How to future-proof your business by prioritizing ESG metrics

8 min read
Header_blogpost_How to future-proof your business by prioritizing ESG metrics
8 min read

Attribute it to the rapid digital acceleration in a post pandemic world or changing perspectives towards a sustainable life and future, sustainability has already found its way into the core values of a lot of organizations.

Contrary to the tendency of having profit generation as the sole goal of businesses – generated in part via shareholder capitalism – ESG principles are increasingly finding relevance. Even prior to adopting ESG principles, however, companies have shown a tendency towards embracing the non-financial aspects of running businesses – for example, in the form of Corporate Social Responsibility (CSR) projects. Concerns for the environment and a more sustainable future triggered these changes, which can be seen as a shift in the way businesses function.

Imagining ESG to be central to, or even driving a company’s overall business strategy can be seen as a significant departure from the dominant profit-maximizing approach, but one that is increasingly resonating with organizations worldwide.

What is ESG?

ESG stands for Environmental, Social, Governance, the three pillars that make up the now-widely-used framework. The goal of this framework is to capture non-financial risks and opportunities and understand how organizations handle the risks and opportunities associated with environmental, social and governance situations. It adopts the view that sustainability is not only limited to environmental issues but extends beyond that and stakeholders including investors, employees, customers and suppliers increasingly care about these metrics.

ESG disclosures or ESG reporting also consists of positive sustainability impacts that the companies achieved, which can translate into positive long-term advantages for them.

Why is ESG important for businesses?

Sustainability is increasingly influencing business decisions. Once on the fringes of investment philosophies, ESG has now moved into mainstream acceptance by global investors. The changing landscape of investment practices is apparent in the shift towards assessing companies using non-financial factors too. Investors are now associating companies with strong ESG performance with lower risks, better long-term prospects, and greater resilience in the face of uncertainty.

This is a trend that experts predict will only grow stronger, considering how ESG reporting could be made mandatory due to regulation changes in various countries.

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Moreover, companies that embrace stakeholder capitalism and prioritize the needs of employees, customers, communities, and the environment, have a competitive edge against those that tend to wait it out before picking a side. ESG creates a compelling value proposition not only from an investment angle, but also facilitates growth, reduces costs, minimizes legal interventions and positively impacts company reputation. Employee satisfaction and in turn, productivity also gets a boost in the process.

A huge part of the growth of ESG could be attributed to the environmental pillar due to the responses to climate change and the larger consensus in addressing those issues in the recent years. As the focus on ESG continues to grow, companies that prioritize sustainable IT are well-positioned to unlock value, gain a competitive advantage, and contribute to a more sustainable future.

Sustainability in tech

Sustainable IT, viewed through the lens of ESG principles, offers a compelling value proposition for companies. By aligning sustainable IT practices with ESG goals, companies can enhance their environmental impact, social responsibility, and governance practices, thereby altering their perception in the market and improving their overall performance. Gartner goes as far as to predict cloud sustainability as one of the three emerging environmental sustainability technologies that will reach early mainstream adoption by 2025.

As the calls for sustainability gains momentum, this puts pressure on companies to adapt sustainable IT practices into their businesses. Put into this mix an additional factor of changing public opinion and perception and this could paint a better picture of how the push for sustainable IT practices is taking shape. Companies and IT leaders are in a unique position to heavily alter their businesses for a more sustainable future.

Sustainability in IT strategy

Although many technology leaders and companies realize the importance of sustainability, it is understandably challenging to identify how and where to get started. A report from Capgemini Research Institute titled ‘’Sustainable IT: Why it’s time for a Green Revolution for your organization’s IT‘‘ points out that for most organizations, sustainable IT is disconnected from the overall sustainability agenda. Even when a large portion of companies have a well-defined sustainability strategy, less than one in five say they have a comprehensive sustainable IT strategy with well-defined goals and target timelines.

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A good place to start is with Niklas Sundberg, Senior Vice President and CIO at Assa Abloy Global Solutions and the author of ‘’Sustainable IT Playbook for Technology Leaders’’. He talks about what sustainable IT practices could look like for organizations, as a first step in incorporating sustainability in business strategy.

Also, among the pioneers in adapting sustainable IT is Microsoft, with its various initiatives including the Sustainability Calculator. It empowers those responsible for reporting on and driving sustainability within their organizations by providing new insights into carbon emissions data associated with Azure services.

Start the move

If your organization is running Microsoft 365, one good actionable first step towards sustainable IT is to evaluate the energy consumption of your all your cloud services. This is where a cloud collaboration governance solution like Rencore Governance comes in handy. Our tool helps identify shared data to help reduce unnecessary data transfer, discover and remove redundant resources, and reduce Azure consumption by indirectly looking at storage, processes and traffic.

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