ESG stands for Environment, Social and Governance1. On first sight, this sounds very cryptic but in the meantime it has become an important standard for the valuation of companies by institutional investors2. Companies are not only evaluated on the basis of their financial data, but increasingly also on the basis of factors that fall into the three categories mentioned. These are the handling of resources including environmental factors, the management of the company and the interaction with the company’s stakeholders and the society in general.
So how is data or information reflected in this ranking? Interestingly, the processing and use of data is only a subordinate topic so far. Information Governance also appears only marginally so far. However, the importance of data-related strategies and the handling of information as a resource seems to take a stronger place. For example, data security and data protection have recently made it into the catalogue of ESG factors.
In our opinion, however, there are additional topics that should be included as criteria. For example, many organisations are not aware that energy consumption is significantly affected by the fact that a very high percentage of ROT (Redundant, Outdated, Trivial) data is processed (typically between 50 and 75% of the total amount of data) . Although the energy use per gigabyte is basically decreasing, this is more than compensated by the exponential data growth.Bruno Wildhaber, 2022
Data economy is therefore not only a requirement of data protection law or information security, but has also become an environmental factor. In a Whitepaper that we will be publishing shortly, we will present the correlations between data volume, data growth and guarantee data and will devote special attention to the associated effects on ESG factors.
We advocate that data-related issues and the handling of information become an essential content of ESG assessment4.
2 Definition: https://en.wikipedia.org/wiki/Socially_responsible_investing; example MSCI: https://www.msci.com/our-solutions/esg-investing;
3 Watch our IG video on youtube: https://www.youtube.com/watch?v=IYCvmerKBOs
4 The krm has developed its own catalogue of criteria for the integration of data as ESG factors, which is based on the MATRIO Method®.