ESG and Sustainability is a Team Sport

Credit: iStock by Getty Images

Companies across the globe are going through a dramatic business transformation. Customers, and the experiences they have, are driving companies to change at a rate not seen before. These transformations, however, only tell part of the story.

Prior to the pandemic, companies had started to transform their digital estate through digital transformation. As we traversed the pandemic period, the rate of transformation accelerated. In parallel, the focus was driven less by technology alone and more by business transformation. Essentially, digital transformation was quickly giving way to business transformation.

The way in which customers engage with companies and purchasing products and services changed. Companies needed to demonstrably change to meet this demand. Companies are also establishing their stance on environmental, social and governance (ESG) objectives.

Employees are looking for more than just a place to work. Beyond a more hybrid workforce, employees are looking for a company with a purpose. This conveys to customers as well. In response, companies are setting ESG objectives and reporting these in their quarterly and annual financial reports.

A holistic view of sustainability

One of the key ESG aspects companies are focused on is sustainability. Sustainability is not a new topic for companies and their respective information technology (IT) organizations. Sustainability has been a subject in the commercial real estate and IT organizations for decades. For IT, the work focused on the data center. However, sustainability encompasses much more than the data center and building.

Today, sustainability includes impact from third parties, hybrid work and energy mix. All of these factor into the overall sustainability picture and impact the company has. Companies have turned to renewables in the energy mix (hydroelectric and solar) as potential offsets to impact. However, even these have pros and cons as we are currently seeing with a lack of water to feed turbines and the strain on the grid from misaligned sources and consumers of energy. In the end, companies need to dig deeper to understand and reduce their impact.

In its report entitled, “The intersection of digital transformation and the energy transition,” Eaton Corporation reports that sustainability is a top goal for the sector, “prioritized by 46% of respondents over resiliency and inhabitant comfort. ‘Smart building’ efforts targeting sustainability are already underway—76% of building respondents said they are deploying environmental monitoring digital use cases today.”

Clarity through reporting

At the core of any movement is data. For ESG, and more specifically sustainability, this is no different. The problem is complicated as data is needed from many different sources and in many different forms.

The complexity of the problem should not dissuade companies from pursuing information to chart their path. Data is at the source of the informed company. Beyond data, there are metrics that can provide guidance. Power usage efficiency (PuE) is one example. PuE is essentially a measure of how efficiently power is used (ie: in a data center). PuE is a great start, but also has its limitations as it is very focused and can be gamed due to the number of variables involved. It is best used when comparing a company to itself through change over time.

Organizations are working on common methodologies to help alleviate this issue while providing guidance at the same time. Add to this complexity that the skills gap between what is needed, and experience is real.

Where to start?

To get started, a company should start with an awareness of where they stand. Education and a holistic perspective is key. Focusing on one area that has the potential of a 1-3% gain is less impressive than one with a 30-40% gain in efficiency. In the past, companies focused on the easier targets that may have only provided these smaller gains.

It is important to understand that ESG will cross organizational boundaries like never before. ESG, and sustainability, is not relegated to the bounds of IT and real estate. All parts of a company will need to participate in the process.

Taking a holistic approach provides clarity around strategy to set realistic, but forward thinking ESG goals. This clarity also provides the basis for a solid understanding to measure progress over time.

The bottom line is that managing through ESG is challenging. Understanding and engaging cross-functional teams adds to the complexity. However, the outcomes are incredibly positive and woefully needed. Get started, keep an open mind, and look for creative ways to drive forward. ESG and sustainability is a team sport.

For more information, download the latest report from Eaton Corporation and 451 Research on “The intersection of digital transformation and the energy transition”:

This blog is sponsored by Eaton Corporation.

1 comment

Leave a Reply

%d bloggers like this: