A standard approach to implementing ESG strategies and accelerating sustainability goals
Fabrizio Cannizzo, Chief Architect, IOTICS
Organisations worldwide are embracing Environmental, Social, and Governance (ESG) strategies, recognising their importance for sustainable business operations and societal progress. Technology is essential for accelerating these strategies, but traditional solutions have their limits. A standard approach, focused on data centricity and data interoperability, is preferable to any single-vendor turn-key solution. This approach offers numerous benefits, including improved visibility and insights, enhanced collaboration, and reduced costs. It can also help organisations achieve their sustainability goals faster and more sustainably.
Organisations face several challenges that impact the choice of technologies that implement ESG strategies
● Siloed data: Data sourced from different parts of an organisation may not be integrated, making it challenging to obtain a complete picture of an organisation's ESG performance.
● Proprietary data: Data may not be available for sharing, or organisations may not want to relinquish control to access their data.
● Data scalability: Organisations may possess extensive data that hinders cost-effective sharing. What organisations might prefer is to share information or insights derived from processing some data in-situ.
● Process alignment: Merely sharing and exchanging data may not be sufficient to align organisational processes to comprehensively tackle ESG goals.
Data silos, proprietary constraints, and scalability issues often compound the challenges faced by organisations. As the ESG landscape continues to evolve, organisations need to seek more adaptable, accessible, and comprehensive technological solutions.
Limitations of vendor-specific solutions
Private initiatives, such as Microsoft's Sustainability Cloud and Common Data Model, have emerged as popular solutions for driving ESG strategies. They provide an integrated framework for capturing and reporting ESG metrics, making it easier for organisations to track their sustainability efforts. Yet while these tools offer considerable benefits, they also come with some limitations.
They are not universally adopted
These private initiatives, while comprehensive, are not universally adopted. Their use is often limited to organisations that already use the specific vendor’s products. As a result, a significant number of organisations that use different tech stacks are unable to leverage these solutions. This lack of universal adoption leads to fragmented and inconsistent ESG reporting and tracking, hindering holistic progress towards sustainability goals.
They are not always comprehensive
These solutions typically focus on a specific subset of ESG metrics, which means organisations might not be able to measure their performance across all aspects of ESG. This leads to a potential gap in understanding and addressing the full spectrum of ESG issues.
They can be expensive
The cost of implementing and maintaining these systems can be prohibitive, especially for smaller organisations or those with limited resources. The expense can act as a barrier to the adoption of these initiatives, thereby limiting their scope and effectiveness.
They can require vendor lock-in
These technologies often require vendor lock-in, which can limit an organisation’s flexibility and choice in selecting and using other tools. This is particularly problematic for organisations that need to interoperate with other systems or vendors.
A standard approach to technology
To overcome these challenges, we need to shift our approach to a data-centric model where data is decoupled from the tools and enriched to make it interoperable across any data source. Adopting an approach rooted in making data available and interoperable offers several key benefits.
Avoid vendor lock-in
This approach allows organisations to sidestep the confines of vendor lock-in, promoting interoperability and facilitating the seamless integration and analysis of ESG data across different platforms and organisational boundaries. This freedom enables organisations to select the best tools for their needs to create a tailored end-to-end solution, rather than being constrained by a single vendor’s offerings.
Beyond sharing and exchanging raw data, the technology should also enable the sharing and exchange of information, insights, and actionable directives. This enriches the alignment of organisational processes towards ESG goals, promoting a culture of sustainable operations across the ecosystem.
Take, for example, an organisation working to reduce its carbon emissions. This organisation can share data, insights, and actionable directives with its suppliers, helping them adapt their internal processes to also lower emissions. This collaboration benefits both entities and their shared goal, creating a ripple effect that extends beyond individual organisational boundaries, all working towards shaping a better future.
Growth and scale
The technology adopted should facilitate a start-small and scale organically approach. Quick wins are instrumental in proving the immediate success of ESG initiatives, and the technology chosen should support the scaling of these wins as part of a business’s regular operations.
The choice of technology plays a pivotal role in the evolution and scale of ESG initiatives. Ideally, technologies adopted should provide mechanisms to 'start small' and scale organically. This strategy is key because ‘time-to-market’ and ‘right-first-time’ are crucial metrics to get started and prove immediate success in achieving ESG goals.
Starting small can refer to piloting a project within a single department before scaling it to the whole organisation or targeting a specific ESG goal before tackling more. This approach enables quick wins, delivers immediate value, and provides momentum to build on, bolstering the confidence of stakeholders and making the case for further investment.
As these initiatives prove successful, technology should facilitate their scaling as part of business as usual. Scaling, in this context, could mean expanding the initiative across the organisation, replicating the project in different geographical locations, or broadening the scope to include more ESG goals.
By allowing for growth at a comfortable pace, technology enables companies to maintain momentum in their ESG efforts without overwhelming their resources or processes. Thus, technology that enables quick wins and facilitates seamless scalability should be favoured in the pursuit of ESG goals.
Benefits of a standardised approach
This standard approach to sharing data, information, and actionable insights can profoundly impact an organisation's ESG efforts.
With access to a broader range of data and insights, organisations can make more informed decisions regarding their ESG initiatives. This improved decision-making capacity enables companies to optimise their strategies, leading to better performance and a more significant ESG impact.
Transparency is fundamental in the ESG landscape. By adopting a standard approach to sharing data and insights, organisations can foster a greater degree of openness. This transparency can boost stakeholder trust, improve reputational strength, and solidify long-term relationships with partners, customers, and the public.
Identifying and managing ESG risks is an integral part of any sustainability strategy. With access to a wealth of shared data and insights, organisations can better predict, evaluate, and mitigate potential risks, reducing their exposure to financial and reputational damage.
A standardised approach allows for a scalable model, letting organisations adapt and grow their ESG initiatives at their own pace, in tandem with their partners. This flexibility avoids the pressure of an all-or-nothing approach, enabling incremental growth and facilitating an ecosystem-wide progression towards ESG goals.
Technology is essential for accelerating global ESG efforts. To truly achieve this, we need technology that promotes trusted technical interoperability, allows the sharing of raw data, information, and actionable insights, and supports an agile approach to scaling.
To accelerate ESG strategies globally, organisations must avoid limiting themselves to private, vendor-specific solutions. Instead, they need to build on open standards that encourage sharing, collaboration, and adaptability, providing the necessary infrastructure for the collective pursuit of sustainable futures.
Fabrizio Cannizzo is Chief Architect at IOTICS. He is the steward of both conceptual and concrete architecture, playing a pivotal role in shaping the foundation of the organisation's technology and meeting the evolving needs of clients and partners.