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ESG Data Managementand AnalyticsUsing data analytics to generate valuable insights into your ESG performance8 April 2021

YO U R H O S T S TO DAYAnne Kathrine Wennergren HolmPartnerResponsible Innovation & Tech Digital Ethics . 2021 Deloitte Climate & SustainabilityHelena BartonPartnerSustainability ESG Climate RiskCarsten Brøns AndersenSenior ManagerResponsible Innovation & Tech Digital Ethics2

A G E N DA1.What is ESG data and why are we talkingabout it?2.What is the foundation for mastering ESGdata?3.How can we use ESG data and AI/ML toachieve greater insights and make betterdecisions? 2021 Deloitte Climate & Sustainability3

What is ESG data and why arewe talking about it?4

ES G DATA TA K E M U LT I P L E FO R M S A N D R ES I D E A C RO S S M U LT I P L EC O R P O R AT E A N D PA RT N E R S Y S T E M SEXAMPLES OFENVIRONMENTALSOCIALGOVERNANCETOPICSEEnergy consumptionCarbon emissionsWater consumptionWaste managementSWorking conditions, health & safetyHuman rights and labour rightsDiversity and inclusionPrivacy and data securityG 2021 Deloitte Climate & SustainabilityAccountability and oversightEthical conductExecutive remunerationEXAMPLES OFTYPES OF DATAConsumption dataSafety dataEmissions dataSurvey data***Status reports (unstructured)RSS feeds ES OFDATA SOURCESExtracts from ERP system,HR, HSE and other corporatesystemsPerformance data collectedfrom suppliers, partners andother third partiesMedia (incl. social)Satellite imagery and geolocation dataOther public data5

FO C U S O N A C C ES S I B I L I T Y, AVA I L A B I L I T Y A N D T R A N S PA R E N C YO F ES G DATA I S A C C E L E R AT I N GR E G U L AT O R S , I N D U S T R Y B O D I E S ,A N D S TA N D A R D - S E T T E R SREGULATORS, INDUSTRY BODIESINVESTORS, CUSTOMERS& O T H E R S TA K E H O L D E R SDATA AND INDEX PROVIDERS 100 FRAMEWORKS AND STANDARDSKey Questions: Data Availability – How do we get complete, reliable data? Data Management – How do we operationalize and work with the data? Data Transparency – How do we report our data? What does it tell us? 2021 Deloitte Climate & Sustainability6

What is the foundation formastering ESG data?7

M A N Y C O M PA N I ES A R E G R A D UA L LY I M P ROV I N G T H E Q UA L I T YO F ES G DATA M A N A G E M E N T FO R B E T T E R D EC I S I O N - M A K I N GData qualityand maturityLEADINGADVANCEDFOUNDATIONAL Existing data usage (emails,production units, F&A, HR, HSEsystems)Spreadsheets (and post-its)Manual data managementHigh-level partner input (e.g. fromreports) Standard ESG reporting toolsBI/Analytics dashboardsDetailed supply chain reportingSourced third party dataInvesting in ”for-purpose” solutions(often AI-powered) Boardroom using ESG data-driven insightsAdvanced ESG forecasting and predictions at theheart of strategic decision-makingExploration and investment in solution-buildingand data acquisitionESG data of sufficient quality to be tied tocompensation and bonus schemesEcosystem collaboration around newtechnologies, business models and partnershipsESG data is evolving from static and backward-looking to dynamic and forward-looking, harnessing the digital revolution. 2021 Deloitte Climate & Sustainability8

ICLead for RegionAmericaLead for Region AsiaICContact forLocation AICContact forLocation BContact forLocation CICICData ControllerData ControllerData ControllerData ControllerLocation AProcurementLocation BProcurement 2021 Deloitte Climate & SustainabilityICData ControllerLocation CICLocal Requirements and LegislationData ControllerData Entry and Quality ControlAccounting Principles and Data ProtocolsS T RO N G G OV E R N A N C E I S N E E D E D TO B U I L D T H E C O N T RO LE N V I RO N M E N T FO R ES G DATA TO T H E L E V E L O F F I N A N C I A L DATADataManagementSystemsInternalControl9

G E T T I N G ES G DATA R I G H T R EQ U I R ES A S T RO N G FO U N DAT I O NA N D S Y S T E M I C A P P ROA C H A C RO S S I T, P RO C ES S ES A N D C O N T RO LDefinition of Metrics and Data Transparency Scope of Consolidation and Reporting ScopeESG-MonitoringLeadaMetric definitions, standard protocols and measurementsCompliance with relevant external standardsAlignment of assumptions, projections, measurements and the use of conversion factors in calculationsProtocol for avoiding aggregations- and conversion errors (US ton vs. metric ton) Consistent scope of consolidation and reporting period with key financial figures Specification of ‘consolidation groups’, e.g. ensuring alignment on which locations are relevant for collection ofenvironmental indicatorsRegion AmerikaRoles and Responsibilities Clear allocation and definition of ownership and responsibilities as well as adequate competencies Formal procedures to ensure sufficient knowledge-sharingContact forLocation BProcesses and ITContact forLocation n BProcurementLocation C Formal reporting processesCorporate reporting requirements and alignment of processes at each relevant locationDefinitions and descriptions of relevant dataUse of IT-systemsClear and robust interfaces between manual and automated processesInternal Control Systems 2021 Deloitte Climate & Sustainability Formal and operational control systems for non-financial key metricsDesign – Controls are designed to address the risk of false statementsImplementation – Ensuring that the controls are correctly implementedOperating Effectiveness – Ensuring that the controls are working optimally10

How can we use ESG data andAI/ML to achieve greater insightsand make better decisions?11

DATA - D R I V E N I N S I G H T S R EQ U I R E V I G I L A N C E A N D A L I G N M E N T– A N D T H E I N VO LV E M E N T O F YO U R E N T I R E EC O S Y S T E MKnow whereyou standIterate, innovate andcollaborate to increaseinsights and impactVisualize risks andopportunitiesBuild scenarios andforecasts 2021 Deloitte Climate & Sustainability12

C O L L EC T, C O L L AT E , A G G R EG AT E A N D A N A LY Z E A L L R E L E VA N TES G DATA TO D E L I V E R R E L I A B L E M EA S U R E M E N TWhat it takesA full overview of and accessto ESG data in internal as wellas relevant partner systemsand reports.OptionsLeverage Cloud, automation, process anddata mining to identify areas that can beoptimized, and deliver transparency across allrelevant stakeholders.Know whereyou standIterate, innovate andcollaborate to increaseinsights and impactVisualize risks andopportunitiesBuild scenariosand forecastsBENEFITSClarification of ESG data availability andbaseline measurements. Clear overviewand ‘activation’ of relevant corporatedata-sources (and gaps).How to get startedCreate an ESG data heatmapand prioritize areas to improveby building e.g. a materialitymatrix or performing abusiness value measurement. 2021 Deloitte Climate & SustainabilityExample – Insights for CFOsData Management PlatformsChallengesEnsuring that all relevant data isdigitized and ‘online’. Ensuring theright levels of access and the rightbreadth of capabilities.Standardize, collect and aggregate ESGdata in 1 cloud platform with full audit trail13

E N S U R E M A N A G E M E N T A L I G N M E N T A N D B A S E D EC I S I O N S O NI N S I G H T I N TO M O S T M AT E R I A L R I S K S A N D O P P O RT U N I T I ESWhat it takesA full overview of and accessto ESG data in internal aswell as relevant partnersystems and reports.OptionsCombine AI, data science and ESG insightswith data management, data visualization,intelligence and dashboard solutions topresent executive management and boardwith status, risks, opportunities and options.Know whereyou standIterate, innovate andcollaborate to increaseinsights and impactVisualize risks andopportunitiesBuild scenariosand forecastsBENEFITSStrong basis for communicating andensuring alignment with key internalstakeholders on ESG-initiatives, key focusareas and impacts across the company.How to get startedCreate a sprint to build a firstgeneration dashboard on thehighest prioritized ESG-targetsand iterate with keystakeholders. 2021 Deloitte Climate & SustainabilityExample – Insights for CEOsChallengesAligning strategic ambitions with ESG risksand opportunities. Creating a strong anddiverse team to build data stories andsolutions. Ensuring robust governance todevelop solutions across the company.Global physical climate risk analysisInvestment Portfolio risks and exposures14

C O M B I N E DATA A N D D I G I TA L T EC H TO FO R EC A S T A N D P R E D I C TT H E M O S T I M PA C T F U L A C T I V I T I ES A N D I N V ES T M E N T SWhat it takesComprehensive datamanagement and visualizationskills applied on top of a stateof-the-art IT/data architecture.OptionsMerge the digital and the virtual worldthrough Big Data, IOT, Digital Twin andDistributed Ledgers technologies.Know whereyou standIterate, innovate andcollaborate to increaseinsights and impactVisualize risks andopportunitiesBuild scenariosand forecastsBENEFITSStrong data, analytics and AI skills willmaximize impact by enabling real-timeinsights and abilities to pro-actively takeaction.How to get startedStart by looking at your existingportfolio of ESG projects andpartners, then assess who in themarket shares your values andESG goals. 2021 Deloitte Climate & SustainabilityChallengesSecurely integrating third partysystems and data with legacy.Ensuring the right capabilities aremobilized across the company andable to deliver on short responsetimes.Example – Insights for COOsDigital Twin Architecture to combine insights,analysis, and simulations based on real data15

C O N T I N U E TO I T E R AT E A N D C O L L A B O R AT E TO F I N D N E W WAY STO I N C R EA S E I N S I G H T S FO R G R EAT E R I M PA C TKnow whereyou standWhat it takesA dedicated team, workingwith an ecosystem of trustedand like-minded partners toexperiment.OptionsIncrease impact and knowledge generationby adopting new, fast and iterative ways ofworking to leverage the value of agile andcollaboration.Accelerate knowledge acquisition bysharing and working closely withresearch institutions, experts, startups, competitors, etc. 2021 Deloitte Climate & SustainabilityVisualize risks andopportunitiesBuild scenariosand forecastsBENEFITSHow to get startedDefine initial use case forcollaboration and seek outtrusted partners to support.Iterate, innovate andcollaborate to increaseinsights and impactChallengesIdentifying the trusted partnersand technologies that will deliverthe highest value and impact.Ensuring foundation for securecollaboration on sensitive data.Example – Insights for EveryoneGreen Sustainability Hub - leveraging aplatform to make all datasets availablefor collaboration to relevant stakeholders16

ES G DATA A N A LY T I C S C A N O P E N U P FO R D E E P I N S I G H T S T H ATD R I V E B E T T E R D EC I S I O N - M A K I N G provided there is the right architecture, governance and vigilance in place.Getting ESG data management right is an iterative process thatrequires a continuous commitment to improving skills,competencies and ways of working.Meaningful insights and impacts cannot be delivered alone by acore ESG-team but require the commitment of the entirecompany, often in collaboration with partners, suppliers andcustomers.This simple loop starts with getting the ‘data foundation’ inorder and then gradually increasing the technical complexity todeliver greater insights and impact. 2021 Deloitte Climate & SustainabilityKnow whereyou standIterate, innovate andcollaborate toincrease insights andimpactVisualize risks andopportunitiesBuild scenarios andforecasts17

K E Y TA K E - A W AY S1. ESG data is evolving from static and backward-looking to dynamic and forward-looking,harnessing the digital revolution.2. Embrace robust ESG data as a new window into your business. It will help you to governsustainability at scale and achieve real ESG impact.3. Keep calm. It’s a journey. Start small and allow to grow big. 2021 Deloitte Climate & Sustainability18