With more and more technological advances on the rise, companies are starting to discover the importance and advantages of incorporating these technologies for sustainable practices. Some of the world’s biggest companies are looking towards new technologies such as blockchain, artificial intelligence(AI), and the Internet of Things (IoT) to improve their environmental, social, and governance (ESG) efforts and the way they report them.
Technological innovations, such as the following, are accelerating, amplifying and prioritizing sustainability in today’s business world. Let’s see how:
This much-buzzed-about technology has already had a positive impact on the Energy and Financial Services sectors, and it’s also redefining broken systems and data consumer security. Blockchain is also a game changer for supply chain management which in turn is enabling greater transparency and efficiency. Blockchain gives companies and consumers the potential to track transactions securely and transparently; this will help ensure that suppliers are adhering to their values – whether that be environmental stewardship or sustainable manufacturing.
- Artificial Intelligence (AI)
AI is not limited to just predicting and modelling sustainable initiatives but has the potential to transform company reporting processes when it comes to ESG. While sustainability information flows into the market, AI allows companies to search through these large data sets at unparalleled speed. As the value of ESG data is better understood and increasingly demanded, AI provides an opportunity to smartly analyse mass amounts of fractured data, chartering sustainable new pathways for business.
- Internet of Things (IoT)
IoT is one of the most significant technological advancements that will impact the global economy within the next couple of decades. Projects that can harness the power of IoT can contribute to achieving the UN Sustainable Development Goals (SDGs). For example, IoT can move sustainable development forward as a tool to help improve the quality of life in less developed areas of the world– from smarter cities to cleaner energy – and within that lies a real opportunity for companies to positively contribute to the SDGs.
In the last decade, many companies have been scrutinized from stakeholders for not improving the management of natural resources and human capital. Although most non-financial data disclosure remains voluntary, stakeholders are now requesting that these companies release some non-financial data.
However, these expectations create problems for companies, the primary problem being that although many of them are following the guidelines of the Global Reporting Initiative (GRI), there is no single global standard for ESG reporting.
The great convergence
Change may come in the form of gradual standardisation in the reporting industry and the technology they use to report with. The dominant standard, the GRI, has been used by three-quarters of global Fortune 250 companies that produce ESG reports. On environmental topics, it has aligned with another standard-bearer, the Carbon Disclosure Project (CDP). “What we are trying to create is a singular global standard, like that of the International Financial Reporting Standards,” says GRI’s chief executive, Tim Mohin.
A digital boost
Potential changes in reporting requirements create opportunities to enhance digital solutions. Third-party digital software could also speed up company reporting, according to Professor Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School. “A lot of companies complain that ESG reporting is costly, time-consuming, and they are not sure what the use is,” he explains. “Emerging software will produce reports for different sustainability standards in a fraction of the time. The effort and cost are going to come dramatically down—and that deals with a major issue that companies are facing in their reporting.”
What we are trying to create is a singular global standard, like that of the International Financial Reporting Standards
Although the ability to adequately measure and report on sustainability is still being debated and developed, the technological tools to aid these processes exist and can be further adapted. Furthermore, the significant development in technology has the power to analyse ESG and sustainability data at incredible levels. Today’s challenge is to embrace these breakthrough technologies for valuable insight into a company’s long term and sustainable growth.