Why ESG technology is the key to success for your sustainability and diversity strategies
Today, environmental, social and governance (ESG) underpins every successful business — and technology underpins every successful ESG strategy. Yet ESG technology is not being used to its maximum potential.
To succeed, your ESG strategy must transcend internal siloes and business geographies. It must be fully embedded into your corporate strategy. ESG solutions — for example, carbon accounting software — can help you achieving this.
But only 7% of respondents to Accenture’s 2022 Uniting Technology and Sustainability survey have integrated their technology and sustainability strategies. When ESG technology is fundamental to achieving your goals, how can you capitalize on it to improve ESG performance?
What is ESG technology?
When we talk about ESG technology, there are two possible interpretations:
- Making technology more sustainable, more socially-focused and better governed: in other words, “more ESG.”
- Technology designed to support organizations’ ESG efforts; technology that measures and reports on ESG programs and captures performance
There’s no doubt that the first definition is essential; CIO.com states that “Creating and implementing a comprehensive sustainable technology strategy must now be the core mission of a purpose-driven CIO.”
Here, though, we will focus on ESG technology as an enabler; how you can capitalize on its potential to accelerate and fine-tune your ESG strategy. What is the role of technology in ESG, and how can ESG technology support your environmental, social and governance programs?
Benefits of ESG technology
ESG is increasingly recognized as good for business and the “right thing to do.” Reporting on environmental, social and governance issues is becoming mandatory in some areas and expected in all. Investors do their ESG due diligence when making decisions. Candidates are more likely to choose employers with a strong ESG record. Customers vote with their wallets, preferring businesses that evidence impressive ESG credentials.
With ESG now a non-negotiable component of corporate strategy, your approach to ESG must be based on accurate, robust and comprehensive data. Yet a 2021 report by MIT’s Sloan School of Management and London Business School found that data quality and inconsistency in ESG measurement persist.
Whether you want to conduct an ESG materiality assessment to prioritize focus areas for your ESG strategy, or need to measure performance for reporting purposes, data accuracy, along with timely reporting and meaningful insights, are critical for ESG success.
ESG technology can help you to tackle all of these challenges.
Putting rigor around your ESG measurement and improvement programs via technology will help you to:
- Advance your net zero strategy
- Ensure a sustainable supply chain
- Measure your ESG performance
- Deliver meaningful and compliant ESG reporting
- Create an authentically sustainable business
ESG technology for sustainability
Sustainability is a crucial focus of ESG; much of the pressure on organizations stress the need for greener, more sustainable approaches. The shift towards mandatory or expected reporting, too, has a tilt toward the environmental aspect of ESG.
When it comes to sustainability, carbon accounting solutions can have many benefits. Data is the foundation of all your ESG improvements, and simplifying ESG data collection is often seen as the Holy Grail in achieving ESG objectives.
With various potential measures and data sources — for instance, when facing scope 1, 2 and 3 emissions reporting — bringing ESG technology to bear on data collection can have significant benefits.
Integrating ESG and technology can help you to map your data against external standards like TCFD or the GRI Standards. It can help you pull the ESG data you need from your core systems across your entire organization in real-time, making ESG data more complete, accurate, and current. And technology can help you to track your sustainability progress against peers and competitors, using recognized measures to benchmark performance.
ESG technology for diversity and inclusion
DEI, I&D, D&I — however, you term it, diversity and inclusion is another key focus for organizations under the ESG umbrella. More than three-quarters of organizations questioned for a recent survey cite DE&I as a top priority.
And yet many director-level respondents to KPMG’s recent Poised for Change? Boardroom Diversity Survey have concerns that a lack of diverse views on the board is causing “blind spots and missed opportunities,” as discussed in Diligent’s Inside America’s Boardrooms episode.
Your board is the engine of your corporate strategy and a key component of its success. You need to ensure that your board’s composition delivers the diversity necessary for rounded decision-making. The board should be a microcosm of your wider business, reflecting the diverse make-up of your organization; in terms of experience and background, ethnicity, gender and a wealth of other characteristics.
If this isn’t currently the case, and your board does not have the diversity of thought needed to drive forward-focused strategy, board diversity solutions can help by:
- Helping with succession planning and recruiting board talent
- Keeping you abreast of new regulatory and legislative requirements
- Identifying investor trends and potential areas of opposition
Harness ESG technology to optimize your ESG strategy
ESG is a vast agenda item for organizations of all sectors and sizes. Achieving your ESG goals means identifying where you are, setting clear objectives, and having the data you need to support and guide your journey.
By harnessing ESG technology — across the E, the S and the G, but in particular for the priority areas of sustainability and I&D — you can advance from manual data collection, incomplete and inaccurate measures, and reporting that struggles to articulate your ESG successes.
Instead, ESG technology allows you to easily collect, normalize and centralize the data you need. It helps to document progress against your ESG goals and external benchmarks. Integrating technology and ESG enables you to report clearly, accurately and meaningfully to all stakeholders. And to gain visibility of your ESG performance in all areas, enabling continuous improvement.
Find out more about how Diligent’s ESG technology can support you with solutions like Carbon Accounting and Board Diversity.
