Organisations Must Build ESG Into Digital Transformations

As organisations continue their digital transformation initiatives, companies today are being held more accountable when it comes to ESG by customers, employees, shareholders, governments and even regulators. 

With a World Economic Forum report finding that 66% of consumers, and 75% of millennials, consider sustainability in their purchasing decisions, companies today must take sustainability into account.

However, a report by Kyndryl and Microsoft found that while both sustainability and digital transformation continue to be a priority for businesses, just 16% of organisations have integrated sustainability into their strategies today.

What’s more, even though 80% of organisations surveyed see great significance in technology’s role in achieving their goals, only 32% believe their organisaton is making full use of it – highlighting how there is much more progress to be made. 

Companies integrating sustainability goals into their digital transformation strategies

With most companies expected to undergo some sort of digital transformation within the next year, ensuring sustainability objectives are integrated into these strategies is crucial, explains Kevin Macnish, Head of Ethics and Sustainability Consulting at Sopra Steria. 

“Companies are doing this by considering the environmental impact of the technologies they are implementing, such as AI, and taking action to reduce them – whether that’s by shifting workloads to sustainable data centres, moving operations to the cloud or restricting usage. 

“A consistent framework, such as the Task Force for Climate-Related Financial Disclosures reporting standards for measuring and disclosing emissions, can also allow companies to be open and transparent about their environmental performance when undergoing a digital transformation. This can allow companies to build a competitive advantage, improve their reputation and contribute to developing a net zero economy for all.”

Mattie Yeta, Chief Sustainability Officer at CGI UK, has seen first-hand how important integrating sustainability initiatives is for facilitating digital transformation. 

“If organisations align their sustainability and digital transformation teams and treat both as equally strategic, they can achieve sustainability objectives and progress that otherwise may have gone unnoticed. For example, implementing a strategy for change based on sustainability will attain higher efficiencies than alternatives, because it leads to cost-effective results bylowering emissions or reducing waste. 

“Sustainability should be considered a key driver of innovation, transformation and balance. Recognising it as such means we can develop better ways of driving and facilitating digital transformation, reaping greater benefits in the process.”

Technological innovations playing a pivotal role in enhancing sustainability

As governments move to align with a fast-approaching deadline to transition to net-zero emissions, sustainability is one of the most serious challenges faced by organisations today. As David Craig, CEO at Iceotope, explains, big problems require bold ideas. 

“Climate is changing and one of the most pressing issues we face as a society is how we are going to address that change,” he says. “Technology offers us a path forward to address these challenges.”

In the data centre industry, for example, ESG objectives are driving business goals to meet the demands of a low-carbon economy. “In many ways, what this requires is the courage to lead. Many of the new technological innovations are “low-hanging fruits” and new ways of doing business. They are moving away from a well-known technological solution to one that has greater perceived risk.”

When it comes to data centres, there are several new technologies which are having a transformative impact, such as precision liquid cooling. 

“Servers today are designed to be air cooled. However, at a time of denser compute and data gravity, traditional air-cooling technologies are reaching their limits,” Craig says. “Precision Liquid Cooling significantly reduces energy and water consumption as well as the cost of data centre design, build and operations – making a liquid-cooled data centre simpler, less complex and more efficient than any alternative.”

Now, Craig explains, is not the time for incrementalism. The longevity of sustainability decisions being made right now is akin to a lifestyle change for the data centre industry. “The right technology solution isn't good for one or two generations, it is a 15 or 20-year life cycle. Decisions and investments need to be made with a long-term perspective. Incrementalism might buy us another 18 months, but it won’t get us 20 years.”

While Macnish acknowledges that there is no silver bullet solution when it comes to solving the climate emergency, technologies such as digital twins are already playing a crucial role in reducing emissions. 

“As a virtual replica of a real-world entity, digital twins can be used to model and monitor elements impacting environmental performance, such as carbon embodiments, and simulate a ‘what if’ scenario on how to effectively counter them,” he adds. 

“In the real world, this can be applied to organisational or industry-wide sustainability strategies - with the technology capable of reducing carbon emissions in a building by up to 50%.

“Given that the adoption of digital twins is still relatively new in many fields, improving public trust will be crucial. Encouraging more organisations to share their data will also allow digital twins to work effectively. This will allow them to play a more central role in supporting the world’s sustainability goals as we look towards reaching net zero by 2050.”​​​​​​​

Balancing economic growth and environmental responsibility

With increased pressure on businesses to embrace sustainability initiatives, it is essential that organisations adapt. But while historically the matters of profitability and environmental responsibility were seen as opposing views, businesses today must strike the perfect balance between the two.

According to Craig, sustainability can catapult businesses into a future of growth or condemn them to a struggle for survival. “Companies adopting strong sustainability policies and practices will perform better financially over the long term than those that don’t,” he says. 

“This is in part due to the idea that those who prioritise sustainability are often better positioned to adapt to changing market conditions, as well as attract top talent, build stronger relationships with customers and stakeholders, and manage risks more effectively.”

As CGI’s Yeta concludes, businesses should embrace a collaborative approach when defining sustainability goals: “There seems to be a neo-classic economic view in the modern-day markets that drive businesses to avoid environmental initiatives where they conflict with profit maximisation,” she says. 

“To overcome this constraint, we need to consider environmental sustainability as one of the main filtering values through which other competing principles are evaluated, prioritised and implemented. 

“Businesses should embrace a collaborative approach when defining sustainability goals. Strategic planning should involve various stakeholders, especially those with sustainability know-how to promote the desired change and collaboration. 

“Therefore, the strategic planning process should incorporate a long-term perspective beyond short-term profits. It should be approached holistically, taking into account the relationship between business, profit maximisation and environmental opportunities and obligations.”

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