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May 25, 2022
6 Min Read
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As environmental, social and governance (ESG) strategies climb the list of priorities at organizations worldwide, chief information officers find themselves playing an increasingly central role in ESG efforts.
Today’s ESG efforts are often ad hoc, siloed, and manual, with data and operations scattered across disparate systems in an organization.
Digital transformation presents a powerful opportunity for companies to turn ESG efforts into impact and business value, and the CIO has a front-row seat to how digital transformation is intersecting with every facet of the business.
With enterprise data at the heart of a company’s ESG strategy, CIOs -- with their compete view of the interdependencies and interactions between people, processes, and technologies across every business function -- are critical to advancing ESG objectives.
Chris Bedi, chief digital information officer at ServiceNow, says it’s up to the CIO to inform the rest of the organization of the environmental impact in terms of energy usage in data centers and business processes or advise on hardware and software purchase optimization.
Keeping ESG Top of Mind
The CIO is also responsible for managing technology lifecycles and informing governance policies that promote data trust and transparency. “It’s incumbent upon the CIO to make innovation decisions and direct technology purchases with ESG in mind,” he says.
From Bedi’s perspective, an effective ESG program needs to be embedded into a company’s business strategy, culture, and values across global operations.
When ESG efforts are siloed end everyday business decisions aren’t linked, it presents real business risks -- suppliers chosen through procurement affect a company’s carbon footprint, risk profile, and data privacy.
Workplace services created by facilities affect employee health, equity, and prospective talent, while data accuracy maintained by multiple groups affects transparency in reporting.
“There are hundreds of ESG point-products in the market that support discreet, disconnected ESG efforts, compounding the problem,” he says. “And companies rely on different operational systems that support individual, siloed processes.”
Ben Kruse, director of global ESG reporting and insights at AT&T, explains that CIOs can help advance ESG efforts in two ways: First, they can lend their teams’ resources and expertise to enhance efficiencies and controls supporting the collection and reporting of ESG data.
Second, they can take steps within their IT organizations to contribute to ESG goals such as emissions reduction targets -- such as through network optimization and virtualization efforts that help reduce energy consumption.
“More and more companies, including AT&T, are committing to net-zero emissions,” Kruse explains. “We’re progressing toward a goal to reach net zero Scope 1 and 2 emissions by 2035. And we’ve set a goal to develop connectivity solutions that help our business customers collectively reduce a gigaton of greenhouse gas emissions by 2035.”
As part of AT&T’s gigaton goal, Equinix, a digital infrastructure company, works with AT&T to provide highly secure access to energy-efficient digital infrastructure, helping corporate customers accelerate their digital transformations and lower emissions.
“Together, we’re providing a solution that lets customers migrate their data from on-site IT infrastructure to more efficient cloud-based infrastructure,” Kruse says. “This isn’t about helping customers shift emissions from Scope 2 to Scope 3. Cloud-based solutions operating at scale can offer greater energy efficiency than an individual corporate network -- reducing overall emissions for all players.”
Kruse explains that like many companies, AT&T is implementing efforts to aggregate data from dozens of legacy databases and systems into centralized platforms that will simplify analysis and compilation of datasets such as our greenhouse gas inventory. “We’re evaluating specialized data management platforms to centralize collection and storage of our ESG data and narrative, as well as associated process controls and content approvals, to simplify the audit and assurance process,” he says.
Kruse says some of the most successful ESG programs demonstrate how the management of ESG issues -- including use of ESG data -- is integrated across the business and into decision-making. “Companies are looking for ways to simplify their ESG reporting process -- such as by integrating legacy systems to make the compilation of data easier, faster and less prone to human error,” he says. “Such enhancements can also ease the strain placed on operational sustainability teams, as compilation of GHG inventories and other ESG data have historically been manual and time-consuming.”
Pulling it All Together
Key challenges include making disparate, legacy systems -- many of which were likely never designed for ESG reporting -- work together to provide reliable, auditable datasets.
Kruse pointed out CIOs and their IT teams are central to this work, as is collaboration with business units across the company, to help fund such investments.
“Such systems integration can pull data visibility into near-real time dashboards, pivoting the compilation of ESG data from an annual reporting exercise to a tool that supports ongoing performance management by departments across the business,” he says.
Gartner research vice president Simon Mingay points out that the one thing that is universally true across any enterprise is that ESG is an incredibly data intensive project.
“The data is widespread, diverse, large in volume, and scattered across the organization and requires incisive analytics,” he says. “Anything and everything that anyone ever learned about data quality, data management, data architecture -- everything -- applies in spades to all things ESG.”
Mingay says while this should be home territory for the CIO, the real value in gathering the data is gaining operational insight and driving performance improvement. “The piece of basic homework CIOs need to do, if they are not 100% familiar with the enterprise sustainability goals, targets, timelines, strategy, is to home in on those,” he says. “Because absent that insight and context, you are just chasing too many things in too many different directions.”
The result is an inability to provide the necessary focus and priorities that can be implemented, because there are so many directions in which one could go.
Bedi says the problem CIOs face is not scarcity of ESG data -- but the fact that the data is sprawled across countless applications, in varying formats, managed by different teams.
“So, to me, the most critical best practice is an obvious one,” he explains. “CIOs must ensure that ESG data is gathered and analyzed within a centralized solution -- an amalgamation point to set goals, collect data, audit activities, and track and disclose performance.”
Bedi says by aligning investments, empowering decision-making, and streamlining ESG-related product and service delivery, organizations can better serve all their stakeholders and creating meaningful, sustainable change while enhancing reputation and trust. “Every digital transformation project is an inflection point that can contribute to a company’s ESG performance,” he says. “Organizations need an integrated, company-wide planning and operational model to help them turn their ESG intent into action.”
According to Mingay, it is essential that CIOs can prioritize and zero in on the things that are going to make a difference to the enterprise, its operations, its stakeholders, and its customers. “Without that, they're going to be faced with a large number of requests coming from a lot of different directions, most of which will simply not be significant,” he says. “The CIO absolutely needs to understand what matters to their sector and specifically what matters to their enterprise.”
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About the Author(s)
Nathan Eddy is a freelance writer for InformationWeek. He has written for Popular Mechanics, Sales & Marketing Management Magazine, FierceMarkets, and CRN, among others. In 2012 he made his first documentary film, The Absent Column. He currently lives in Berlin.
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