In today’s rapidly evolving business landscape, investors, consumers, employees, suppliers, and other stakeholders are demanding that organizations of all sizes demonstrate clear environmental, social, and governance (ESG) planning and action. Far from being a mere checkbox exercise or a “nice to have,” ESG has become a fundamental component of business performance, shaping corporate reputations and long-term success.
The Growing Imperative for ESG Action
The urgency of integrating ESG into business strategy has never been greater. According to the 2023 Global Climate Report from NOAA National Centers for Environmental Information, current global policies are projected to result in approximately 2.7°C warming above pre-industrial levels. This highlights the difficulty in meeting the Paris Agreement’s target of limiting global warming to 1.5°C. As a result, we are witnessing more extreme weather conditions, with catastrophic consequences. The World Economic Forum’s Global Risks Report 2023 ranks extreme weather events as the second biggest risk facing the world over the next two years.
In parallel, diversity and inclusion have become top priorities in corporate agendas. Businesses recognize the importance of fair and equal workplace practices, ensuring broader representation for women and minorities. Many companies are also expanding their social engagement beyond hiring by investing in initiatives that address societal issues such as homelessness, disease prevention, and youth empowerment.
Meanwhile, the evolution of technology and the growing responsibility of corporations to contribute positively to society have underscored the importance of governance initiatives. Without clear ethical guidelines, businesses risk making short-term decisions that could harm both society and their long-term success.
Why Businesses Must Respond
The strategic importance of ESG reflects the broader societal focus on environmental and ethical matters. Consumers are making conscious changes in their personal habits and expect the businesses they support to do the same. Transparency in ESG standards is now a crucial factor in purchasing decisions, supplier partnerships, and investment strategies.
Businesses are not only expected to improve their own ESG performance but must also ensure that their upstream suppliers align with ESG principles. Redesigning products, services, and operational frameworks to be more sustainable is no longer optional—it is a competitive necessity.
The IT Sector and Sustainability
Technology is evolving at incredible speed and permeating every aspect of human life. The World Economic Forum (WEF) believes that digital technologies have the potential to cut global emissions in the three highest-emitting sectors by 20% by 2050. Tech businesses, specifically, therefore have a key role to play in driving sustainability forward.
Companies are increasingly leveraging technology to support ESG reporting and manage vast amounts of sustainability-related data. Beyond reporting, businesses are embracing green software practices that prioritize privacy, fairness, transparency, and accessibility. For example, technology enables underserved minorities, such as students without Internet access, to engage in remote learning via NextGen TV applications.
Technology also plays a crucial role in ethical decision-making, helping businesses monitor and verify supplier sustainability claims while mitigating supply chain risks through AI-powered analysis and predictive insights. Furthermore, the tech sector is advancing medical innovation by developing AI-based stratification methods for hereditary diseases.
Investing in a Sustainable Ecosystem
Technology businesses are at the forefront of innovation and must lead the sustainability revolution. To help clients and customers meet ESG objectives, tech firms should actively collaborate with research institutions, startups, and government initiatives. This includes partnering with academia and research bodies to drive innovation, co-developing sustainability pilots with customers and market players and supporting startups with groundbreaking ideas in sustainability and technology.
Participation in ecosystems like the European Commission’s Horizon2020 initiative enables technology companies to contribute to impactful projects, from forest fire prevention solutions to accessibility tools for the Deaf and hard-of-hearing communities. By leveraging their expertise and resources, IT businesses can inject progressive environmental and social objectives into broader societal change.
Read our latest report on ESG to learn more about how businesses can effectively integrate sustainability, ethics, and social responsibility into their operations.