August 16th 2023
Opinion: Why every organisation’s ESG journey starts with data
by Mary Jacques, Executive Director, Global ESG and Regulatory Compliance at Lenovo
In the modern business landscape, choosing sustainable practices can lead to increased profitability. This was no better demonstrated than at Earth Day 2023, where the central theme revolved around ‘invest in our planet’, underpinned this point. Valuable business outcomes can be achieved when organisations make technology choices to realise their environmental, social, and governance (ESG) objectives.
During times of economic uncertainty, business leaders may feel tempted to deprioritise ESG initiatives. The past year has brought this issue to the forefront, as ESG initiatives dropped from being the top organisational priority to the third, according to research conducted by Google Cloud. Instead, increased pressure to focus on revenue generation was shown by many executives. However, nearly all respondents (87%) expressed their intention to enhance ESG initiatives within their organisations.
Photo by Towfiqu Barbhuiya
In the past, it was easy to fall into the trap of imagining that ESG targets were completely separate from a company’s data strategy, with one handled by sustainability officers and the other by IT – but in fact the two are inextricably linked. Having a robust data strategy can deliver results for both businesses and the planet.
One of the key findings of Lenovo’s recent Data for Humanity research highlights that executives believe data will play a crucial role in helping enterprises deal with global crises such as climate change. More than two-thirds (70%) of organisations are already using data to achieve both ESG and financial goals. The findings also show that in the most successful organisations, the IT team works closely with business teams to achieve both financial and ESG goals. A mature data strategy and a move away from siloed thinking are the cornerstones of an ESG strategy fit for the 21st century.
The underlying issues
Grappling with the problems of sustainable IT can be daunting. Enterprise technology accounts for around 350 to 400 megatons (million tons) of carbon dioxide-equivalent gases every year, according to an analysis by McKinsey. This makes up around one percent of total greenhouse emissions globally. To put this in context, it’s roughly half of the emissions caused by the global aviation industry.
Business leaders must use the data at their fingertips to take an overview of where their emissions come from, and what can be done to remedy this. Sometimes, these answers may seem counterintuitive. McKinsey’s research shows that end-user devices, such as laptops, smartphones and printers, are responsible for more emissions than on-premise data centres, generating between 1.5 and two times the amount.
Engaging with data offers CIOs the information they need to make the big decisions, both in the data centre and in the office: for example, data can empower CIOs to upgrade to less power-hungry servers, or zero in on end-user devices that aren’t needed. For business leaders, data-enabled sustainability decisions don’t need to be painful ones. Simple methods, such as buying IT equipment in smarter packaging which reduces the amount of paper and plastic used to ship products, can help.
The key benefits
In the race to net-zero, companies, consumers and governments must work together: everyone’s future depends on it. Corporations have several important roles to play, from ensuring consumers are educated about climate change and what needs to be done to address it, to working closely with other businesses and governments, sharing data where needed to hit important goals in the decades to come. This is not a battle that can be fought alone. Companies have a duty to influence both consumers and others in their value chain, leveraging their data to help in this: from these seemingly small actions, global change can grow.
Engaging proactively with data is central to this. The Data for Humanity report highlights the fact that business leaders who engage with data reap significant rewards, although too few currently do so. Companies which have engaged robustly with data, categorised as ‘Data Leaders’ and accounting for 15% of the companies surveyed, are far more likely to have made progress towards their ESG goals. Most Data Leaders (89%) have made significant progress towards ESG goals, compared to just a quarter (23%) among ‘Data Followers’. Four in five ‘data leaders’ (78%) have also increased revenues.
The report finds that awareness of environmental and social issues is high. Business leaders recognise the potential of data as an enabler to deal with such ESG issues, believing that it will be highly important in dealing with issues such as global warming (60%) and income inequality (55%). But just a third of executives (33%) have a plan to tackle global warming within the next three years – and even fewer (18%) are setting out to deal with income inequality.
Sharing data with collaborators and partners is also widely recognised as important in achieving ESG goals. Almost half (43%) of business leaders say that they are sharing data with external partners and organisations to help support environmental initiatives. This is vital, as reducing carbon emissions is not something that can be done alone. In today’s global economy, no large company ever works in isolation. Many companies are already working together to take climate action. The UN-backed Race to Zero Breakthroughs; Retail Campaign has seen global retail giants such as IKEA and H&M Group working in an industry-wide initiative with trade association partners to accelerate what the campaign describes as a ‘whole-economy transition’ to cleaner ways of working.
A mature data strategy is key to identifying and dealing with problems around sustainability and working on these with suppliers and partners. These conversations can be difficult, but data empowers business leaders to understand the environmental and financial implications of each decision.
Future objectives
Mastering data can offer the insights business leaders need to frame their longer-term climate ambitions – including their emissions goals over the next decades. The Science Based Targets initiative (SBTi) offers organisations a benchmark to measure their future progress on climate issues. The SBTi Net-Zero Standard is the first to be backed by science, and is already used by 2,000 organisations worldwide. Companies as diverse as Capgemini SE, H&M, and Schneider Electric, as well as Lenovo, are among the first group of organisations who have committed to at least some of the SBTI goals, publicly sharing how they are taking action as part of an ambitious plan to accelerate the global economy to net-zero emissions.
Looking ahead at sustainability
IT needs to be involved in discussions concerning environmental and social matters so organisations can break away from isolated thinking when it comes to ESG.
To accomplish sustainability objectives, business leaders need to embrace the data readily available to them, helping to establish precise goals and assess outcomes. At the centre of this, to benefit both the business and the planet, data must sit at the heart of any business decision.
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