KPMG Urges Companies to Shift Sustainability Data from Compliance to Strategy

KPMG's US Sustainability Leader Maura Hodge and ESG Data and Technology Senior Manager Anthony Hui argue that leading companies are transforming sustainability data management from a compliance function into a strategic business asset, driven by three fundamental shifts toward automation, integration, and predictive analytics. According to a 2024 MSCI study, companies with higher sustainability ratings benefit from financing costs averaging 6.8% versus 7.9% for lower-rated peers.

The authors identify fragmented data collection and management as the number one challenge in sustainability reporting, with disparate systems and inconsistent definitions making it difficult to produce comparable, reliable, and timely sustainability information. Leading companies have deployed AI and machine learning solutions to rapidly capture, validate, and analyse sustainability data across their businesses, moving away from manual data entry by regional managers into spreadsheets. Direct data feeds and AI tools can rapidly identify consumption anomalies and pinpoint facilities with material opportunities to enhance energy efficiency.

Forward-thinking companies have created unified data ecosystems that integrate sustainability metrics with financial and operational data, enabling real-time visibility into how environmental and social factors impact business performance. Large utility companies are leveraging smart technologies to feed real-time data into centralised repositories and generate digital twins of key assets. In the insurance sector, predictive capabilities for forecasting climate events have become critical given USD 162 billion in global economic losses from natural catastrophes.

KPMG recommends a phased approach: starting with how sustainability can create or preserve business value, conducting a data audit to identify gaps, evaluating existing enterprise technologies, establishing clear data ownership and validation protocols, and adopting a phased implementation beginning with high-impact, low-complexity initiatives. The authors argue that companies viewing sustainability data management as a strategic imperative rather than a compliance burden will be best positioned to thrive in an increasingly transparent world where the ability to act on sustainability data is a prerequisite for sustainable success.

Key figure — 6.8% vs 7.9% financing cost