August 31, 2021
Embracing sustainable business practices is no longer optional. After a long period of disruption and uncertainty, customers, employees, and investors increasingly expect organizations to focus on long-term value creation for all. With this new mandate, leaders have turned to data-driven insights to build resilient, purpose-led organizations with a mission to build organizations that prioritize communities, employees, and the environment alongside clients.
And those choices are paying off. Research shows that environmental, social, and governance (ESG) initiatives can drive significant competitive advantage, innovation, and financial performance. For leaders who are ready to act, a data-driven sustainability framework that enables environmental and social sustainability is vital.
Data-driven sustainability means collecting and using data to make decisions that guide measurable and sustainable business practices. Whether it's lowering greenhouse-gas emissions, optimizing supply chains, or reducing waste, insights from data can power positive change while increasing profitability.
The Global Sustainability Imperative
Governments worldwide have doubled down on commitments to tackle environmental challenges – putting budgetary and operational pressure on businesses to respond to climate change, which directly affects societies and global economies. For example, the United Nations laid out 17 Sustainable Development Goals covering everything from clean energy and responsible consumption to production and healthcare access. Also, at the 2021 G7 Summit, all attending countries committed to a 2050 deadline to achieve net-zero emissions
By prioritizing data-driven sustainability initiatives, enterprises can stay ahead of new and changing regulatory standards. As a result, they can also capitalize on opportunities for business growth, such as the following three:
Attracting investors: Research by Bank of America's Merrill Lynch shows that firms with ESG practices tend to produce higher three-year returns, have lower price declines on their shares, and are less likely to declare bankruptcy. And investors are paying attention. According to Morningstar, global demand for ESG investments hit a record in 2020, standing at nearly $1.7 trillion. Beyond the bottom line, mounting evidence shows that sustainable business practices can have numerous positive outcomes, such as improving risk management, driving competitive advantage, and fostering innovation.
Increasing customer loyalty: With every generation, consumers become more conscious about how their purchases impact the world around them. A recent study by IBM and the National Retail Federation found that nearly 8 in 10 consumers rank sustainability as important for them. Many of those surveyed are even willing to change their shopping habits to lower their environmental impact. Among those who feel strongly about the topic, almost two-thirds would pay, on average, 35% more for sustainable or eco-friendly brands.
Building a strong workforce: Sustainability initiatives are also crucial in recruiting and retaining diverse talent. Millennials are the largest generation in the US workforce, and they are a very socially conscious group. As other generations like Gen Z-ers enter the labor force, organizations must evolve and adapt. For example, according to a 2019 Porter Novelli/Cone Communications study, 90% of Gen Z-ers believe companies should take action on social and environmental issues, and 83% see a company's purpose as a core consideration in where to work.
Data: The Foundation
Data is critical for building a sustainable enterprise.
Automated data collection and analysis empower enterprises to make strategic, real-time decisions needed to achieve sustainability goals. In addition, advanced technologies can uncover deep insights from data, opening a world of innovative ways to support sustainable practices across organizations.
With data-driven sustainability, enterprises can identify opportunities to do the following:
Improve customer services
Foster equality, diversity, and inclusion
Reduce energy usage and cut carbon emissions
Conserve resources and minimize waste
Measure performance toward sustainability goal
The First Steps
When embracing data-driven sustainability, there are three main steps to take, the first of which is to define industry-specific goals. It's critical to take an industry-led approach. Enterprises should lay out sustainability objectives that are right for their business and industry to achieve the most significant results.
Second, build a framework. When you identify sustainability goals, you can use data to guide your action plan. With machine learning and AI, enterprises can rely on data modeling and forecasting techniques to analyze how current processes connect with sustainability goals, such as reducing energy consumption.
Finally, combine human and machine intelligence. Success is not just about having the best and latest technology to drive sustainability goals. Human expertise is still critical, which is where augmented intelligence comes in. In essence, artificial intelligence takes over many data processing tasks, unlocking insights at speed so that teams can make confident data-driven decisions.
By following these steps, purpose-led companies can support their communities, improve diversity and inclusion, and build more ethical business practices. And through technology and analytics, enterprises are bringing positive change to their broader ecosystems while strengthening their competitive advantages.
Purpose Leads to Profits
The business community has long viewed sustainability as a trade-off between doing what's good for the world and what's good for the bottom line. Since data unlocks exciting possibilities, those goals are becoming the same.
With a comprehensive data-driven strategy, enterprises can meet sustainability goals to satisfy customers, employees, and investors. There was never a better time for leaders across industries to explore what's possible with data-driven sustainability at the heart of the enterprise.
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