It is critical for today’s business and technology leaders to operate in an environmentally friendly manner and focus on sustainability. But exactly How Reducing a company’s environmental footprint is much more confusing.
Companies are under internal and external pressure to advance sustainability in all aspects of their business. Where and to what extent this transformation occurs varies across the company, but some universal themes apply, according to Björn Stengel, global sustainability research leader at IDC.
Stengel covers sustainability software trends, how investors are driving climate action, and why data is so important for creating greener business practices.
Technology as a potential sustainability factor
What role does technology play in corporate sustainability?
Björn Stengel: In general, we see technology as a pioneer for sustainable business transformation. Many organizations we work with are seeing sustainability increasingly impacting their bottom line and transforming pretty much everything they do [as well as] every function of your organization.
Now business and IT leaders are examining existing or new technologies from a specific sustainability perspective. In addition to observing the emergence of certain technologies, we also study:
How do sustainability trends impact certain features of the technology?
What functionalities can different technologies offer that help solve sustainability problems?
Some technologies [are under particular scrutiny], such as software, cloud and data centers. There is currently a lot of interest in AI, particularly in addressing the risks associated with AI from a sustainability perspective. We also see blockchain as a pioneer for sustainable transformation.
What tools and technologies do companies use to increase the sustainability of their supply chain?
Stengel: A big problem at the moment is Scope 3 emissions, i.e. CO2 emissions that are not caused directly by the organization itself, but by other organizations further down the supply chain. And these emissions are difficult to measure, track and report, despite strong demand from investors, for example [for the organization] report something Scope 3 emissions. This is a major challenge for companies with a complex supply chain.
This is an area where we are seeing increasing demand and offerings around software. This may include, for example, software packages that can help track Scope 3 emissions throughout the supply chain and bring the collected data into a manageable format, as well as a format that can be used to report and disclose this information.
There is a need for standardized, quantifiable, in many cases almost investment-worthy data. So this data has to be collected somewhere; It needs to be processed and then reported to relevant stakeholders. That would be a driver for [procuring supply chain sustainability-related] Software.
Ecological water consumption
To what extent does this work? Water consumption Factor for the sustainability of companies?
Stengel: A big focus is on greenhouse gas emissions, but water is another emerging major environmental issue that companies are increasingly concerned with. [That’s because of] its scarcity and the negative impact that increased water consumption can have on the environment and people. The environmental impact of water use is an important issue that is receiving increasing attention from a variety of stakeholders.
Generally speaking, [sustainable transformation is] It is a top-down approach, but it must be embedded in all parts of the organization.
In the past, water use has often been scrutinized by interest groups, the public or the media. Investors are also increasingly paying attention to how companies manage their water use. They look at the water data that companies publish and incorporate it into their business assessments and processes.
Building pressure to reduce the ecological footprint
In what ways does external influence impact business and technology leaders’ decisions to prioritize sustainable practices? Implement sustainable technology?
Stengel: We are definitely moving towards a stakeholder economy, not just a shareholder economy. According to ESG, there is exponential growth in asset management [environmental, social and governance] Standards or guidelines.
In the United States, for example, government and regulatory authorities have an increasing influence on decisions related to sustainability or requirements related to sustainability. And organizations [such as interest groups] are becoming more educated and vocal about sustainability issues. Employees are also an important stakeholder group. They are increasingly making decisions about whether to work or stay with an employer based on the employer’s sustainability performance.
Generally speaking, [sustainable transformation is] It is a top-down approach, but it must be embedded in all parts of the organization. There is certainly a great deal of responsibility for middle management and other parts of the organization that contribute to the success of these sustainable transformation projects.
What strategies do companies use to achieve their sustainability goals? For example, are certifications or external partnerships with various groups becoming increasingly important and common?
Stengel: From an investor perspective, ESG ratings are becoming increasingly important and achieving good ratings from the ESG rating firms out there. This is especially true if you are a listed company. I also think it is now important to leverage professional services firms to gain an external perspective on sustainable business strategies, risk management and operational improvement processes.
In parallel, companies are increasingly collaborating with professional service companies in the areas of auditing, technical services, etc. Therefore, meeting investors’ growing demand for quality data may be even more important than any particular label or type of certification, because it is so important and so powerful to investors.
Editor’s note:Answers have been edited for length and clarity.
