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The role IT departments play in achieving business ESG goals 

Sinead Conboy

What is ESG? 

Environmental, Social and Governance (ESG) is a holistic framework for businesses to achieve sustainability beyond just environmental factors, but diversity and societal priorities too. It requires businesses to behave ethically to achieve a sustainable and responsible future.  

  • Environmental: This considers how companies use energy and manage their environmental impact considering factors such as energy efficiency, climate change, carbon emissions and waste management. 
  • Social: Social criteria examine how companies foster their people and culture and the wider implications on society. Factors that are considered include inclusivity, gender and diversity, employee engagement, customer satisfaction, human rights, and labour standards. 
  • Governance: This assesses timing and quality of decision making, governance structure, and the distribution of rights and responsibilities across stakeholder groups. Criteria include business ethics, data security, capital allocations and supply chain management.  

In recent years, ESG goals have gone from being “nice to have”, to a non-negotiable for companies looking to attract new customers, partners, and employees. While many may have primarily focused on “E”, “S” and “G” have increased in priority for companies looking to adapt a 360 approach to sustainability. 

Why is ESG important?  

ESG is important for several reasons. It not only addresses environmental and social challenges, but it also contributes to the overall resilience, sustainability, and success of companies as it focuses on the following areas: 

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  • Risk Management 
  • Long-Term Sustainability 
  • Investor and Stakeholder Relations 
  • Regulatory Compliance 
  • Reputation and Brand Value  
  • Innovation and Efficiency 
  • Employee Engagement 
  • Supply Chain Management 

There are a number of benefits associated with pursuing a well-rounded ESG strategy. McKinsey defined five ways ESG can add value to a company

  1. Top-line growth: Customers will be more attracted to sustainable products. Stronger relations with the local community will also provide better access to resources.  
  2. Cost reductions: These can be achieved through lower energy consumption and reduced water intake.  
  3. Regulatory and legal interventions: Deregulation allows for greater strategic freedom and government subsidies provide financial support.  
  4. Productivity uplift: ESG strategies mean companies build more social credibility and therefore attract great talent and boost employee motivation.   
  5. Investment and asset optimization: Capital can be allocated to more sustainable long-term projects with higher returns. 

The need for a coordinated approach  

Companies have typically had a siloed approach when implementing ESG policies relying on departmental expertise to address the most pressing issues. This had led to a fragmented approach with little coherence around how to create standards and guidelines.  

However, working towards ESG goal should not be a siloed activity, cross-departmental collaboration is needed to fulfil objectives on a company-wide scale.  

A coordinated approach is crucial for achieving meaningful and lasting impact. By breaking down the traditional silos and fostering collaboration across various departments, companies can leverage a diverse range of perspectives, skills, and resources to address the multifaceted challenges posed by sustainability and responsible business practices.  

This holistic approach enables the development of comprehensive ESG strategies that align with the organization's overall mission and values. Moreover, a unified front in implementing ESG policies promotes consistency in reporting, transparency, and accountability, which are essential elements for building trust among stakeholders, including investors, customers, and employees. In essence, the shift towards a coordinated approach underscores the recognition that ESG considerations are integral to the core functioning of the entire business rather than isolated initiatives, leading to more robust, resilient, and socially responsible organizations. 

What role do IT Teams play?  

IT Teams have a pivotal role to play in helping companies achieve ESG goals, across the different areas.  

Environmental:  

Infrastructure

IT infrastructure often accounts for a sizeable amount of carbon emissions, making it a key target area for reducing a company's environmental impact. As companies implement more and more digital transformation strategies, it is vital that the improvements in business efficiency do not come at the expense of their carbon footprint. Companies who are dedicated to achieving their ESG goals need to look at the full lifecycle of their IT assets and embed sustainability data into their asset management processes

Software Development:

When thinking about industries with a heavy carbon footprint, software development might not necessarily come to mind, but in fact it is responsible for 3% of global carbon emissions, which is on-par with the aviation industry. Technology leaders need to consider the environmental impact of software, whether they are building it in-house or choosing different platforms to install. Companies looking to reduce their carbon impact can use the environmental impact of the software they use as a metric.  .

Social:

Accessibility:

Ensuring accessibility promotes social inclusivity and is a huge part of any company’s diversity, equity, and inclusion (DEI). IT departments play an essential role in establishing digital accessibility for both its employees and customers alike. In doing so, companies ensure social inclusivity, which not only fulfils a moral duty but also opens doors to a wider talent pool and customer market.

Supply Chain Management:

IT teams need to take the ESG achievements of their suppliers and third-party vendors into account if they want to take a holistic approach to reaching their own ESG goals. Some questions to consider when choosing IT vendors and suppliers are; what do the working conditions look like across the supply chain? Are the companies IT vendors in compliance with fair labour standards? Are human rights respected? 

Governance:  

Data management and transparency: 

Transparent reporting is essential for building trust with stakeholders, whether that be investors, customers, employees, or regulators as it fosters accountability and demonstrates commitment to sustainable practices. IT departments play a crucial role in this as they implement the infrastructure needed for efficient data management to ensure accurate and reliable data. They can also leverage the capabilities of automation and artificial intelligence to enhance data processing, identify patterns and enable predictive analytics so companies can make more informed decisions regarding ESG.

Cybersecurity

The risk of cyber-attacks is one of the most financially material sustainability risk that businesses face. Even small companies can handle vast amounts of sensitive data such as customer information, financial records, employee details. The frequency of cyber-attacks is on the rise, meaning robust cybersecurity processes are crucial to mitigate the risks of the reputational and financial fall out a potential attack could cause. 

How Knowledge Exchange can help IT Departments 

Knowledge Exchange is a programme designed for IT decision makers to fully understand their challenges, needs, and priorities. It is a complementary independent brand and partner programme which supports companies by offering a number of services and tools to facilitate the IT purchasing process with expert advice, trends and analysis and unrivalled access to bespoke solutions from BNZSA’s vendor and channel partners. 

By joining Knowledge Exchange one of our Key Account Managers will work with you to build a robust road map to achieve your IT ESG goals.  

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