By: Bruno Sarda, TMT Climate Change & Sustainability Services Leader, Ernst & Young LLP
Leaders from across the globe recently reconvened for the World Economic Forum’s 53rd annual meeting in Davos, Switzerland, and covered everything from the COVID-19 pandemic and the war in Ukraine, to the state of the global economy and more. However, one elephant in the room seemed to pose the greatest challenge for all delegates: the future state of our environment. From climate change, to ESG, to natural disasters, global leaders are contemplating how they can make a positive impact for the future of our world and how to align their companies and communities for progressive change and future prosperity.
In recent years, environmental sustainability has increasingly become a boardroom topic. In fact, despite growing concerns around a potential recession, many CEOs are planning to make sustainable investments a top priority. According to the latest EY CEO Outlook Pulse report, 39% of CEOs surveyed are planning to increase investment in sustainability as a core aspect of their strategies and offerings, including net-zero and other environmental and societal priorities. The reason: companies are seeing the critical advantages that embedding ESG factors into strategic planning has on enhancing their brands, strengthening their operations and building trust with key stakeholders.
If there is anything we have learned over the last few years, it’s that we live in a climate-constrained world where the total carbon budget is fixed. All industries that are bringing new ideas to the market should do it with this reality in mind. However, the question becomes: How does a company turn sustainability strategies and initiatives into tangible actions? For most, the path to sustainability, like most other transformations, is through technology. Here are three benefits when technology is used to advance environmental ESG initiatives and impact:
- Faster and more accurate reporting. Like many other applications of technology, the quality and consistency of the inputs dictate the quality and usefulness of the outputs. With the rise of regulatory requirements, reporting on data faster and more accurately is vital. By deploying and implementing upgraded technologies, such as IoT, blockchain or AI, companies can manage, track and scale their ESG programs.
- Reduced risk and increased velocity. Implementing tools to better manage ESG initiatives increases agility and reliability, while reducing risk. Additionally, many companies will need to use new technologies to improve data quality, as well as data management controls and processes. They are adopting technology platforms that offer tools allowing them to better measure and manage the health and progress of their ESG efforts, as well as report against them.
- Influx of useful and actionable data. In addition to tracking, it’s important for organizations to effectively act on the data they are gathering. A well-managed ESG program needs the tools to better mitigate risks, which in turn limits financial consequences for these organizations. For example, some organizations use technologies that track electricity outputs, but it’s not until they implement energy efficiency measures or renewable energy strategies that they will achieve the associated savings and carbon reductions. Therefore, technology can advance ESG initiatives by supplying the tools that will help companies deliver on their environmental goals.
However, supplying the tools to implement, track and manage ESG programs is only one piece of the puzzle. To lower emissions across the entire supply chain, technology companies must also prioritize sustainability, either by running on renewable energy or lowering their environmental footprints. EY teams work with clients to help them implement strategies such as sustainable supply chains, fleet electrification, responsible innovation or renewable energy procurement, to name a few. Overall, leaders who act quickly to capitalize on the sustainability movement can gain competitive advantage over those who do not.
Technology truly can provide the blueprint to a more sustainable future. Not only can the industry contribute to building a more sustainable value chain, but the innovations stemming from the industry can also help businesses in other sectors create a more sustainable path ahead.
The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.