Analytics maturity rising to achieve ESG goals: Melbourne Business School and Kearney

Melbourne Business School and consulting firm Kearney’s fourth edition of their Analytics Impact Index (Aii) reveals that analytics maturity to achieve environmental, social, and governance (ESG) outcomes is growing.

The report which is based on surveys of more than 300 companies across 35 industries in the US, Europe, Africa, Middle East and Asia Pacific analyses the increasing pressure for businesses to deliver on a triple bottom line (TBL).

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While the authors describe the current maturity level of analytics in the ESG space as “nascent”, and the majority of companies are unaware of the impact of analytics on environmental sustainability, the report did reveal that analytics is responsible for a 39 percent of waste and emissions reduction for those that implemented it as part of their sustainability agenda.

According to the authors, "With the right implementation of analytics and digital technologies, firms can enable new efficiencies throughout new production methods or an optimised supply chain.

"For example, companies can use data-based insights to assess supplier performance trends to then provide visibility into supplier governance. Companies can also utilise analytics to optimise their distribution network, enabling them to minimise environmental impact caused by transportation."

The index compares companies based on how advanced the analytics function is and its impact on the business' profitability. Organisations are then categorised as either laggards, followers, explorers or leaders.

According to Enrico Rizzon, partner APAC solutions lead at Kearney, the ways that Australian companies are leveraging analytics to meet their ESG goals varies greatly.

"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,” said Rizzon.

"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.”

Just 12 percent of companies surveyed are considered leaders, where the c-suite are committed to the organisation's clearly defined analytics strategy. This is down from 16 percent year on year. 

The third edition of the report found that the two key ways for leaders to progress analytics in their organisations is through big data and artificial intelligence (AI). This year’s report however reveals that analytics is where leaders are investing to optimise processes.

According to the index, 76 percent of leaders have leveraged analytics to the success of their environmental sustainability efforts, while those that invested in analytics for governance saw a ten times improvement.

“The past couple of pandemic years revealed how important sustainability (more broadly) is in a crisis. Having witnessed loss of employment, shortage of talent, rising food insecurity and supply chain disruption around the world. These issues have led companies and society at large to better understand the importance of sustainability more broadly and for the need to be better prepared for such shocks in the future,” said Rizzon.