“In most enterprises, there are hundreds, if not thousands, of potential sustainability ideas and projects that IT could support. The CIO must make sure the IT organisation focuses on those that will drive the enterprise’s sustainability ambitions,” says Simon Mingay, VP Analyst at Gartner.
With ESG scores rising in importance, orchestrating the right technologies and practices will be key to meeting the ESG goals that your organisation uses to track and report progress to both external and internal stakeholders.
A good ESG score can improve stock performance, customer engagement and reduce operating costs. A bad one can tarnish your reputation with job candidates, employees, customers, regulators and investors.
Sarah Johnson, APAC digital leader with ERM, says sustainability is often referred to as the new digital. Many IT organisations have journeyed from more internal, process-focused operations, to now being the digital transformers across the entire organisation.
“We see IT as the connector, driver and accelerator of change across the organisation, and is perfectly positioned to be connected to ESG,” she added.
In terms of the head of IT, in some organisations it's the CIO, in other organisations, it's the CTO – when it comes to ESG, what is expected of these positions, the CIO or the CTO?
Sarah Johnson: Tech is becoming critical to the success of every company. What is expected of the CIO is down to the culture. Has that company set a strategy for their business? Does that strategy include a sustainability strategy and to what extent is that seen as a key enabler? Regardless, the CIO is a critical accelerator.
"CIOs need a strong vision for accelerating sustainability through digitalisation. With increasing pressure on companies to produce an annual ESG report in compliance with regulatory guidelines, the CIO plays the critical role of maximising data-collection efficiency from various systems including finance, HR, operations, etc."Sarah Johnson
IT should take on the role of the enabler within the organisation. I think there is synergy in what we should expect from the CIO and how that is aligned with the organisation’s sustainability KPIs. IT can provide the data and information to check performance against those objectives, identify gaps and devise solutions to manage them in advance.
To what extent is the CIO accountable for ESGs success or failure?
Sarah Johnson: The success or failure of a company’s sustainability efforts should not fall solely on one person. The CIO is accountable, but it is just as much a shared accountability across the C-suite. In our consulting projects, we saw that sustainability outcomes accelerate when there is collaboration across different departments in a company.
What do you think are the key challenges that someone in the CIO role must overcome to ensure IT is able to make a positive contribution to a successful ESG initiative?
Sarah Johnson: I think ESG is constantly evolving, and even regulations and expectations from investors are changing. The sheer volume of data that is expected to be generated in very short time frames can pose a huge challenge for CIOs.
Another key challenge is in balancing strategic decisions. How do you balance the ever-increasing demand for data, speed of computing and information, with the accompanying increase in emissions profiles?
CIOs need to think in a different way, with sustainability considered a key part of the strategy. It also calls for the CIO to deal with challenges in an innovative way while being open to constant change.
When it comes to ESG, who are the people who get involved at the highest level and what do they need to do to ensure that the whole organisation moves in the same direction?
Sarah Johnson: It is about bringing together the whole C-suite and teams under them into one vision and one journey. They need to align on the goals of sustainability and decide why sustainability is important to the company; how everybody contributes to it, and what their role is.
High-level executives need to look beyond short-term commercial goals and think about sustainability goals, which are often longer-term goals, that could bring benefits in the future.
In terms of the role of the CIO, how can that person get ahead of sustainability and ESG?
Sarah Johnson: One way is to focus on the nexus where IT and sustainability meet and raise the profile of IT’s impact on sustainability. It could be about reducing emissions, increasing social impact and increasing digital transformation to accelerate sustainable outcomes.
Everything within IT is about using transformational capabilities across these three areas – people, process, and technology – to accelerate outcomes.
“Leadership that actively focuses on diversity and securing sustainability talent is also key. IT roles should start looking for sustainability-related skill sets and focus on building a culture that has shifted to sustainable ways of working.”
What IT organisations can do now is also around machine learning and artificial intelligence. Using predictive analytics and geospatial data, we could predict events and changes, and adjust strategy accordingly. To move beyond simply focusing on data security, the CIO should shift into the role of an accelerator, being the part of the organisation that sees the future of sustainability and the person who drives it to success over a longer timeframe.
Click on the PodChat player and hear Johnson’s views on the CIO’s role in fulfilling an organisation’s ESG aspirations.
- To frame your expertise on the topic, what is ERM?
- How is ESG connected to IT (function)? Does ESG complicate an already complex IT operation?
- What is expected of the CIO when it comes to ESG?
- To what extent is the CIO accountable for ESG's success or failure?
- What are the challenges that a CIO must overcome to ensure IT is able to make a positive contribution to successful ESG?
- You spoke of ESG as a team sport. Who gets involved to do what?
You mentioned that ESG does not stand still. It is evolving. How can CIOs get ahead on sustainability and ESG?