Technology with sustainability towards achieving ESG

Technologies and sustainable practices have both recently become a must for many organizations, and not merely something nice to have. For one, companies accelerated their digital transformation to keep up with the new normal. More and more consumers, meanwhile, value sustainable products and practices of brands.

Yet these two together are also imperatives for businesses in their ESG (environmental, social, and governance) performance.

Companies’ ESG performance has become more significant for investors. EY’s global institutional investor survey last year saw the COVID-19 pandemic as a catalyst to ESG, as 90% of the surveyed investors put greater importance on the ESG performance of companies for their investment strategy and decision-making. Furthermore, 74% said that the pandemic drove them more likely to divest from companies with poor ESG performance.

Given such importance for investors, businesses looking into creating or achieving their ESG goals should also look at their sustainability and technology strategies already in place. A report by Accenture titled “Uniting Technology and Sustainability: How to Get Full Value From Your Sustainable Technology Strategy” highlighted the need for the sustainability and technology strategies of businesses to become more compactly aligned to earn a competitive advantage, financial value, and a long positive impact on the environment and society, which could be valuable as businesses now establish bolder ESG goals.

The professional services firm referred to this as a ‘sustainable technology strategy.’ Its research considered that “an effective sustainable technology strategy helps drive business growth and ESG performance.” This is through delivering on three important factors: ‘sustainability by technology’, ‘sustainability in technology,’ and ‘sustainability at scale.’

“Many companies have begun to pilot and scale use cases that harness technology to drive sustainability,” Accenture’s report stated. “There are clear benefits from doing so. In fact, as our analysis shows, companies that adopt sustainable technology to a significant extent achieve 4% higher ESG scores on Arabesque S-Ray dataset — a global specialist in measuring ESG metrics — than those that do not. This can translate into an 11% jump in their ESG ranking.”

Technologies have been considered to play an important role in driving sustainability. According to the United Nations Environment Programme, although technology has caused several environmental and social problems, it could also be a key in dealing with global challenges such as climate change, waste management, and food scarcity.

“We need to harness the digital revolution to drive forward environmental sustainability using a combination of high and low tech solutions. We need to use digital technology to engage and empower governments, companies, and citizens to adopt environmentally sustainable practices, policies, and business models,” UNEP said on its website.

Likewise, all companies surveyed for the said Accenture report believed that technology is ‘important’ or ‘very important’ to meet their sustainability objectives.

One instance that presented technology’s role in driving sustainability from the report is that of the surveyed companies that succeeded in reducing carbon emissions in their productions and operations, 70% do so with the help of artificial intelligence (AI). Among other technologies that could also help in emission reduction are analytics, cloud, blockchain, and the Internet of Things (IoT).

The report also considered technologies a key to sustainable value chains, especially as supply chains are responsible for 60% of global emissions, according to the firm. The report added that technologies could also enable brands to ‘promote sustainable choices for consumers’ and help ‘build sustainable organizations.’

But as businesses leverage technologies to accelerate their sustainability transformation, they should also be mindful of the impacts of the technologies they utilized, which would make it seem to contradict the very purpose of their sustainability goals.

Accenture’s report cited that an estimated share of the information and communications technology sector of the world’s carbon footprint increased from 1.5% in 2007 to 4% at present, and is projected to reach 14% by 2040. This is what its concept of ‘sustainability in technology’ could help address.

Making technology sustainable could help mitigate its environmental impact. According to the firm, one way is for companies to embrace green software. 

Furthermore, the firm reminded to consider the human and social impacts of technology aside from its environmental impact. Hence the need for businesses to ‘build trustworthy systems’ that include ‘privacy, fairness, transparency, robustness, and accessibility,’ as not being able to address trust could damage the wider ESG strategy of a company.

Delivering on sustainability in technology, the report added, would also need clear governance structures to be instituted.

The last among the factors of an effective sustainable technology strategy from Accenture’s report is scaling sustainability by engaging ecosystem partners, as one organization cannot tackle global sustainability issues and make an impact at scale alone by itself.

As organizations enhanced their efforts towards achieving their sustainability goals with technologies, it could somehow impact their ESG performance, which, as mentioned earlier, has become more important for investors. However, PwC’s global investor survey in 2021 saw that only one-third of investors (33%), on average, deemed the quality of ESG reporting they see is ‘good.’ In solving this issue, therefore, technologies could once again serve a critical role or revolutionize another aspect of how businesses deal with ESG. — Chelsey Keith P. Ignacio

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