Point of View

Don’t get lost in over-hyped ESG tech—there’s no time

November 12, 2021

The Bottom Line: Technology is rarely what’s lacking when it comes to sustainability. You have more options than you realize

Organizations must become more fluent in how technology and services partners can bring joint sustainability and business outcomes. These partners can leverage their ecosystems, foster collaboration, bring data, and integrate that data throughout an organization’s processes under the context of environmental, social, and governance (ESG) goals. Any technology or platform can play a part in sustainability if it can bring together ecosystems and data in combination with business processes capability and the technology (like AI or analytics, for example) to best use that data. So, don’t over-complicate things: Create a roadmap, and figure out how to break it down into manageable actions and processes with the data to measure and monitor progress. There are tech and services firms out there that can fill the gaps in data and broader capability—so long as you keep bringing the conversation back to outcomes and the global context of decarbonizing to net-zero and addressing all of ESG.

Technology is critical for sustainability. Whether it’s carbon capture and storage (CCS), monitoring tech and data analytics, or any number of other digital technologies—we need it. But there’s a problem developing with digital technologies. Technologies including automation, cloud, enterprise platforms, and more besides, are being slapped with the “ESG” tag. We desperately need to meet sustainability goals that include net-zero emissions and all 17 UN Sustainable Development Goals covering ESG factors. But there’s a risk that by over-complicating or over-hyping the role of certain technologies, the real value those technologies can bring to sustainability will be missed, or worse, organizations will become cynical of any technology or services provider coming to them with ESG solutions.

Every leader within every organization must make sustainability their problem. They must replace aspiration with outcomes and clear metrics—and then apply strategies, technologies, services, and actions. We’re out of time to put this to committee. Corporate leadership must commit to decarbonizing their operations and more broadly deal with the world’s biggest problems. Industry marketing hype can’t afford to get in the way.

Technology and services firms risk over-complicating their narratives and missing the real value they can bring to sustainability

Most of the recent technology announcements centered on sustainability address integrating ESG data and facilitating reporting requirements. But how much of this is all that new? The crux of sustainability is not technology. Achieving ESG goals revolves around people, culture, data, change management, and upgrading business processes to underpin sustainability: measuring, monitoring, visualizing, collaborating, and reporting to make strategic and operational decisions based on data.

Infusing technology in the sustainability discussion is a good thing. But the technology industry is in danger of over-complicating its narrative and value proposition. The level of ecosystem collaboration required to integrate ESG data and make these business processes work is something we’ve never seen before. It doesn’t need the added complication of technology, and often platform companies (that provide capabilities across cloud, enterprise management, finance, workflows, etc.) get caught up in the sustainability hype and pretend to be something they’re not.

We’ll use the need to reach net-zero emissions by 2050 as an example: Organizations need targets (net-zero emissions) to measure their starting points (i.e., their current emissions footprints), build roadmaps, break these roadmaps down throughout the organization, and deliver on them. This approach is all made up of data and business processes contextualized in sustainability terms. But this effort shouldn’t only be about meeting reporting and audit requirements; rather, it can find new efficiencies (e.g., in optimizing energy use to reduce emissions and reduce cost), show and prove to customers how their firm commits and acts across ESG, and assure investors that the organization is fit-for-future.

This path will not be easy. In fact, it may be quite the opposite given the challenges in collaborating across organizational silos, obtaining cultural commitment at all levels of a company, and engaging entire supply chains to share data—all of which are necessary to properly measure and improve your impact.

We are NOT claiming that the technologies and platforms developed to address sustainability aren’t important. Cracking business process integration—linking between enterprise-level strategy and domain roadmaps, execution, and ongoing operations management—is critical if the mandates of CEOs and their sustainability execs and strategies are to become truly “native” within their organizations. These platforms can also act as additional tools to facilitate ecosystem collaboration and data sharing—but they don’t make up for the cultural change required in openly sharing data or the difficulties in getting that data in the first place.

Integrating data and business processes are frequently the biggest barriers to sustainability

Both Exhibit 1 and our separate take on the challenge of manual ESG accounting and reporting processes outline the dire state of sustainability processes within most organizations; there might be a CEO mandate or an organizational-level roadmap to a science-based net-zero target, but this is not translating into concrete metrics for all business functions and down into delivery.

Exhibit 1: Enterprise barriers to sustainability center around the integration of data and business services

 

Sample: 352 enterprise leaders
Source: HFS Research and Accenture, 2021

Takeaways

If the market can avoid over-hyping itself to a point where the world is cynical about anything labelled as ESG, then tech, platform, and services firms will have a critical role in overcoming the barriers to sustainability—sourcing and integrating disparate data, and incorporating technologies like automation, analytics, and artificial intelligence (AI) to report and help their clients make the best decisions based on that data. Technology, platform, and services providers also have vast ecosystems and the means to build data banks and foster the collaboration required. Organizations need to look behind the ESG marketing at what joint sustainability and business outcomes technology can help them achieve. Providers need to make this easier.

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