How sustainability data management can help enterprises meet ESG goals
Growth comes through increased sales, improvement through operational efficiency, and protection by mitigating risk. But a fourth area of foundational value has emerged. To the usual value line-up of grow, improve, protect, let's add sustain. As ESG (Environmental, Social, and Governance) efforts and sustainability have risen to become top-tier strategic initiatives gaining executive focus, so too has the deeper importance of master data.
"Sustainability data management, that's what I like to call it," said Neda Nia, Head of Product for MDM provider Stibo Systems, on a recent episode of LoqateTV's Ask the Experts. "We need an understanding of the end-to-end supply chain, including the location of raw materials, farmers, manufacturers, plants, shipping, and destinations."
But complicated supply chains and go-to-markets can make visibility to the right data elusive. "It is disturbing to see how few organizations have transparency into their supply chain beyond tier one," Neda observed. That means identifying partners at every link. "I get surprised at how little some of our enterprise customers know about their suppliers. Not to mention their supplier's supplier's suppliers!"
Ingredients and materials are needed for every type of branded good. "When there are suppliers, factories and personnel involved, often there isn't sufficient information," Neda explained. "It's important for us to help customers create views of the products, sub-products, and raw materials, build the hierarchies in the MDM, and then manage them."
Enriching master data with verified location information can add unique value in sustainability use cases and play a critical role in the calculations used to track measures. "It's going to be important to have accurate address data on which supplier sits where because that can impact the entire sustainability calculation and carbon footprint," said Neda.
For example, a consumer-packaged goods brand wanted to capture the carbon footprint by product category. "They had subject matter experts come up with formulas and business rules for each category," Neda explained. "In the process, we noticed that, depending on the location of the product, the carbon footprint changed." Different geographies will have different environmental rules and regulations. "That's when we realized the location data really matters here," she added.
As these new measures fuel data-driven enterprise systems, new governance requirements will follow. Neda is sure of Stibo Systems' ability to enable data governance in the context of sustainability data management. "We are able to help with governing data, then allowing customers to syndicate the data wherever it needs to go." Things as straightforward as read/write access of a given field suddenly have paramount importance. "If something says it's an 8% carbon footprint, you shouldn't be able to edit that to 10%," Neda warned.
Calculating accurate sustainability measures depends not only on the category but also on variations of a given item. "We are talking with a few fashion companies, and they have a challenge because an item in the same category, let's say shirts, in a different color would have a different footprint even though it's at the same location." Neda recounted. Ingredients in dyes, and even the local water used in processing, can create different results. "So, it's redefining the hierarchy of products and the relationship between products and variants in a new setting."
"Our customers, especially in Consumer packaged goods (CPG), are sharing with us that they're struggling with aggregation of accurate information on ingredients," Neda said. "This is an absolute requirement for how we are going to manage sustainability and ethical trading claims in the future."
Enterprises should seek to create "zones of insights" that offer a 360-degree view of sustainability across different domains, whether they are location, product, or supplier, and bring that information to one place to expose it to the right users. The right MDM system "can surface that data so, as a business user, you have a clear vision of what is going on, what attributes are made available to you through third-party pools, and then use automation to simplify the whole process. That's what MDM is good at," explained Neda. When it comes to advancements in sustainability data management, "what we are doing is some co-innovation with a couple of our customers to understand the use cases that they're having, mostly around integrating with the existing data pools."
ESG is one of the priority items for Stibo Systems internally as well. "Being a foundation-based company, we have strong values, and we want to also serve our customers who have these values," Neda added. Stibo Systems recently appointed Paul van Lennep as Head of Environmental, ESG and Sustainability. He is leading their journey toward sustainability, including a strategic commitment to bringing customers closer to their own sustainability goals.
Since sustainability is so important, does it warrant being its own master data domain? "We have narrowed down sustainability data management as being complementary to product, customer, and supplier domains," suggested Neda. "We haven't decided yet whether sustainability data will be its own separate domain because, as you can imagine, it touches most of these other areas. That's something that we are discussing with analysts and experts as well as with customers."
But there is no question that sustainability is here to stay and is a firmly nailed plank on the platform of an enterprise's strategic agenda. Neda believes it will become part of the total equation to measure ROD or "return on data" as she put it.
Neda elegantly summarized the direct connection between trustworthy data content, such as location information and address verification, with sustainability, by reminding us, "better data, better business, better world." And you can bet I couldn't have said it better!
Watch the full interview with Neda Nia on LoqateTV: Ask the Experts to learn more.