Connecting master data management with sustainability – is it a far reach?  I don’t think so.  When a company has clean master data that is effectively organized, it is simpler to roll up reporting for customers, vendors, materials, sales, employees, etc. Reporting and analyzing data directly supports the business goal to drive triple bottom line results and sets the stage for bold transparency through Integrated Reporting (i.e., integrating financial and operational reporting with environmental and social responsibility metrics).  I think the “hot spot” data to collect and maintain for sustainability is material data, human resources data and vendor data.

Material Data: Consumers are increasingly expecting companies to prove product sustainability.  Examples of data collected in the material master that might be useful for sustainability reporting include data about product origin, product amount used, and material type (e.g., hazardous).

Human Resources Data: Employee data (age, gender, race), benefits (pay, compensation), and policies make up a large part of a company’s social sustainability metrics.  Important aspects of social sustainability include equitable hiring, compliance with corporate governance policies, productivity, talent attraction, retention and workforce costs, all of which are linked to and supported by human resource master data.

Vendor Data: Society is more frequently holding companies accountable for not only their actions, but also the actions of their suppliers.  Companies like Walmart are taking this societal challenge very seriously. Supplier master data must be acquired and maintained for companies to take on this responsibility, and the first step in the process is to establish a relationship and/or contractual agreement that enables a free flow of data.  This shared information can be leveraged in many ways.  One example is mapping geographic locations of company facilities to identify natural disaster risks to the supply chain.  This example became a common concern after the 2011 Japanese tsunami slowed production for many companies. The metrics mentioned above are now included in GRI (Global Reporting Initiative) guidelines and the IIRC (International Integrated Reporting Council) framework, and many other reporting organizations’ guidance.  The intent of these reports is to measure data that demonstrates the value of sustainability-related initiatives and to track the progress that companies are making towards a more stable, sustainable future.  South Africa has mandated businesses to report according to the IIRC framework that includes metrics such as those mentioned above.  France has also mandated the same requirements for all businesses that have 500+ employees. Some predict that this reporting trend will move to America within the next 5 years, replacing standard SEC annual filings with an Integrated Report that would combine SEC financial information with sustainability information.  These data requirements are advancing as sustainability touches more of the business.  Companies that start to collect and organize this data now will have a competitive advantage as the compliance requirements grow. At Clarkston, we help companies create and implement master data strategies that lay the foundation for sustainability reporting. Feel free to contact us to discuss more about how we help companies prepare for the future.

One example is mapping geographic locations of company facilities to identify natural disaster risks to the supply chain.  This example became a common concern after the 2011 Japanese tsunami slowed production for many companies. The metrics mentioned above are now included in GRI (Global Reporting Initiative) guidelines and the IIRC (International Integrated Reporting Council) framework, and many other reporting organizations’ guidance.  The intent of these reports is to measure data that demonstrates the value of sustainability-related initiatives and to track the progress that companies are making towards a more stable, sustainable future.  South Africa has mandated businesses to report according to the IIRC framework that includes metrics such as those mentioned above.  France has also mandated the same requirements for all businesses that have 500+ employees. Some predict that this reporting trend will move to America within the next 5 years, replacing standard SEC annual filings with an Integrated Report that would combine SEC financial information with sustainability information.  These data requirements are advancing as sustainability touches more of the business.  Companies that start to collect and organize this data now will have a competitive advantage as the compliance requirements grow. At Clarkston, we help companies create and implement master data strategies that lay the foundation for sustainability reporting. Feel free to contact us to discuss more about how we help companies prepare for the future.