Enterprise ESG Strategy with Snowflake

Jul 12, 2023

Have you recently considered installing solar panels on your house roof to offset your domestic electricity bill? Do you carry bags to the local store instead of asking for plastic carry bags? Have you recently ditched your favorite gas-powered car for an electric one?

If you have been thinking or acting along those lines, you have already embarked on the ESG journey in your personal life. Environmental, Social, and Governance (ESG) is no longer just a distant buzzword but a framework guiding the future of organizations and individuals. For organizations, it is no longer about ‘winning.’ It must be ‘winning while caring.’ Organizations are required to generate economic value and care for the entire ecosystem contributing to its success.

The concept of ESG is based on the three pillars described below.

E (in ESG) stands for Environment. It tracks the impact of an organization on the environment through various aspects such as carbon footprint, emissions, energy intake, waste generation, or related activities. This has gained further importance as the degrading effects of climate change have become more evident in recent years.

S (in ESG) stands for Social. This involves tracking an organization’s operations concerning people and the societal structure within which it runs. It also involves monitoring the steps taken for the betterment of society in terms of diversity, inclusion, quality of life, and other factors.

G (in ESG) stands for Governance. This pillar refers to the internal systems of checks and balances that an organization implements to function per legal and regulatory needs while meeting stakeholder expectations. This aspect became prominent following the failure of large corporations during the 2008 financial crisis.

Source: https://www.techtarget.com/

ESG provides the framework for measuring an organization’s commitment to sustainable growth. Nowadays, there are multiple agencies, including NGOs and Financial Services firms, which publish ratings and scores with respect to the ESG commitment of organizations. Due to the increased focus on ESG-related factors, financial investors consider these ESG scores and ratings to drive their investment decisions. While growth is essential, there’s equal emphasis on sustainability. Consequently, organizations are also tracking and monitoring their ESG metrics to ensure they do what is necessary under the framework.

There are a variety of metrics that could be measured under the ESG framework, and the following table provides a sample set.

Source: https://www.paygovernance.com/

As imaginable, reporting these metrics would involve integrating and processing structured and unstructured data from many sources. The data sources, which provide data in different formats, could be internal to the organization or external. To paint an organization’s complete ESG picture, it may be required to look at data from diverse sources. They could be social media posts and reviews, regulatory filings, annual reports, company websites, news articles, press releases, forecast data, etc.

Hence, the entire process of collection and processing of ESG data to generate a meaningful outcome is fraught with multiple challenges. Some of them are listed below:

Complexity in sourcing data – Accessing the data from internal and external sources would require a complex and robust architecture.
Disjointed data from different source systems – Understanding data from unrelated data sources will be crucial to establish a meaningful connection but also quite challenging.
Data quality issues – Sorting out quality issues in the data acquired from various sources would be necessary for a meaningful outcome.
Managing the volume of data – Handling data that increases exponentially as more avenues of measuring and reporting ESG data come into existence could be difficult.

As with every other field, management, and data interpretation are important for ESG, and Snowflake provides the opportunity to get it done correctly.

Build a single, fully managed ESG data platform on the cloud: This would be the first step in solving the challenges. Such a platform will be the single source of truth for all ESG data needs. Organizations can integrate data from all possible sources on the cloud platform. This platform needs to be scalable and secure to ensure that it can successfully support the expected growth in data volume.

The Snowflake data cloud is ideally placed to address this challenge. Snowflake provides the flexibility to host the environment on a hyperscaler of choice and integrate data from all possible sources. Its scalable infrastructure and limitless connectivity offer tremendous potential. With Snowflake, organizations no longer have to worry about being able to establish connectivity between various sources of ESG data or store it securely and govern it within Snowflake. Along with that, they can leverage multiple sources of data available on the Data Cloud marketplace. Snowflake enables organizations to move away from data silos to one data platform providing storage, computing, and analytical needs.

Companies can also leverage LTM’s Spectra, a comprehensive DataOps platform from the Fosfor suite, to build a data platform of their choice. Spectra makes it easy to build and deploy data pipelines, integrating data from multiple sources of ESG information to build a single source of truth in Snowflake.

Moving data to the cloud offsets the carbon footprint, making it conducive to the ESG initiatives of an organization. LTM’s PolarSled FinOps offering can help organizations measure the exact ESG gains generated by the cloud move.

Build applications and analytics: Once the needed data has been sourced into Snowflake, organizations may leverage Snowpark capabilities to support almost every language for building analytical models. Customers can also leverage Streamlit capabilities to present analytical outcomes. This is important from the ESG perspective, as this would not only help organizations to understand their performance w.r.t various ESG parameters thus far but also make them cognizant about aspects where they are lagging from the desired or benchmarked performance and hence make them vigilant to deploy corrective actions as needed.

LTM’s Refract from the Fosfor product suite has made developing and deploying ML models on Snowflake easy. Lumin, another product from the Fosfor suite, is a decision intelligence platform that helps users analyze data and share insights without relying on data experts or complex coding skills.

Collaboration and Monetization of Data: The ESG data journey does not end with building a single source of truth and performing analytics. The data must also be shared externally. ESG scoring agencies look for data to incorporate into their algorithms so that investors or regulators can monitor and review the data to understand how the company performs on the ESG parameters.

Snowflake Marketplace allows organizations to monetize their data as a product and publish it for external consumption. For sharing more sensitive data, there are Data Clean Rooms that can be leveraged.

Conclusion

ESG is an opportunity and not just another obligation. There are apparent regulatory needs that are emerging. However, apart from these, organizations have invested in Corporate Social Responsibility (CSR) and other initiatives such as diversity and equality. An ESG framework provides an opportunity to measure and generate value from those activities. It offers the opportunity to showcase excellent work and invoke investor interest tangibly. Apart from the larger benefits, monetizing the data products is another advantage organizations can leverage.