As the debate over environmental, social and governance (ESG) principles continues, one of the few unanimous conclusions is that we all have an important role to play, from governments and policymakers to NGOs, citizens and businesses. That's one.
The recent COP28 summit strengthened my sense of collective action. We have just endured one of the most difficult years on record, with smoky air turning Manhattan's skies a deep orange hue and scenes of destruction wreaking havoc across Greece, Haiti, and Libya. The effects are being felt more and more closely, with the UK Health and Safety Executive recently warning that the climate crisis could lead to 10,000 new deaths each year in the UK by 2050. The milestone goal is therefore to triple the use of renewable energy and double energy efficiency by 2030. We welcome it, even if there are still question marks about how it will be funded.
The creative solutions we need are already here
But these words must be translated into meaningful actions. Until then, humanity desperately needs creative, ambitious, and organized action to confront this crisis. Technology can play an important role here. Companies of all sizes are combining time, resources, and leadership efforts to explore digital-first solutions to pressing environmental challenges. The technology sector is known for its rapid innovation and rich creativity, and has always been at the forefront of promoting sustainable development. For example, IoT sensors and blockchain can increase supply chain transparency in agriculture, reduce carbon emissions in logistics, ensure responsible sourcing, and reduce environmental impact to help his ESG efforts. support. Artificial intelligence alone has the potential to reduce global greenhouse gas emissions by 4% by 2030 through increased industry transparency, data analytics, and resource efficiency.
President of Tech Mahindra.
Despite advances in the technology sector, running a successful ESG program is not easy. The ESG landscape is becoming more complex by the day, given changing global goals, tightening regulations and consistent demands for associated ESG disclosures. The UK's financial watchdog has urged companies to consider a new voluntary code of conduct to assess the sustainability efforts of other companies. Some organizations face challenges in getting the start they need, while others tend to be slow in the process as integrating ESG considerations requires a number of operational reviews.
Mobilizing the technology sector
The complexity of the ESG landscape is no excuse for technology companies to delay meaningful action, and sitting on the sidelines as complexity continues to grow is not an option. With so much influence, resources, and technological power in this space, technology companies have both an obligation and an opportunity to lead the way. Failure to act responsibly risks losing the trust of stakeholders and regulators. Proactive leadership fosters innovation, strengthens social license, attracts top talent, and improves efficiency. Technology leaders must view this complexity as an opportunity to differentiate.
Additionally, related ESG disclosure challenges highlight the need for global harmonization of reporting standards. The current lack of consistency in reporting frameworks creates a degree of opacity and may lead to greenwashing by some organizations. International bodies may eventually coordinate standards, but the technology sector doesn't have to wait. Instead, tech companies must jointly establish and commit to transparent, rigorous, and globally consistent ESG reporting standards.
Technology companies are in the best position to understand the appropriate metrics and data collection mechanisms in this area. By self-regulating and holding each other accountable to a single set of standards, you can pre-emptively address rising stakeholder expectations and build trust in a way that better reflects real-world impact. Sharing IT infrastructure and data pools can ease the implementation burden for small businesses. Also, his agreed upon KPIs and measurement protocols highlight leaders and laggards more clearly, fostering competition and the desire to improve.
Establishing consistent ESG reporting is only the first step. Standards must be translated into action. When consistent transparency and accountability mechanisms are in place, companies are forced to continually improve. Failure to meet centralized expectations can result in exposure, punishment, and deterrence. Reinforcing his standardized KPIs will also gradually expand the scope and rigor expected from technology-driven sustainability efforts.
Technological innovation is acting as a catalyst for the evolution of ESG initiatives, moving sustainability from a corporate buzzword to a core business strategy. By adopting these solutions, the future of ESG holds promise if comprehensive measures are taken at the right time. In recent years, companies have become increasingly aware of their role in adopting good practices, and investors will continue to place greater importance on ESG metrics.
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