Putting people and the planet ahead of profits may sound profoundly idealistic to some business leaders, but climate and social crises around the world have placed environmental awareness at the center of business agendas.
At least 88% of publicly traded companies are embracing environmental, social and governance (ESG) standards, and companies like Deloitte, Bank of America, IBM, and Unilever are adhering to more advanced conscientiousness principles.
What is ESG?
Environmental, social and governance compliance is a tangible framework through which companies and investors evaluate sustainability in an effort to transition our economy from a linear economy to a circular one. The goal is to balance economic pressures with societal needs.
An increasing number of investors are including ESG in financial management reviews and business development roadmaps, steadily expanding ESG’s importance from the perspective of securing capital; both equity and debt.
Boards, C-suites and other enterprise leaders need to assess how to meet new expectations, uncover new opportunities to create value through ESG, and dedicate resources to establishing new pathways to ESG success.
Many enterprises have observed that they can unlock business value by positioning technologists at the center of corporate sustainability efforts.
The CIO role in ESG compliance
Establishing ESG ‘readiness’ involves refocusing people, solutions and processes across disparate levels of influence within an organization. However, a key first step commonly consists of educating and equipping technology leaders, enabling them to execute on newly essential tasks.
When it comes to ESG, CIOs can drive innovation through IT initiatives, whole-of-business solutions, new investments, data aggregation and development of new, consistent reporting practices. Ultimately, CIOs can help broadly minimize an organization’s environmental impact, bringing about business benefits that span beyond technology alone.
CIOs championing ESG efforts
To realize value through sustainability efforts, organizations need to close the technology and ESG gap, but only 7% of enterprises have fully integrated their sustainability and technology strategies.
Integrating sustainability, existing business technology and business needs is a tremendous task. In most organizations, there is no shortage of related initiatives, projects to work on and new targets to reach. So, where should a CIO start?
1. Establishing priorities with peers. To ensure a strategic approach and the delivery of positive outcomes, CIOs should actively engage with executives in order to assess existing commitments, key performance indicators and forward-looking perspectives as they pertain to sustainability; determining which specific ESG KPIs warrant further attention.
2. Addressing IT sustainability issues. After establishing priorities in collaboration with executives, CIOs and IT leaders should assess whether or not IT itself represents a sustainability issue. It may be necessary to improve the sustainability performance of IT and digital infrastructure and services.
Common corresponding initiatives include increasing material efficiency of IT infrastructure, reducing technology-related greenhouse gas emissions, and partnering with the procurement department to advance vendor-based ESG best practices and their implementation.
3. Agile tech solutions for broad sustainability. CIOs can invest in efforts that allow for the transformation of products, processes and services, thereby improving energy efficiency and reducing carbon emissions.
CIOs may also want to explore technology solutions like artificial intelligence, and IoT that can reduce waste and warn of costly, environmentally unsound material issues. For instance, artificial intelligence can assess whether or not machinery or mechanical processes pose a threat to wildlife.
4. Making the metrics matter. Demand for transparency around ESG is increasing, and leaders require accurate insights. Technology leaders should be aware of what executives and investors need to know, and can set up technologies that offer corresponding levels of visibility into value-add activities. Over time, ESG reporting should become more granular, more consistent and an easier to analyze for everyone involved.
CIO impact through ESG
Most organizations and technology leaders have yet to establish and execute a sustainable technology and ESG strategy. However, organizations that have invested in realizing ESG value through technology have also observed improved financial performance, better customer experiences, higher levels of software quality and other large-scale, high-impact business benefits.
Meeting ESG goals is tough, but CIOs who shape the sustainability discourse and pursue the challenges inherent therein will increase value to organizations and pave the way towards a more sustainable future.
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