ESG issues at the heart of human, technological and sustainable growth
Committing to social and environmental responsibility (ESG) is more important than ever and companies play an essential role when it comes to taking ESG considerations into account for commercial decisions and practices.
Our eighth issue of Tech Radar on ESG was created to help organizations demystify and understand the issues, implement an integration plan, measure their progress and set long-term social and environmental responsibility objectives.
ESG issues are more than just environmental: they also include social issues, corporate responsibility and good governance practices. By considering these aspects, companies can improve and optimize their performance and their relationships with stakeholders, including their employees, clients, suppliers and shareholders.
By committing to sound governance, you can support and encourage ongoing performance improvement. Tech Radar also offers helpful advice on how to integrate ESG practices and processes and improve existing practices within an organization.
By integrating ESG practices, companies can gain a competitive edge, guarantee employee and client satisfaction and ensure, in the long term, sustainable financial returns.
Pressures for companies to make an ESG commitment
The ongoing development of ESG is propelled by external pressures on companies to adopt a stricter approach to their commitments. Although they don’t push companies to take more ambitious ESG measures than what they have committed to in the short term, adopting such measures is inevitable in the long term.
The first pressuring factor is the climate crisis. The data is extensive and the conclusions are clear: at the current rate of production and overconsumption, the planet’s resources will be depleted. The consequences will include more frequent and severe natural catastrophes and a marked increase in temperatures, which will impact production. Achieving global targets for reduced greenhouse gas emissions is required to slow these trends.
2. New workplace expectations
The pandemic was also an important driver of ESG development and its effects continue to be felt. Telework and generally more challenging working conditions have exacerbated cases of burnout, stress, anxiety and depression among workers, especially women and young employees. This trend has led to the “Great Resignation,” a massive wave of resignations, with 4.3 million across all sectors in the United States in August 2021 alone.
3. New regulations and consumer demands
Pressure from stakeholders can no longer be ignored. Consumers, regulators, employees and investors now all expect a strong commitment to ESG. Delayed adoption of this new standard comes with a range of consequences, including loss of employees and government grants and reduced productivity and sales. That being said, the regulations are likely to only become stricter—acting now means not having to play catch-up in the future.
ESG: the key to competition
Beyond responding to existing pressures, a sustainable transformation can create value at all levels within your organization. Not only can ESG create value for your organization, but non-inclusion of ESG criteria can undermine it.
Allocating capital to sustainable initiatives improves return on investment. Even though the costs of major changes in the value chain can be high, they are offset by regulatory benefits that will make waste reduction and investment in renewable energies pay off in the long run.
Added value from an environmental perspective continues to grow due to two complementary trends: the lower costs of environmentally responsible production and the increase in operating costs for raw materials, water and carbon.
Higher social performance can also attract consumers who would not usually buy a company’s products. The comprehensive integration of ESG criteria also ensures much higher retention of quality employees. These employees report a more concrete sense of purpose and are generally more motivated to be more productive. What’s more, less regulatory pressure is placed on companies that thoroughly integrate ESG criteria, meaning they enjoy more strategic freedom and government support. The facts are clear: companies with the highest ESG commitment are considered the leaders of their respective industries.
Technological solutions for measuring your carbon footprint
An increasing number of businesses recognize the importance of measuring and reducing their carbon emissions, and technological solutions offer a practical and affordable way to do so. Companies can use technological tools such as emission management software or online platforms to calculate their carbon footprint and measure their progress. These tools can also help companies integrate ESG practices into their policy and take measures to improve their carbon footprint, share their progress with stakeholders and create communication tools for employees and shareholders.
In sum, technological solutions can help companies simplify their ESG practices and will prepare them to take on future challenges. How do you know what tool to work with? To choose the right tool, companies need to understand their ESG objectives, scope of application and budget constraints. The tool’s features also need to be considered. Is there an integrated carbon emissions calculator? Is the tool ready to use or does it need to be configured? Is it easy to update and administer? We’ve made a list of key questions to guide your decision so you choose the right solution for your sector and objectives.
Download the 2023 Tech Radar