Over the next four years, the EU will roll out carbon tax policies and already investors are flocking to companies with well-documented, data-backed ESG policies and commitments. Businesses are making significant investments in staff and expertise, with the number of roles in sustainability up 91% over the last five years in the UK alone. The future of how we do business must be environmentally sustainable, and integrated technology solutions will help us make this adjustment.
These signs give me hope -- but when it comes to how businesses and industry tackle sustainability, we are still only at the beginning. To meet market and consumer demands, every enterprise will need to evolve their sustainability programs into being just as accurate and rigorous as that of financial accounting. Similarly to the The Sarbanes–Oxley Act of 2002 mandates practices in financial record keeping and reporting for corporations in the US, we can expect laws and consumer expectations around sustainability impacts to follow suit.
In the same way that SaaS platforms, cloud computing, and digital transformation have changed how enterprises sell, hire, and invest, we’re on the cusp of similar changes within sustainability. For example, as recently as the mid-2000s, interviewing for a new corporate job meant printing out resumes, distributing paper benefits pamphlets, and signing forms that had been Xeroxed a half-dozen times. Today, numerous human resources software companies offer streamlined digital solutions for tracking candidates, onboarding new colleagues, and managing benefits. When large organizations are faced with a high volume of data in any area of their business, digitization is the inevitable solution. Enterprises have come to a similar tipping point in their need for sustainability software today. With the rising demand to track and prove ESG commitments, digital solutions are now being built into the fabric of enterprise sustainability reporting. Importantly, these solutions will help scale progress on climate change.
Over the last decade, I’ve seen firsthand how data-first sustainability efforts have helped major consumer brands take inventory of their environmental impact and then inform key decisions to transform their footprint.
- In 2017, Nike set the goal of “zero discharge of hazardous chemicals.” This required a coordinated global effort across their supply chain -- their network of manufacturers had to now align on wastewater testing and reporting. Nike used a data platform to track progress across hundreds of facilities, and today, they continue to track the uptake of manufacturing restricted substances.
- In 2018, VF Corp. tracked baseline environmental impact across factories in China, Bangladesh, and Vietnam. Since implementing sustainability programs focused on energy, water, and greenhouse gas savings, VF has been able to leverage sustainability data to reduce over 50,000 metric tons of GHGs.
Looking ahead, we can expect sustainability technology to be the next wide-scale enterprise investment. Leaders who have paved the way like Nike and VF can provide helpful lessons to businesses just beginning to take a serious look at their environmental impact.
The first lesson is that it’s essential to consider one’s entire impact -- holistically. For instance, in apparel, the vast majority of a brand’s emissions lie in their supply chain. While efforts to rid retail stores of single-use plastic bags or to swap light bulbs in corporate offices are laudable, such initiatives ultimately have a marginal impact when the entirety of making to selling a piece of clothing is taken into consideration. It takes gathering accurate data at each step of the supply chain -- from raw materials extraction to finished goods -- to get the full picture. While this is complex in the modern world of disaggregated global production, companies that invest in the foundational work today will be able to make the most impactful improvements tomorrow. It’s only by setting an accurate baseline of water or energy use that they’ll be able to track progress and prove ROI on sustainability investments.
This brings us to a second lesson: the power of a collaborative bottom-up approach with one’s supply chain partners. While top-down approaches -- for instance, using advanced algorithms to estimate carbon emissions based on generalized datasets -- are appealing in their ease, this approach will ultimately lack the resolution needed to help leaders know if they’re moving the needle. Instead, businesses must take a more granular approach, reaching across the value chain to collect data from materials providers to contractors and vendors. While different from the status quo, this is the future of sustainability management. We must begin to move in this direction and leverage enterprise-level digitized solutions to help us get there.
Tomorrow’s sustainability leaders will begin by implementing the right technology solutions. With immense pools of impact data available, they’ll need SaaS solutions designed to collect, manage, and contextualize information from many different parts of their business. While there are dozens of robust solutions on the market, it will be important to select platforms and partners that offer scale, flexibility, trusted data sources, and interoperability with their existing business systems and technology stack.
Sustainability is the next pillar of enterprise software. Until now, few businesses felt that rigorously measuring and managing their environmental impact was a major imperative -- but with expectations and demands rapidly evolving, we will see digitized sustainability solutions become the new normal, particularly for consumer goods manufacturers.