The Intersection of IT and ESG

Organizations around the world are increasingly recognizing the importance of environmental, social, and governance (ESG) initiatives as they strive to comply with regulatory requirements and meet growing consumer demand for sustainable practices. With IT being one of the most carbon-intensive aspects of business, CIOs are playing a critical role in deploying technology that supports sustainability while minimizing the environmental impact of existing and new infrastructure.

In a recent report, Forrester Research highlighted that ESG will remain a top priority for IT in 2023. The report noted that data center technologies and cloud services providers are seeing an increased trend of sustainability-related questions in requests for proposals. As a result, many technology executives are focused on implementing software platforms for measuring and monitoring environmental footprint, digitizing operations, and optimizing user devices. These efforts will not only help organizations meet their sustainability goals but also drive operational efficiencies and cost savings.

In addition to digitization efforts, organizations will need to report on their ESG progress as regulatory bodies continue to implement reporting requirements. Unfortunately, many organizations currently lack the ability to accurately report on the impact of their ESG initiatives. IDC predicts that by 2024, 75% of large enterprises will implement ESG data management and reporting software to meet emerging legislation and stakeholder expectations. The question remains whether this actually means companies will become compliant with legislation such as the upcoming CSRD in Europe.

Lack of quality data

One of the biggest challenges facing organizations working to embed ESG into their operations is the lack of quality data. Technology executives need to source ESG-related data and ensure its trustworthiness and auditability. However, there are a variety of emerging and existing technologies that can support ESG initiatives. Blockchain, digital twins, artificial intelligence/machine learning, edge computing, the Internet of Things, processor technology advancements, optimized data centers, augmented reality/virtual reality, and automation are all prominent technologies that can help organizations achieve their sustainability goals while at the same time providing trustworthy and auditable data.

As an example, businesses are leveraging digital twins - virtual replicas of physical objects that capture real-time data, status, connections, and actions - to merge operational data from IoT sensors, analytics, machine learning, and business logic. By doing so, they can simulate and forecast the most efficient usage of physical assets, including pumps, motors, wind turbines.

Another example is the move from on-site data centers to the cloud that can provide significant energy savings. Some companies have reported energy savings of up to 80% after moving to the cloud. Cloud providers who are committed to zero or carbon-neutral footprints can help organizations meet their environmental sustainability goals. Technology executives can adopt efficient migration approaches to take full advantage of the sustainability benefits of the public cloud.

The Role of a CIO is changing rapidly

Encouragingly, despite impeding economic volatility, technology executives remain committed to prioritizing sustainability initiatives. In fact, according to Forrester Research, very few technology leaders globally have stated that they would alter their carbon footprint reduction goals in the wake of a recession. This indicates that organizations understand the importance of ESG initiatives, not just from a regulatory or stakeholder perspective, but also from a long-term business sustainability perspective.

Internally, we are observing that CIOs are increasingly being tasked with implementing technologies that contribute to environmental friendliness, sustainability, and playing an active role in minimizing the environmental impact of existing and new infrastructure and technologies. This means that CIOs have a crucial role to play in leading the transformation towards a sustainable future and achieving climate goals.

Closing remarks

To truly drive sustainability efforts in organizations, CIOs need to embrace a new mindset and actively seek out knowledge on ESG initiatives. This means moving outside their traditional technology-focused comfort zone and taking on a more strategic role in driving change. CIOs must be willing to experiment and take risks with new technologies that can support sustainability goals, while also actively educating the board on the importance of ESG initiatives. This requires a willingness to seek out new education opportunities, network with peers in the sustainability space, and develop a deeper understanding of the broader business impact of ESG efforts. By doing so, CIOs can become key drivers of the transformation towards a more sustainable future, and in turn, contribute to long-term business sustainability.