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How CIOs Are Advancing ESG
CIOs play an important role in a company’s environmental, social, and governance strategy. Their involvement in ESG has also changed their approach to tech procurement.
6 Min Read
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Increasing numbers of companies are embracing environmental, social, and governance (ESG) because they’re under pressure from stakeholders and society at large to do so. ESG and IT can be at odds, however, when the company sets targets, but things like AI computation and legacy tech are increasing the company’s carbon footprint.
“When it comes to sustainability planning, my main goal is to make sure our IT strategy aligns with our overall sustainability goals,” says Nicolas Bragard, CIO at finance automation company Esker. “I focus on using data to track and report on our sustainability metrics, helping us see where we can improve. For example, I look at where we can fine-tune our IT infrastructure and tools, like cloud services and hardware, so we can reduce our energy consumption, carbon footprint, and resource usage further.”
Esker has certain principles, such as believing a company’s economic development must have a beneficial impact, not just on its entire business ecosystem, but on society and the environment. It’s a part of the organization’s goal to make sure the company and its clients can reach positive-sum growth, where all stakeholders are positively impacted by the company’s operations.
On the IT side, Esker has implemented several strategies that reflect its dedication to promoting sustainability and responsible use of technology.
“We have successfully prolonged the lifespan of our computing devices, including servers, desktops, and laptops, to a minimum of five years. When it comes to our procurement process, we prioritize computers that are designed for easy repair, which allows us to reduce electronic waste,” says Bragard. “Similarly, we have extended the lifespan of our mobile phones to a minimum of three years. We encourage our employees to choose mobile phones, such as Fairphones, not only because they are durable but also easily repairable, making sure they can remain functional for several years.”
In addition, Esker gives its computers a second life by offering them to employees in return for a donation to a non-profit organization, promoting reuse and supporting charitable causes.
When it comes to utilizing AI-driven solutions, IT ensures the use of the most efficient AI models.
“We opt for specialized solutions tailored to specific use cases, rather than generic AI solutions that can generate far more CO2 emissions. This approach allows us to leverage the benefits of AI while minimizing our environmental impact, says Bragard. “To cut down on our environmental impact, Esker prioritizes eco-friendly vendors whenever we can. We run all of our vendors through an ESG report on a corporate level to make sure it aligns with our standards.”
Esker has also made moves to host all new Esker customers on Microsoft Azure by default. Azure uses renewable energy for much of its data centers and has a billing model based on server resource usage, which promotes efficiency.
Balancing Tech Strategy and ESG Strategy
Deep learning and large language models demand significant compute power, which can create tension with ESG objectives, particularly around environmental sustainability. According to Matt Hasan, founder and CEO of AI-Driven Marketing and Customer Lifecycle Optimization (CLO) Solutions provider, their involvement in ESG has evolved from being a secondary consideration to a core component of decision-making. Initially, ESG was more about compliance and meeting stakeholder expectations, but now it's about driving innovation that aligns with their broader sustainability and social impact goals.
“ESG considerations influence their decisions about the tech stack. For instance, now energy-efficient hardware, more sustainable data center solutions, and cloud providers that offer renewable energy options have become priorities,” says Hasan. “The shift towards greener technologies, while essential, presents challenges, such as managing the trade-offs between performance and sustainability. The need to balance innovation with responsible resource use is an ongoing challenge, especially as the demands of AI and big data continue to grow.”
CIOs and CTOs need to make ESG a strategic priority rather than an afterthought and to start by embedding ESG considerations into every stage of their tech strategy -- from procurement to deployment.
“I emphasize that the role of the CIO/CTO is no longer just about technology; it’s about leading with a vision that integrates sustainability into the very fabric of their organization’s operations,” says Hasan.
Hanne McBlain, senior director at global technology research and advisory firm ISG agrees.
“The role of the CIO in ESG is becoming increasingly more important in today’s world where employees, customers, and shareholders are holding C-level executives to account,” says McBlain. Just a decade ago, ESG was seen as niche, something that a few socially conscious companies embraced. Today, ESG is mainstream and forms an important part of most every company’s strategy, including the requirement to reduce the organization’s environmental impact while still driving business growth. [T]here is a drive among companies to reduce their carbon footprint through energy-efficient data centers, selection of technology partners that use renewable energy sources and decommissioning of legacy technologies, known for their inefficient energy use.”
There’s Increasing Pressure To Embrace ESG
ESG has captured the attention and prioritization of Boards of Directors and the investment community. According to Tom Andresen Gosselin, the ESG practice director at attestation and compliance services company Schellman, in today’s business landscape, organizations worldwide are recognizing the importance of incorporating sustainable and responsible practices into their operations, as well as the benefits of doing so. As a result, ESG considerations like monitoring and reporting have become crucial aspects of corporate decision-making, risk management, and stakeholder engagement.
“It’s crucial for CIOs to be driving a focus on ESG efforts. The increasing emphasis on ESG disclosures reflects the concerns of key stakeholders, including large institutional investors and regulators,” says Andresen. “They recognize that a company's management of ESG risks and opportunities impacts its cost of capital, long-term growth prospects, and overall “social license to operate.” An increasing number of corporations are using well-defined ESG priorities to shape strategies that drive long-term business value. For all these reasons, ESG must be a top of mind focus for the C-suite.
Climate change and extreme weather events have fueled organizations’ recent emphasis on sustainability, and in fact, in some cases, ESG efforts have been synonymous with sustainability. However, that is changing. Today, there is more emphasis on the environment and governance, which rounds out ESG efforts.
No question, CIOs play a pivotal role in ESG.
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