Building a sustainable future with ESG and technology

Environmental, social and corporate governance (ESG) is slowly making its way in conversations in the enterprise market, broadening the many ways to address organizational value among stakeholders. It includes the environment as an additional stakeholder, among others, and is recommended to be incorporated in an organization’s strategy. In addition, it covers the treatment of an organization’s employees and stakeholders, and its adherence to ethical and transparent governance practices. Alongside the rise of ESG, technology has emerged as a powerful tool for driving positive change and enabling sustainable practices. This intersection of ESG and technology highlights how technology can be leveraged to advance environmental sustainability, social responsibility and effective governance, effectively aligning to the United Nations’ Sustainable Development Goals.

 

In understanding the ESG framework, it is important to consider the dimensions that are part of it:

Environmental sustainability. Technology has become a crucial ally in addressing the pressing environmental challenges of our time. From renewable energy solutions to resource management systems, technological innovations have the potential to reshape industries and reduce our ecological footprint. For instance, advancements in solar and wind energy have made renewable sources more efficient and cost-effective, paving the way for increased adoption and reduced reliance on fossil fuels. Smart grids, enabled by advanced data analytics and Internet of Things devices, offer optimized energy distribution and consumption, minimizing waste and promoting sustainability.

Furthermore, technology has facilitated the development of eco-friendly transportation alternatives. Electric vehicles (EVs) have gained prominence, aided by advancements in battery technology and charging infrastructure. With their zero-emission capabilities, EVs contribute to reducing air pollution and greenhouse gas emissions, thereby combating climate change. Additionally, emerging technologies like autonomous vehicles and ridesharing platforms have the potential to improve traffic efficiency and reduce the number of cars on the road, further promoting sustainable mobility.

Plant alternatives and going meatless are also slowly gaining prominence in the market, with plant-based and vegan options almost included on the menu of dining establishments. These dietary preferences are also considered as planet-based diets and are friendly to the environment given the minimal footprint required compared to farming animals.

 

Social responsibility. The social aspect of ESG becomes essential especially in a country like the Philippines, where most of the population is marginally poor and majority of the businesses are classified as MSMEs. This allows organizations to consider these aspects in terms of inclusion overall — not just in the financial aspect but the many other things that are necessary in the age of technology and digital.

ESG places a strong emphasis on a company’s social impact and responsibility toward employees, communities and society. Technology plays a vital role in fostering social responsibility by enabling inclusive and equitable practices. Accessible and affordable technologies, such as mobile devices and internet connectivity, have empowered marginalized communities and bridged the digital divide. These technologies have facilitated access to education, health care, financial services and information, contributing to socioeconomic development and empowerment.

Moreover, technology has facilitated the rise of social entrepreneurship and impact investing. Social media platforms have become powerful tools for raising awareness, mobilizing resources and fostering social change. Crowdfunding platforms allow individuals to support causes and initiatives they believe in, promoting community involvement and enabling grassroots movements. By leveraging technology, companies can embrace diversity and inclusion, promote fair labor practices and enhance their social license to operate.

 

Effective governance. The governance component of ESG focuses on ethical and transparent business practices, responsible leadership and accountability. Technology has significantly enhanced transparency and accountability through advanced data analytics, blockchain technology and artificial intelligence. These tools enable companies to track and report their environmental impact, monitor supply chains for ethical practices and ensure compliance with regulations and standards.

Blockchain, in particular, holds great promise in enhancing governance practices. Its decentralized and immutable nature ensure transparency and traceability, making it valuable in supply chain management, fair trade certification and combating fraud. Additionally, artificial intelligence can assist in identifying patterns of misconduct, detecting potential risks and enhancing corporate governance frameworks.

Similarly, we have seen banks put effort in the marginalized sector to access financial inclusivity, creating products and services that would be more relatable for them such as “pasaload,” a mini bayad center, even doing financial transactions even without a bank account. Banks enable access to digital services as well, eliminating the need to have physical cash and hence can cater to more customers.

 

This empowerment of the mass market to be their own entrepreneurial versions of themselves, even if challenges such as business capital may be present, is an example of incorporating ESG. Doing so will help foster a more sustainable business in the long term, with benefits enjoyed by all stakeholders.

The convergence of ESG and technology presents immense opportunities for building a sustainable future. By harnessing the power of technology, companies can reduce their environmental footprint, promote social responsibility and strengthen governance practices. However, it is essential to ensure that technological advancements are guided by ethical considerations and aligned with the principles of ESG. Collaboration among stakeholders, including businesses, governments and civil society, is crucial for maximizing the positive impact of technology on ESG goals. Together, we can leverage technology as a force for good and create a more sustainable and equitable world for future generations.

Kay Calpo Lugtu is the chief operating officer of Hungry Workhorse, a digital and culture transformation firm. Her advocacies include food innovation, nation-building and sustainability. The author may be reached at kay.lugtu@hungryworkhorse.com.

Source: https://www.manilatimes.net/2023/06/22/business/top-business/building-a-sustainable-future-with-esg-and-technology/1897192