How Does Digital Transformation Make Impacts On ESG Goals?

As the business landscape is shifting towards sustainability, digital transformation is becoming one of the core components in every business’s pathway to ESG goals. While emerging technology is capable of accelerating ESG goals through automated, real-time analytic functions, ESG can act as the driven factors of business digital transformation strategy. 

No matter how small or large the businesses, digital transformation can impact the ESG strategy. Explore some of our insights below to learn more, and get recommendations to maximize technology adoption for sustainable practices! 

Environment: Pathway To Green Business!

The rise of new technology, including AI, Cloud, Data & Internet of Things (IoT), not only provides a significant boost to business performance but also a new methodology to identify the impact of operational activities on the ESG elements. One of the most notable examples is the capability of digital tools to turn business activities into data, capturing various insights including the amount of consumed energy, materials, and productivity evaluation. These benchmarks are valuable assets to help business leaders, strategists have an easier time considering cutting down inefficient processes and forming new practices to leverage sustainable goals. 

With the ongoing development and advancement of technology, the journey towards ESG goals for businesses is much accelerated than ever. The World Economic Forum indicates that digital transformation might contribute to a reduction of approx. 20% global emission by 2050, particularly in the three highest-emitting sectors: energy, materials, and mobility. 

Aside from future predictions, businesses are already realizing the impacts of digital transformation towards their sustainable goals. More than 40% of respondents among 400 executives affirm the same opinions in a recent survey conducted by Bain & Company and the World Economic Forum!  

So, how can you maximize digital transformation for green outputs? 

• Integrate IoT solutions to analyze, monitor energy consumption and reduce emission of electric devices / production lines of business. Solar Box & E-sensor, a solution produced by NTEX with capability to automatically monitor air conditioner’s energy consumption, are the most notable examples of this application. 
• Digitize documents as much as possible to reduce the usage of printed materials 
• Prioritize adopting technologies that consumes eco-friendly, renewable materials (Eg: Solar energy consumption) and ENERGY STAR qualified to limit negative impacts to environment 
• Evaluate your business activities / products’ impact towards environment on a regular basis through implementation of real-time analytic & tracking tools. Consider to base on the most common standards of carbon footprint including GHG Protocol, ISO 14064

Social: Towards Equal Business Practices! 

Apart from the environmental matter, social (S) responsibility is one of the key factors within the ESG goal. In ESG, social refers to the goals of creating a community centering on human rights, equality, and sustainable relationships between organizations and relevant stakeholders (e.g., Employees, Investors, Providers, Partners, Press, Government, Public community…).

PwC suggests that Social element can act as a “secondary role to environmental and governance factors for some time”. This includes a wide range of areas that make up social factors among businesses, including workforce diversity & inclusion, health & safety promotion among organizations, talent acquisition strategy, well-being culture & behavior practices, business products’ impact on society… In a report by Infosys, 86% of business CXOs believe that workplace transformation can enhance team collaboration.

With the help of digital transformation and new tech innovation, it becomes much easier for businesses to embed social practices into everyday operations. They can spread their voice faster, drive a diverse talent pool with the help of automated matching tools, and leverage employee communication to a better degree. These elements contribute to fostering an organization that drives towards a friendly workplace, respect differences, and equality for everyone!

Some DX approaches to leverage best social practices among organizations! 

• Promote e-learning & training programs to push overall performance, providing opportunities for employees to gain equal access to learn new skills / upskill 
• Utilize employees’ health record system to analyze well-being and drive better healthcare policies to improve quality of life. 
• Make use of employees’ demographic, geographic, gender & race data to drive a better diversity & inclusion strategy, creating a baseline for talent acquisition programs. 
• Built-in AI Chatbot & relevant channels that allow employees to report / make statement on any relevant corporate issues that might affect or damage their work experiences.
• Maximize usage of internal & external online channels (Eg: Social Media, Internal Gateway, Radio, Speaker…) to spread corporate voices in a timely manner. 

Governance: Foster A Transparent Framework!

Governance includes corporate structure, board composition, business ethics, compliance, risk management, and anti-corruption. While most companies are becoming more involved with leveraging governance, the World Economic Forum indicates that environmental and social risks are still the top priority. Efficient governance practices help businesses strengthen their reputation with stakeholders and the public, trust among employees, and foster a transparent business operation. 

Many reports indicate that excellent digital governance practices can help businesses drive growth & performance to a better degree. In a recent survey by McKinsey & Company, 85% of respondents considered the company’s data privacy policies as the most important factor before making a purchase decision. The firm also indicates that companies that build “digital trust” — or consumer confidence in their cybersecurity, data protection, and use of artificial intelligence — are 1.6 times more likely than the global average to achieve at least 10% growth in revenue. 

A study by MicroStrategy indicates that 56% of companies worldwide are utilizing data to achieve more effective decision-making. 

Thanks to digital innovation and the introduction of various analytical tools, it’s getting easier for business leaders & strategists to leverage governance in different aspects. 

Some of the most notable applications of digital transformation into governance can be as follows: 

• Utilize management platform to formulate a clear workflow, and business model and streamline with established KPIs among operations. 
• Implement analytic tools to gather real-time & accurate data on business operations & operational activities, with integration of an AI-based model to forecast potential risks based on given insights. 
• Enhance data security through different methodologies of technology adoption, from building multiple-layer storage measurement to automated threat caution tools.

Conclusion: 

As the world is considering ESG as the measurement of the future landscape, digital transformation can be a disruptive factor in this journey. While both of these element shares the same long-term progress, the most optimal pathway for both new and current businesses is to conduct “dual transformation”, aligning both strategies at the same time. This requires business leaders, strategists & executives to share mutual goals, desire to change, and aim toward a reputable corporate that promotes sustainable innovation. 

Want to gather more insights for elevating ESG among your business? Stay tuned for more articles on NTQ Solution’s website!