possible data that could be collected. To maintain focus, it’s essential to align data collection efforts to strategy. The materiality assessment, discussed in an earlier post, is an important driver at this stage. The data collected should connect to organizational goals, which in turn reflect the issues most material to the business.
As the materiality analysis and goals drive which metrics to track, organizations will consult well-established reporting frameworks to inform the data collection approach (see below).
The data you source will fall into one these categories:
- Environmental metrics are the most straightforward because they are established and well-understood. For instance, CDP’s environmental disclosure platform, which collects standardized information from businesses on climate change and other environmental risks, has been in use for many years. Likewise, the Global Reporting Initiative (GRI) developed the widely adopted Sustainability Reporting Standards for sustainability disclosures.
- The practice of gathering social metrics is less mature partly due to privacy regulations and other considerations based on regional needs. Notably, efforts are underway to align disclosure, methodologies and standards to communicate impact on issues like human rights and labor practices.
- Governance data is also becoming more well-defined amid more standard disclosures for ethics, governance, and anticorruption.
In addition to sustainability metrics (see GRI’s universal benchmarks), there are also sector-specific metrics to be considered; of note, the GRI is set to develop standard metrics for 40 industries. At Flex, some of the metrics we collect are based on industry practices include Scope 1, 2 and 3 emissions, water withdrawn, discharged and consumption, waste, and global training hours. Among governance metrics, we review the percentage of employees complying with Responsible Business Alliance’s (RBA) rest day requirements and percentage of sites completing social and environmental audits.
For organizations just starting out, the approach should be scoped. Creating a roadmap and prioritizing the data needed to acquire and grow this list over time is key. When our sustainability reporting efforts took shape over 10 years ago, the first step was identifying all the Flex facilities in the world we needed to track. The focus previously was on collecting baseline environmental data such as electricity consumption and volumes of waste generated at each site. Today, we track around 70 environmental impact metrics.
Operationalize data collection
Since the data underpinning a sustainability program is scattered throughout the business, it is imperative to work with partners in finance, facilities, legal, and other functions to operationalize data collection. At Flex, each facility also appoints a sustainability lead who shares site data and works closely with our program office.
To reduce workflow friction and answer the data needs of a robust sustainability program, it is vital to build a foundational structure for collecting, managing and reporting data. Given the rising demand for sustainability disclosure, centralized data platforms are indispensable for streamlining data collection and today, many off-the-shelf solutions exist to support sustainability reporting.
Our sustainability team has progressed on a journey since 2011, when they were still collecting data with email and manual spreadsheets. As the team’s efforts matured, they designed an in-house centralized database complemented by underlying processes and procedures that enforced consistency and uniform workflows for capturing data across Flex’s global footprint. This multi-year effort involved deep collaboration with IT and other internal partners.
When it comes to collecting external sustainability data from suppliers, Flex’s supply chain sustainability team engages the vendors on our preferred suppliers list (PSL), following RBA’s methodology. This process begins with suppliers completing the Supplier Self-Assessment Questionnaire. Their responses will yield an overall score and a risk score; if these scores hit a threshold, an audit will be necessary at the supplier’s site with prescribed actions to follow.
We continue to explore ways to gain visibility into how well our supply base is hewing to sustainability standards. For instance, we are evaluating systems that can provide holistic snapshots of how well our supply chain is performing across multiple sustainability areas.
While we are still growing and learning, we are proud of our leadership in developing deep collaboration with our suppliers to advance our shared sustainability goals. Last year, we worked with CDP to invite our PSL suppliers to report on their carbon emissions. As a result of our proactive effort, Flex has received recognition from CDP as a Supplier Engagement Leader.
Standardize data formatting
For stakeholders to analyze and utilize the information in disclosures, data standardization is required. If operations are globally distributed, this task can be challenging. Given that Flex operates across the globe, the scope of standardization is immense. For example, if our facilities throughout the world record their philanthropic donations in their national currency, they all need to be converted into a currency that is considered standard by frameworks that define global reporting standards. Similarly, imperial units of measurement need to be translated into metric. To fully automate data standardization, we adopt best practices such as building calculators and other tools into a local or central databases to convert the native units of measurement to standardized metrics.
Resources like Global Reporting Initiative, the United Nations Global Compact and SASB provide guidance in the alignment with standards.
Consult these frameworks for standards compliance and sector-specific metrics:
Set cadence for data collection
A data collection cadence should match the size and complexity of a business. For an organization such as Flex with global operations, we must keep pace with the rapid pace and volume of incoming data. Alternatively, a smaller business that develops software in a single location might only need to conduct a quarterly data collection.
At Flex, our more than 100 facilities populate their site’s data into a central database each month. The data collected includes resource consumption, employee trainings and community service hours, and other data that tends to fluctuate month to month. We gather data with lesser variability once a year, and these include the percentage of electricity purchased from third-party renewable and non-renewable sources and the percentage of water withdrawn by source, among others.
We put our data to work every month by way of an internal scorecard that is calculated for each site based on the most recent inputs. During these monthly meetings held with multiple groups of site sustainability leads across regions and countries, we review their latest sustainability performance and share ideas on making improvements. Empowered by fresh data, each site can identify clear opportunities for improvement and next steps to take action.
When it comes to sustainability efforts, the adage “you can’t manage what you can’t measure” applies to our approach. Data gathering is vital to gaining an understanding of how our operations impact the world. Only by gathering and benchmarking data can we begin to track progress.
Ensure data integrity
When collecting data, it is also essential to establish confidence in its integrity. If data is the currency for building trust and informing the progress of any sustainability program, then we are only as good as our data.
This means that it is essential to implement robust data management practices to ensure data is complete, reliable, trustworthy, and secure. Recently, the rise of big data and automation has enabled easier data management practices. Companies can collaborate with their IT departments to develop solutions that can foster data integrity. This includes ensuring that the system has good data hygiene with functions to detect anomalies and minimize human error by automatically retrieving data when it is published. We will discuss audits and other data validation mechanisms in greater detail in our next post.
As sustainability has gone mainstream, so has the need for more specific information, presenting an opportunity to fine-tune our data collection practices. Even the most mature sustainability programs can find areas to improve, whether it’s streamlining processes, boosting data accuracy, or improving collaboration. Organizations must set strategy and goals in line with a materiality assessment to establish what is most critical and design the data undertakings around this. In addition, it is crucial to digest the data to understand performance and determine how to update the sustainability roadmap to engage partners to improve over the near and long-term.
This is hard but necessary work. By diligently measuring and understanding how our operations impact the planet, we can take the actions required to build a healthier and more inclusive world that can be sustained for generations to come.
