By Kate Sarmiento, Updated on 31 March 2023

Climate change is one of the most pressing global challenges facing humanity today. Businesses and organizations around the world are under increasing pressure to disclose their carbon footprint and take meaningful action to reduce their greenhouse gas emissions. The role of information technology (IT) in facilitating climate disclosure cannot be overstated.

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The amount of Greenhouse gas (GHG) we emit into the atmosphere is one of the biggest threats to every living thing on Earth. The excessive GHGs in the atmosphere are what cause global warming and the dire consequences of climate change we experience today. 

According to the Intergovernmental Panel on Climate Change (IPCC), if the Earth’s temperature rises above 1.5 °C, we will experience climate catastrophe, in which the effects of climate change become irreversible. 

In line with this warning, several green concepts and strategies emerged, including climate disclosure. And in this blog, we’ll learn more about what it is, the role of IT in facilitating it, and the associated challenges and opportunities. Let’s get started.

What is Climate Disclosure? 

Climate disclosure is a rule that requires public companies to provide information about their efforts to address this change. It can include the company’s carbon footprint, energy sources, climate-related risks, and emissions reduction strategies. Its goal is to demonstrate that companies are taking climate change seriously and showing transparency with their efforts. 

In the business aspect, climate disclosure helps companies build trust and generate positive public relations. Since more customers are becoming more aware of major global issues, they are also being more mindful of which businesses they support. Hence, by showing the public your efforts, you also build a good brand reputation. But know that it doesn’t end with that. Climate disclosure also helps you attract investors looking for sustainable investments, which are important for businesses to thrive.

The Role of IT in Facilitating Climate Disclosure 

Information Technology (IT) plays an important role in helping organizations with climate disclosure. It provides an infrastructure needed to collect, analyze, and store data on an organization’s carbon footprint. Plus, IT can help you track progress toward goals and communicate with your stakeholders and investors easily. Best of all, IT has tools that can be used to automate processes, which helps provide more accurate reports in real-time. 

Let’s take a closer look at the benefits of using IT in climate disclosure.

Opportunities in Facilitating Climate Disclosure by IT

Real-Time Data Monitoring

IT offers tools and systems to collect and analyze climate-related data in real-time. They may include energy meters, sensors, and other monitoring systems like a satellite. These technologies collect and analyze data, which helps companies identify issues, trends, and opportunities related to climate change. They provide a valuable resource for organizations to track and monitor their impact and make more sustainable decisions.

Process Automation 

IT also allows organizations to automate processes, which helps generate more accurate and reliable climate-related data. This type of automation can include everything from collecting and managing data from internal and external sources to analysis, reporting, and visualization of that data. It helps streamline the process and reduce human errors in calculations, data entry, and verification. As a result, organizations can produce more accurate, reliable, and timely reports.

Improved Visualizations 

Data visualization is the process of converting data into visual forms, such as IT charts and graphs. It is used to make large amounts of data easier to understand and interpret. The role of IT in this process is to provide the necessary tools and software to create visuals for reporting. As a result, investors and stakeholders can easily understand related data.

While IT offers many opportunities for climate disclosure, there are a number of challenges that you may face. Let’s take a look at some of them:

Challenges in Facilitating Climate Disclosure by IT

Lack of Standardization 

Since climate disclosure is still new and is not required for all companies, there is no single corporate governance model with wide-scale acceptance. Even though most companies follow the Task Force on related Financial Disclosures (TFCD) framework, they use different metrics and methodologies in measuring and reporting their efforts. This lack of standardization often leads to discrepancies that may compromise efforts on a global scale. 

Collecting Carbon Emission Data 

There are three scopes for collecting your company’s carbon footprint.

Scope 1 refers to direct GHG emissions from sources owned or controlled by the reporting organization. Meanwhile, scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heat, or cooling used by the reporting organization. 

Yet, scope 3 emissions are all other indirect emissions from sources not owned or directly controlled by the reporting organization. These might include employee commuting, business travel, the manufacture and transport of purchased materials, waste disposal, and upstream and downstream emissions associated with the organization’s activities. This is where the struggle happens. Since you have to monitor emissions happening outside your organization, it can be difficult to keep track of them.

Organizing The Data

Perhaps the most difficult challenge is organizing data. Due to the amount and complexity of the data IT systems may collect, it can be challenging to quantify the full extent of an organization’s climate-related activities. However, since it must be comprehensive to be easily understood by stakeholders and investors, you’ll still need to do it.

The Bottom Line

As the topic of climate crisis becomes more prevalent today, organizations must take part in mitigating it. One thing they can do is climate disclosure. And IT can help in facilitating the process by offering various tools and systems to streamline the processes. By learning about its challenges and opportunities, you’ll be able to take better and more sustainable actions. With everyone’s help, we look forward to achieving a greener future.