The Hidden Costs of Using Publicly Available ESG Data – And How to Fix It

Sustainability has become a critical focus for businesses, investors, and regulators worldwide. Companies are under growing pressure to report their Environmental, Social, and Governance (ESG) performance, and many rely on publicly available ESG and sustainability reports to assess risks and make investment decisions. However, these reports come with major challenges, from data inconsistency to greenwashing risks.

So, what’s the problem with relying on public ESG data, and how can it be solved?

The Big Problems with Public ESG Data

1. Lack of Standardization
ESG reporting lacks a single universal framework. Companies can choose from different standards, such as GRI, SASB, CSRD, and TCFD. Because each framework has different methodologies and priorities, comparing ESG performance across companies is difficult. Some businesses selectively report data that aligns with their chosen framework, creating inconsistencies in benchmarking.

2. Greenwashing and Data Manipulation
Many companies publish sustainability reports to enhance their brand image rather than provide a transparent view of their ESG impact. Greenwashing—misleading claims about sustainability efforts—is a growing concern. Without verification, companies may omit negative data, exaggerate their progress, or set vague sustainability targets with no clear accountability.

3. Delayed and Incomplete Data
Public ESG reports are typically released annually, meaning investors and regulators rely on outdated information. Additionally, key ESG factors such as carbon emissions, water usage, and supply chain impacts are often incomplete or missing from these reports, making accurate assessments nearly impossible.

4. No Verification or Independent Auditing
Unlike financial reports, most ESG data is self-reported and unaudited, making it difficult to verify its accuracy. Some companies use internal sustainability teams to compile reports without independent oversight, leading to potential data manipulation and bias.

5. High Costs of Data Cleaning and Interpretation
Companies and investors must manually clean and interpret ESG data due to inconsistencies across reports. This process is time-consuming and costly, requiring specialized ESG analysts to standardize data before it can be used for decision-making. Many businesses spend tens of thousands of dollars on this process, making ESG analysis expensive and inefficient.

A Smarter Solution: Verified, Standardized, and Direct ESG Data

Instead of relying on inconsistent and outdated ESG reports, companies and investors need a better data model — one that integrates real-time, standardized, and verified sustainability information. A centralized ESG data platform can solve these problems by offering the following features:

1. Standardized ESG Data Across All Frameworks

• A data standardization engine can automatically align ESG disclosures across major frameworks (CSRD, TCFD, GRI, SASB, etc.), ensuring consistency.
• AI-powered tools can convert and map sustainability metrics into a unified structure, eliminating discrepancies.
• Investors and regulators can compare companies using a single, standardized set of ESG indicators.

✅ Impact: Ensures accurate, comparable data, making benchmarking easier and more reliable.

2. Direct ESG Data Collection from Companies

• Instead of relying on outdated reports, the platform allows companies to submit ESG data directly in real time.
• Companies can update key ESG metrics throughout the year rather than waiting for annual reports.
• Investors and analysts receive faster, more relevant data to assess company performance.

✅ Impact: Eliminates data delays and ensures access to the most recent ESG information.

3. Third-Party Verification and Blockchain for Transparency

• To prevent greenwashing, companies must submit verification documents from auditors and third-party assurance providers.
• Blockchain technology can track and log ESG data submissions, ensuring data integrity and security.
• Companies can attach audit certificates to their sustainability reports, proving compliance with global standards.

✅ Impact: Increases data trustworthiness and transparency, reducing the risk of misleading ESG claims.

4. Automated Compliance Monitoring

• A real-time compliance engine can automatically flag gaps, errors, and missing data in company disclosures.
• Businesses receive alerts when their ESG reporting falls short of regulatory requirements (e.g., EU Taxonomy, SFDR, SEC rules).
• The platform can generate custom compliance reports based on regional laws and industry standards.

✅ Impact: Ensures businesses remain compliant with evolving ESG regulations, avoiding fines and reputational damage.

5. Smart Benchmarking and Analytics

• AI-powered benchmarking tools allow companies and investors to compare ESG performance across industries, regions, and peers.
• Historical ESG data can be analyzed to identify trends, assess risks, and measure long-term sustainability progress.
• Companies can gain insights into how competitors are performing and where they need to improve.

✅ Impact: Supports data-driven decision-making for investors and corporate sustainability teams.

Why This Approach Works

A standardized, verified, and direct ESG data collection platform offers multiple benefits:

✔ Accuracy – Removes inconsistencies by standardizing all ESG disclosures.
✔ Transparency – Prevents greenwashing through third-party verification.
✔ Timeliness – Provides real-time ESG data instead of outdated reports.
✔ Cost Efficiency – Reduces the need for manual data processing and expensive ESG analysts.
✔ Regulatory Compliance – Ensures businesses meet global ESG reporting requirements.

By integrating these features, companies can move beyond ESG guesswork and make truly data-driven sustainability decisions.
Would you trust ESG data that isn’t verified? Let’s start the conversation.