Analytics Impact Index: How data is being used to drive ESG initiatives
The use of analytics to drive environmental, social and governance initiatives is expected to grow significantly in coming years.
Melbourne Business School and global management consulting firm Kearney have this week launched their annual Analytics Impact Index report, based on surveys of more than 300 global companies across 35 industries.
The fourth edition of the report uncovers the value of addressing the "triple bottom line" through analytics and explains that while analytics maturity in the environmental, social and governance (ESG) space is nascent, it is expected to grow notably as pressures mount for companies to commit to environmental sustainability and social responsibility.
The findings show that most companies are unclear on the link between environmental sustainability and analytics, but those that have implemented analytics to optimise processes have reduced waste or emissions by 39 per cent. Leaders and Explorers invest twice as much relative to Laggards and Followers in social impact initiatives.
"Australian companies are starting to leverage analytics in the ESG space," says Enrico Rizzon, Partner, APAC Solutions Lead at Kearney.
"However, application of analytics across each one of the E, S and G initiatives varies considerably.
"On the Environmental front most companies lack any initiatives which are turbo-charged by analytics. In contrast, many companies are leveraging analytics when it comes to social initiatives, especially around addressing diversity, equity and inclusion.
"When it comes to driving corporate Governance, using analytics is a tale of two extremes: at one end there are several organisations harnessing analytics and technology fully, from automating reporting, improving risk management, and minimising governance related concerns, and at the other end there are organisations who are not doing any of these and are still relying on traditional methods."
This year's Analytics Impact Index shows a marginal drop in the number of companies considered Leaders and Explorers, while the percentage of Followers and Laggards has increased.
Interestingly, longitudinal analysis indicates that it is far harder to move from an Explorer to a Leader than it is to move from a Laggard to a Follower. Consistent with all previous reports, profit returns are correlated with analytical maturity – Laggards would be able to generate 61 per cent more profit, on average, if they acquired the maturity of Leaders.
The Analytics Impact Index is an annual study by Melbourne Business School's Centre for Business Analytics and global management consulting firm Kearney. You can read more and download the latest report here.
The Centre for Business Analytics was founded in 2014 to address the worldwide demand for analytics research and knowledge. Its mission is to be a key catalyst to help Australian businesses gain a distinctive competitive advantage through harnessing the trilingual insights of business, mathematics and technology.
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