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Next In: Enterprise Sustainability Investments in Technology

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Published on Oct 25, 2022

In today's capitalist economy, organizations are turning into a profitability model. This enables organizations to strive to maximize margins and add more to their catalog of offerings, as well as attract untapped customers.  

A few decades ago, organizations were turning a blind eye to the environmental repercussions of integrating sustainability policies that were growing in vigor due to capitalism. But the scenario is now changing. Sustainable business practices are finding their way into corporate obligation, and businesses are taking sincere initiatives to measure and minimize environmentally unfriendly operations. A KPMG study highlighted that sustainability reporting in G250 companies is growing - from 64% in 2005 to 96% in 2020. 

Consumers are also expressing their desires to associate with conscientious and ethically rooted organizations. This has led to an accelerated shift in sustainable business models. Owing to this change, organizations are rigorously assessing their carbon footprint, along with energy consumption and climate risk metrics, to steer the necessary action to integrate sustainability as a critical corporate goal. For global organizations, sustainability has neither been a revenue-generating process nor a cost-containment function. It has always been a function that is either voluntary or sometimes mandatory disclosure requirements due to the government or corporate policies. 


Read more: Sustainability in Tech: 3 Ways for Companies to Become More Sustainable 

While implementing sustainable policies is one thing, accumulating the relevant data source as per standards like the GRI (Global Reporting Initiative) and the CDP-Carbon Disclosure Standards Board is another. Organizations are now exploring robust data integration models and analytics platforms. This is challenging because traditional data collection, aggregation, and reporting have always been confined to the four walls of an enterprise. 

The government disclosure norms for sustainability are enabling organizations to incorporate a value-chain orchestrator model that goes beyond the company's environmental impact. Emphasis is also being laid on the inclusion of trading partners for audit reporting, including suppliers, vendors, and other partners, who equally contribute to the carbon footprint. 

Organizations are now chasing unique approaches to tackle sustainability management challenges and reform sustainability reporting. 

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  1. Third-Party Consulting to Establish a System-Driven Approach 

Deloitte's research study stated that almost one-third of CxOs who are now measuring their company's environmental impact experienced a significant challenge. The sole reason behind this is - sustainability assessments were traditionally undertaken through third-party consulting firms. These firms hold a treasure trove of data to assess multiple sustainability factors. 

Organizations are now drifting away from their historical reliance on consulting firms to set up integrated systems for sourcing and validating sustainability-related data in their internal operations. This enables them to procure data directly from their partners and build a trusted source of data that can power the measurement of sustainability metrics. 

Read more: Integrating ESG in Company Culture – A Move to Drive Resilience 

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  1. Boosting Investments in Sustainability Tools 

Organizations are incorporating sophisticated technologies with predictive capabilities to track, monitor, and extrapolate environmental, social, and governance risks and opportunities. Sustainability reporting tools are garnering all the limelight in the organization and are emerging as one of the instrumental ways to collect reliable data to gain investor and customer trust. However, the use of technology infrastructure is raising concerns about energy consumption. As per a Deloitte study, if enterprises continue to employ fragmented, legacy data centers, power usage is expected to grow to a substantially higher rate of 20%. 

Technologies to measure carbon footprint and emissions, along with IoT-powered devices to track energy consumption, are already being employed by organizations across industries. These technologies can also assist businesses in spotting high energy-consuming data systems and recommend alternatives, such as cloud solutions, to report energy savings. 

  1. Sustainable Tech Strategy 

Over the duration of the last few years, sustainability as a point of focus for businesses has been largely underinvested. However, with the movement toward integrating sustainability into core business operations, products, and services gaining momentum, organizations are viewing digital and technology strategies through a lens of sustainability. Businesses are conceptualizing, designing, and implementing a sustainability tool stack, along with driving technology investments in sustainability to anchor new solutions within their operations. They are integrating sustainability/ ESG scores into lending rate determination for their corporate customers. Larger enterprises are now taking a strategic view for developing mid- to long-term tools and technology strategies to maintain enterprise sustainability requirements in years to come. 

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  1. Orchestrating the Focus on Brand's Value-Chain 

Integrating sustainable initiatives are emerging as a collaborative effort between businesses and their value-chain partners, including suppliers and distributors. A McKinsey report highlighted that almost 18% of surveyed companies assist suppliers in improving their sustainability performance. By taking a step further and working with partners to enhance sustainability initiatives, businesses can demonstrate their hands-on commitment to creating environmentally conscientious operations.  

Read more: Aligning ESG with Corporate Strategy to Gain a Competitive Advantage 

Businesses are also making and implementing stricter policies to work with partners who maintain good environmental ratings. These practices are driving many organizations to rethink their sustainability ideals as well as goals and enabling them to create meaningful partnerships that are based on strong ethics and transparent relationships. 

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Embarking on the Sustainable Journey 

The ESG/environmental, social, and governance movement is now gaining steam. Far-reaching challenges like economic inclusion are concentrating the minds of investors and executives on long-term priorities and non-financial reporting. 

Businesses are placing a new perspective on where sustainability is headed globally. What technological investments will drive global discussions is a question every organization is looking for an answer to. Sustainability experts are now presenting their perspectives on climate technologies and ways to deliver the growing investments in sustainable technologies. With the heightened awareness of the rapid external shocks to the global economy, businesses are replacing sustainability policies at their central trust for transparent operations. 

Organizations are embarking on the transition to a net-zero economy. This shift is considered to be as disruptive as the industrial revolution or the digital revolution. They are exploring as well as grabbing opportunities to reimagine their sustainable operations. Many management teams are also realizing that capturing the true potential of sustainability calls for an all-in approach is vital for the company and the business units to function.  

The path to a net-zero future is creating new opportunities for technology and service providers to create the underpinning technologies and enable sustainable business. Organizations are required to integrate new technologies, business models, strategies, and processes into their everyday operations to incorporate the changes successfully. 

Emerging environmental sustainability technologies, including cloud sustainability, carbon footprint measurement, and advanced grid management, are expected to reach early mainstream adoption within one to three years, according to Gartner's latest research. 

Read more: ESG and Sustainable Investing: A Guide for ESG-Focused Investors in 2022 

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To Sum Up 

Today ESG is a sprawling topic. It presents new challenges for organizations. In the case of digital, the uncertainty leads organizations to start small: like launching a pilot, learning in the process, and running the risk of being overtaken by more ambitious competitors. Like digital, sustainable revolution holds the potential to revamp how successful organizations plan, implement, as well as operate.  

The radical changes in how technology investments are flowing into the enterprise sustainability space are enabling businesses to make room for the adoption of highly automated tools. Many of the tools employed by consulting firms are becoming mainstream within organizations and being employed in a SaaS or licensed model. Consulting interventions are attracting massive traction across industries. The ESG and sustainability consulting market is anticipated to grow at a 17% CAGR from 2022 to 2027, while the global market is expected to reach $16 billion by 2027. 

Sustainability reporting and tech capabilities are spurring a new wave of advanced corporate accountability to society and the environment at large. As organizations are becoming more cognizant of building products and services, the employed systems are centering around sustainability. These reformations are empowering businesses to improve the world economy along with improving the lives of individuals and the ecosystem.  

With a presence in New York, San Francisco, Austin, Seattle, Toronto, London, Zurich, Pune, Bengaluru, and Hyderabad, SG Analytics, a pioneer in Research and Analytics, offers tailor-made services to enterprises worldwide.                       

A leader in ESG Services, SG Analytics offers bespoke sustainability consulting services and research support for informed decision-making. Contact us today if you are in search of an efficient ESG integration and management solution provider to boost your sustainable performance.