High quality data and transparent reporting is a critical driver of corporate action on Environment, Social and Corporate Governance issues. It helps to track progress against targets, and increases transparency to enable decision-making by investors, consumers, suppliers, and governments.
Recognising this, in 2022 we evolved our approach to ESG data management by creating a new ESG Reporting function, comprised jointly of our Group Financial Reporting team and the Group Sustainable Business team. This has allowed us to leverage the data and reporting expertise of the Finance team and combine it with the subject-matter expertise of our Sustainability team.
Together the teams are working to improve the quality and timeliness of our ESG data, by applying financial reporting principles to our non-financial data. In 2022/23 this included creating an ESG data reporting handbook (with standardised definitions), establishing a control framework with clearly defined accountabilities, and securing limited external assurance on a selection of our ESG data points.
These changes have already yielded positive changes in terms of data quality and set a firm basis from which to grow. However, we acknowledge that there is a long road ahead for all businesses before ESG disclosures match the quality of financial disclosures.
The absence of a single, consolidated framework for ESG reporting exacerbates the challenge for all reporters. Although efforts are being made to standardise ESG reporting, we are seeing an increasing number of competing reporting requirements from both governments and non-governmental standard setting bodies. Whilst consolidation of these standards will come, many companies are currently faced with a significant uplift in requirements. In the short-term this may put an undue burden on companies' sustainability agendas. This is especially challenging for companies like Vodafone with a global footprint and an expectation for compliance across multiple jurisdictions.
This challenge is set to increase as Scope 3 carbon emissions come into focus. Reliable and standardised data from across an entire value chain is fundamental to driving down emissions. Today, however, most companies are relying heavily on estimates and assumptions for their Scope 3 emissions. Industry collaboration and standardised reporting will be crucial to tackling this challenge.
In the months and years to come, we look forward to working with partners to develop simplified and standardised reporting standards, and with our suppliers to increase the reliability of their data. Each year of ESG reporting is a learning experience. In the spirit of transparency and cooperation, at Vodafone we will continue to share our learnings across our stakeholders and industry, as well as of course using them to improve our own performance.