SUSTAINABILITY: WEALTH’S HALF-SISTER

or about the issue of data in formal sustainability reporting

A HISTORY

Luca Pacioli was an Italian mathematician and Franciscan friar, born around 1450. He is considered to be the founder of accounting and accounting reporting and seems to have been the first to publish a paper on the double-entry accounting system. He is also known for his work in mathematics and collaborations with Leonardo da Vinci. In his works, Pacioli insisted on the importance of ethics in business, often relying on his spiritual affiliation. In his world, ethics was a focus on recording and reporting financial or adjacent assets.

Paciolo introduced 600 years ago, a measurable and formal picture of wealth.

A POSSIBLE FUTURE

Recently, a new dimension of wealth that wants to be measurable has emerged and formally crystallized: sustainability (sustainability). Formal sustainability reporting is beginning to carry the same load as accounting as we know it today. Managers along with economists should prioritize, in addition to wealth of financial (and business) assets, another form of wealth that has more to do with ethics. We know that very soon the moral dimension of this kind of wealth will be transformed into financial wealth. It is undoubtedly moving towards a transactional development of the whole concept. So, will we be able to go to the shop with sustainability assets to buy goods and services? Most likely, yes; They will also have a real financial understanding.

Sustainability assets will be less volatile than cryptocurrency; They appeared in the context of the noblest goal that can be associated with the human being: the salvation of humanity.

In this context, sustainability is increasingly becoming an integral component of wealth, especially in asset and investment management. Therefore, the way individuals and corporations perceive and measure wealth is changing, moving from a purely financial perspective to a holistic one, which includes sustainability factors with all the psychological charge of the concept. Here are some ways this happens:

· Investment. More and more investors are considering environmental, social and governance (ESG) factors in their investment decisions, recognizing that firms with strong sustainability practices can be better long-term bets.

· Value. There is a growing understanding that companies that prioritise sustainability are likely to be more successful and resilient in the long term. This can increase the value of assets held by shareholders and can be a significant component of a company’s overall value.

· Risk. Climate change and other sustainability issues pose significant risks for many companies; This way companies can protect and enhance their value.

· Market. It is observed that in recent years, consumers are increasingly choosing to align themselves with businesses that prioritize sustainability. This transformation of consumption can impact a company’s reputation, brand value, and overall value.

It seems that, although it is a paradox, there is a growing consensus that sustainability and financial success are not mutually exclusive, but are in fact deeply interlinked. Achieving this has led to a paradigm shift in how corporations operate and how investments are made, with sustainability becoming a critical component of wealth in the 21st century.

PROBLEM: INCOMPLETE INFORMATION

Wealth related to sustainability assets does not impose itself as transactional value (yet) because it has a problem today related to data accessibility and broad estimates values. Moreover, the absence of data creates extensive greenwashing phenomena without the rational possibility of audit and punishment.

Sustainability reporting involves organisations providing information about their economic, environmental and social impacts caused by their daily activities. However, the industry faces several data challenges, which can make it difficult to produce reliable, comparable, and useful reports. Here are some of these challenges that directly affect the effective participation of sustainability in the wealth equation:

1. There is a lack of globally recognised standards for what should be included in a sustainability report, what metrics should be used and how they should be measured. This can make it difficult to compare the performance of different organizations.

2. The data used in sustainability reports is self-reported by organizations, leading to questions about their reliability and accuracy. There is also the issue of greenwashing, where some organizations may exaggerate or distort their sustainability efforts.

3. Collecting all the data needed for a comprehensive sustainability report can be a complex and resource-consuming task. Many organizations struggle to effectively collect, manage, and analyze the vast amount of data needed without a digital interpretation of context.

4. Many important aspects of sustainability (e.g. social impacts, biodiversity) are difficult to measure and quantify and there may not be formally agreed methodologies for this.

5. Given potential problems with self-reported data, there is a need for independent verification or auditing of sustainability reports. However, this can be complex to achieve.

The collection and processing of sustainability data is a complex and difficult topic to solve after 600 years of focus on financial assets. Information systems, corporate culture, and management training are inappropriate for this task. However, neglect of sustainability practice will lead directly to major impairments of financial assets.

WE, ENTERTEQ

Enterteq Software, through its shareholder-supported R&D programs, seeks modern technologies for data capture and processing. Thus, by developing and using a machine learning system, notable performances have been achieved in increasing data accuracy, processing accuracy and their allocation, as well as applying calculation algorithms in accordance with current standards. The systems currently developed cover data collection and allocation requirements for several industries such as finance, banking, oil and gas, services, retail, telco.

We can collect, process and secure our clints sustainability data by a sustained research effort in applied AI with the components data science and NLP.