Sustainability (ESG) performance measurement

“At Grundfos, ensuring the complete and accurate provision of sustainability data and its integration into the company’s operational and performance measurement processes is of paramount importance to us. In 2022, we introduced Sphera Cloud, the new corporate sustainability software. This allows us to further enhance the completeness and accuracy of ESG data within a single platform.”
Károly Nyári, Group Vice President FP&A

Company Name:

Grundfos

Implementation Year:

2022 –

Focus Areas:

Transparency, Responsible Corporate Governance, Corporate Strategy

Program Objective:

Accurate measurement and reporting of environmental, social, and corporate governance (ESG) performance are critically important to Grundfos for various reasons.

External and internal stakeholders, regulatory requirements, monitoring of our strategy, and voluntary commitments increasingly require the collection, recording, and credible reporting of various performance indicators.

We needed a solution that would streamline data collection, storage, and auditability across a complex organizational structure and various maturity levels. Our goal is to ensure that the quality of our sustainability performance data matches that of our financial data.

Program Measures and Commitments:

ESG considerations have been an integral part of our company’s operations since its inception, starting with internal regulations defining the proportion of employees with disabilities and extending to the inclusion of sustainability indexes in our strategy starting in 2020, with total CO2e emissions becoming one of our TOP6 KPIs from 2023.

It’s becoming increasingly evident that the quality expectations for ESG data are catching up with those for financial data.

Considering this, most of the knowledge and experience reside within the financial organization, which also has the longest history of audit processes. Additionally, given the evolving EU regulations and the rise of integrated reporting, it makes sense to integrate and align ESG reporting processes with existing financial reporting.

Improving data quality presents the biggest challenge, and there’s much experience and benchmarking to draw upon within the financial organization.

Within the Financial Planning & Analysis (FP&A) department of the Financial Directorate, a Sustainability Finance team was established with a central hub in Hungary. Team members bring different expertise and organizational backgrounds, providing significant advantages in shaping complex processes.

Taking into account existing and anticipated requirements, as well as internal ambitions, we initiated development efforts on multiple fronts. Besides introducing technical solutions that meet data collection requirements, we also started building related processes, with a particular focus on control processes and their proper documentation.

An increasing portion of the organization is getting involved in the new processes, so significant attention must be devoted to training and development for participants to better understand and comprehend the data they work with.

Given the size and complexity of the dataset, we need simple technical solutions to visualize performance and make tracking easier for decision-makers.

Program Impact and Results:

We introduced the SPHERA system, which enables unified data collection from all locations. We established a system for key performance indicators (KPIs) and data hierarchy. We also developed a Sustainability Scorecard Power BI report and the related reporting process towards top management and the Sustainability Council.

For our 2022 sustainability report, we achieved a “reasonable” level of assurance for energy consumption, water intake, Scope 1 and Scope 2 CO2e data, and a “limited” level of assurance for the entire report and remaining indicators.

Keywords

Data Collection, Sustainability Performance Measurement