Going green -- focusing on sustainability -- is critical for today's business and technology leaders. But exactly how to lower a company's environmental footprint is a lot more confusing.
Organizations are facing internal and external pressures to drive sustainability in all aspects of their business. Where this transformation takes place and to what degree differs across the enterprise, but some universal themes hold true, according to Bjoern Stengel, global sustainability research lead at IDC.
Stengel delves into sustainability software trends, the way in which investors are pushing climate action and why data is so important to creating greener business practices.
Technology as potential sustainability enabler
What role does technology play in corporate sustainability?
Bjoern Stengel: We see technology, generally speaking, as an enabler for sustainable business transformation. Many organizations we work with see sustainability increasingly affecting their bottom line and transforming pretty much everything that they're doing [as well as] every function of their organization.
Now, business and IT leaders are examining existing or new technologies through a specific sustainability lens. More than seeing specific technologies emerge, we're examining:
- How are sustainability trends affecting specific features of technology?
- What functionalities can different technologies bring to the table that help solve sustainability issues?
Some technologies [are under particular scrutiny], such as software, cloud and data centers. There's a lot of interest right now in AI, especially managing the risks around AI from a sustainability perspective. We're also seeing blockchain as a facilitator for sustainable transformation.
What tools and technologies are companies using to boost supply chain sustainability?
Stengel: One big issue right now is scope three emissions, which are carbon emissions that aren't caused directly by the organization itself but by other organizations further down the supply chain. And those emissions are difficult to measure, track and report, although there is a strong demand from investors, for example, [for the organization] to report scope three emissions. It's a big challenge for organizations that have a complex supply chain.
That's an area where we see an increasing demand and increasing offerings around software. These might include, for example, software suites that can help track scope three emissions across the supply chain and put the collected data into a manageable format, and into a format that can be used to report and disclose that information.
The need is for standardized, quantifiable, in many cases, almost investment-grade data. So that data has to be collected somewhere; it needs to be processed, and then reported to the relevant stakeholders. That would be a driver for [procuring supply chain sustainability-related] software.
Greening water usage
To what extent does water use factor into business sustainability?
Stengel: A lot of focus is on greenhouse gas emissions, but water is another emerging big environmental topic that companies are increasingly dealing with. [That's because of] its scarcity and the negative effects that increased water usage can have on the environment and on people. The environmental impact of water usage is an important topic, and it's something that a variety of stakeholders are increasingly paying attention to.
In the past, a lot of the scrutiny around water usage came from advocacy groups or from the public, or from the media. Increasingly, investors are also looking at how companies are managing their water usage. They're looking at the water data that companies are releasing, and they're factoring that into their corporate evaluations and processes.
Building pressure to lower environmental footprint
In what ways is outside influence affecting business and technology leaders' decision to prioritize sustainable practices or implement sustainable technology?
Stengel: We're definitely moving toward a stakeholder economy, not just a shareholder economy. There's an exponential growth in the management of assets according to ESG [environmental, social and governance] standards or guidelines.
In the U.S., for example, government and regulatory bodies have an increasingly strong impact on decisions around sustainability or requirements around sustainability. And organizations [such as interest groups] are becoming more educated and more vocal around sustainability topics. Employees are also an important stakeholder group. They are increasingly making decisions to work or to stay with an employer based on the employer's sustainability performance.
Broadly speaking, [sustainable transformation is] a top-down approach, but it needs to be ingrained into every part of the organization. So, there's definitely also a great responsibility that sits with the middle management and with other parts of the organization that help contribute to making these sustainable transformation projects successful.
What are some strategies businesses are using to help meet sustainability goals? For example, are certifications or outside partnerships with different groups becoming more important and common?
Stengel: From an investor perspective, ESG ratings are increasingly important as well as achieving good scores with the ESG rating firms out there. That's especially true if you're a publicly traded company. I also think using professional services firms to get an outside perspective on sustainable business strategies, risk management and operational improvement processes is now important.
Parallel to that, organizations are increasingly engaging with professional services firms around audit assurance, tech services, etc. So, to cater to that growing investor demand for quality data is maybe even more important than a specific label or particular kind of certification because investors are so important and so powerful.
Editor's note: Responses were edited for length and clarity.