The Earth’s average global temperature has increased by about 1 degree Celsius (1.8 degrees Fahrenheit) since the pre-industrial period. This has been largely attributed to human activities related to the burning of fossil fuels like coal, oil and gas which then generate greenhouse gas emissions. These emissions act as a blanket that traps the sun’s heat within the Earth’s atmosphere and raises the temperature. This is only the beginning of the climate change cycle.
The impact of warmer temperatures has far-reaching consequences - from droughts, flooding, wildfires, and rising sea levels to declining biodiversity and increased famine. Whilst the goal is to reduce emissions to net-zero by 2050, 196 countries signed on to the Paris Agreement in 2015 to limit global warming to 1.5 degrees Celsius. However, to achieve this, emissions must be reduced by 45% by 2030. It takes a (global) village to work together to address climate change, because, after all, the Earth is an interconnected system where changes in one area have rippling effects across other areas, and each global citizen has a role to play.
Time is truly of the essence.
The Collective Movement to Address Climate Change
We are seeing unprecedented coordination and leadership amongst stakeholders in committing to climate change action. CEOs of global companies are calling upon world leaders to collaborate with the private sector and take bolder actions to fight climate change. The European Union has incorporated ambitious initiatives to cut greenhouse gas emissions and invest in cutting-edge research and technologies to preserve the environment as part of the European Green Deal. In the US, the SEC Chair Gary Gensler recently announced that the Commission will be developing a rule on mandatory climate disclosure by the end of 2021 to meet the demands of investors who are calling for consistent, comparable and decision-useful disclosures on climate change. The sense of urgency to solve this problem is clear and immediate. According to Bloomberg research, ESG assets under management could comprise more than a third of global assets under management by the year 2025, signaling the importance of ESG considerations in the allocation of resources. Organizations like Random Acts of Green are empowering and inspiring individuals to take action to address climate change.
Addressing climate change is a collective responsibility.
How does idaciti Play a Role in Achieving Climate Change Targets?
At idaciti, we are firm believers that collaboration is the key to addressing climate change. One country, regulator, company, individual or investor alone cannot solve this problem. We know this because we have seen this first hand and have lived through the movement to digitize and structure financial information since its inception. This effort took vision, passion, commitment and, most importantly, agreement that all stakeholders from around the world needed to work jointly together for a common good. We all came to the problem with the realization that we each had something important to offer - from accounting knowledge, data modeling and taxonomy expertise, to technology and software development.
We know that there are a plethora of companies out there, large and small, that specialize in analyzing climate and environmental data, generating insights and affecting progress towards achieving climate change targets. We, on the other hand, are committed to, and have always been, passionate about turning data into actionable insights. Whether it is in the financial/XBRL world, or in the ESG domain, we do what we do best - structure data from unstructured documents in real-time and at scale, and deliver cleansed, useable data to end users so that they can make the best decisions in a timely manner.
It’s Time to Move Forward. Together.
We see the ESG domain coalescing around some common goals, like the need for stakeholders to work together, and the need for a single, standardized reporting framework. There are many lessons that could be learned from the financial domain with the development of a global digital standard for financial reporting (XBRL) and the cooperation of accountants with technologists, and regulators with companies and investors.
We see many climate-focused companies trying to solve the same problem of collecting data from unstructured CSR disclosures and documents, but we have already solved this problem at scale. The idaciti team has harnessed our many decades of collective experience structuring quantitative and qualitative financial disclosures and have deployed our knowledge and technology to solve this part of the ESG equation.
Do you need to reinvent the wheel to structure climate data from unstructured disclosures or do you want to simply accelerate out of the gate to use this cleansed data to generate the actionable insights and tracking that we so desperately need... now.
At the risk of sounding hyperbolic, we need to collectively act immediately and focus on what we each do best – for the sake of safeguarding the Earth and our common good. We cannot change the past, but we can change the future.