Globally, businesses and consumers are concerned about climate change. Businesses now need to be able to quantify the impact of their environmental, social, and governance (ESG) commitments in addition to making those promises.
When it comes to the "e" in ESG, there is a noticeable rise in societal pressure to lessen businesses' effects on climate change as a result of the SEC's proposed reporting guidelines and growing investor, stakeholder, and consumer pressure to support and work with environmentally conscious businesses.
Particularly when it comes to lowering their carbon impact, businesses are swiftly changing and focusing on corporate social responsibility. Nearly two-thirds of Fortune 500 firms are working towards challenging carbon reduction targets for 2050, according to a McKinsey analysis. These objectives and targets serve as more than just a new measure to monitor. They have evolved into distinct strategic objectives for long-term effectiveness and influence.
Due to investors' increased concern about climate change and social justice, ESG metrics have also increased. According to a Capital Group ESG Global Study, 46% of North American investors view the lack of comprehensive ESG data as a barrier. And 70% of respondents agreed that standardization of tools and data is required for ESG initiative analysis and implementation. Understanding the impact and creating data-driven initiatives require clear, succinct, and unified data. Technology and AI are the answer.
Data collection at scale
Businesses require information on energy use, water use, greenhouse gas (GHG) emissions, vendor efficiency, and waste production in order to track environmental impact. Companies can track their progress toward sustainability targets and pinpoint areas for improvement, such as resource conservation, emission reduction, or waste reduction, with the help of trustworthy data.
The largest problem for organisations, regardless of how equipped they are for sustainability, is gathering and comprehending diverse data, according to Deborah Kaplan, global head of sustainability at SAP customer success. In addition to figuring out how to gather correct data, businesses also need to be able to organize it for reporting across their entire organization. Fortunately, technology is helpful.
One aspect of the puzzle that technology significantly emphasizes is data collection. The next stage in guaranteeing reliable and accurate reports is this. Creating a network of interconnected devices makes it possible for a business to gather data for decision-making with real-time visibility.
For instance, smart waste metering technology in the form of skip sensors and AI software can precisely monitor the amount of waste and recycling produced across every corporate site when measuring waste generation. The opportunity to divert more garbage from landfills and the overall effect of lowering GHG emissions will be supported by these measurements, which offer actionable insight into the quantity and kind of waste produced.
AI supporting consolidation
Technologies for data administration and collecting are unquestionably necessary for standardized, company-wide reporting. According to IDC researchers, 30% of organizations will utilize ESG data management systems by 2024 to channel ESG KPIs through a centralized system of record for reporting requirements and to assist operational decision-making in real-time. For businesses with numerous locations and a lot of data, consolidation is one of the toughest problems, but modern AI technology can help.
Data that was previously unreachable, unreliable, and impossible to handle at scale can now readily be gathered, processed, organized, and analysed through a central system with the use of sensors and AI technologies. These technologies enable reporting while giving organizations useful information they may use to improve their sustainability initiatives and track advancements in almost real-time.
Reporting on impact
IDC projects that 45% of G2000 companies will operationalize integrated sustainability in the supply chain during the next three years and successfully report impact data, enabling a 10% reduction in waste and enhancing competitive advantage. Companies have a lot to lose by not implementing sustainable-based plans and the technologies that support them given the obvious advantages of sustainable operations.
Consumers and employees are starting to take notice of a company's effects in addition to investors. According to Software AG, in addition to the expense of non-compliance, the majority (84%) of organisations believe that they are likely to lose employees if they don't have a clear sustainability strategy. A company will lose trust if they ignore environmental metrics, which will cost them far more than money.
In the end, businesses are unable to manage what they do not measure. Large businesses and corporations will still face reporting issues, but AI and data management solutions can be helpful. These technologies are already having a big impact on garbage and recycling management.
Technology helps businesses run more efficiently, promotes vendor supervision, and delivers data that not only helps businesses develop sustainable business strategies but also enables precise, standardised reporting of carbon footprint reduction. Data-collection technologies might be the key to a company's success in the ESG space.