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An effective ESG data governance strategy should address how to standardize data and how to put internal disclosure controls and procedures in place so that the data is traceable, immutable and unalterable. It allows for trust in the information we are going to be reporting against. Blockchain creates a transparent, encrypted and secure record that companies have recently begun to use for ESG business relationships, including tracking ESG metrics, according to the SASB framework2; reporting about accidents or environmental incidents; and tracking employee data without putting it at risk. Blockchain enables automation and exchange of records, such as green energy certificates, tracking carbon emissions, sourcing sustainable supplies and tracing recycled materials.
Blockchain is not the only answer. Other companies have worked with providers to develop frameworks on platforms that create a structure for reporting. A typical program to map a supply chain would identify which information to collect, defining a methodology and performance indicators, deploying the tool to suppliers and then monitoring results. As they develop these information exchange platforms and structures, CIOs should also assess the analytics and reporting capabilities they have in place and which functionalities they will need to build for the future when preparing an environmental statement or other nonfinancial disclosure.