By: Kiran Bhujle and Tahmina Day
The technology industry has long been hailed as a problem solver for diverse business challenges, including the pressing concerns of environmental, social, and governance (ESG) issues. With ESG gaining prominence on corporate agendas, the tech industry has responded by crafting solutions that enable businesses to effectively manage, monitor, and report their sustainability endeavors.
However, in pursuing ESG automation and strategic partnerships with these tech giants, companies must adhere to sustainable practices, collect ESG data, and make public disclosures. Technology firms often lead the way in sustainability efforts, integrating energy-efficient infrastructure and responsible data management into their ESG strategies. They stand as paradigms of artfully integrating ESG principles into their operations.
This article explores the innovative approaches technology industry leaders employ to tackle ESG challenges, illustrating their commitment to building a more sustainable and responsible future.
Nurturing Growth through Environmental Stewardship
Environmental programs have undergone a significant transformation over the years, shifting from sporadic acts of goodwill to meticulously designed, resource-efficient systems that pave the way for an array of promising prospects. In this context, technology companies have proved their ability to identify and harness these opportunities, which serve the cause of environmental conservation and deliver economic benefits.
Google is one example of this trend. In its 2022 progress report, Google highlighted its commitment to 24/7 carbon-free energy across its data centers and office campuses by 2030. This pledge entails investing in advanced energy storage solutions and leveraging artificial intelligence (AI) to optimize energy use. The company has also been a leading purchaser of renewable energy for several years, reflecting the synchrony between technological innovation and environmental stewardship.
The model set by Google showcases a profound realization: The interplay between growth and energy efficiency is not a zero-sum game; instead, it flourishes in synergy. Businesses can maintain competitiveness and secure a distinct advantage while placing environmental stewardship at the forefront. This convergence of commercial success and ecological responsibility marks a pivotal juncture for the technology sector, effectively overturning the outdated notion of growth achieved at the planet’s expense.
Embracing Data Privacy as a Social Responsibility
As a central component of the “social” aspect of ESG, data privacy has surged to the forefront as a matter of significant concern and responsibility. In our increasingly digital age, data privacy is no longer simply a legal compliance issue but is progressively regarded as a social obligation and a reflection of corporate ethics.
Leading technology firms are at the leading edge of this shift, acknowledging and addressing the delicate balance. They perceive data not simply as an exploitable resource but as a subject of custodianship, understanding that it demands a profound respect for the privacy and autonomy of individuals. Upholding privacy therefore translates into an exercise in maintaining trust, safeguarding dignity, and honoring the rights of individuals.
For instance, Salesforce, a leading enterprise cloud computing company, emphasizes the importance of data privacy with its Privacy by Design initiative. This initiative includes embedding privacy protections into the design of its cloud-based products and services and providing resources to customers on data protection laws and best practices.
Fostering Digital Safety through Effective Governance
Good governance assumes a pivotal role in shaping a company’s risk management, strategic resilience, and commitment to transparency.
Microsoft has set a benchmark with its Digital Safety philosophy. The tech leader works toward creating a safe digital environment by ensuring compliance with laws and regulations, fostering trust through transparency and accountability, and driving innovation in digital safety technologies. This comprehensive governance approach protects stakeholders and the company’s reputation in the industry.
The company’s holistic approach to digital safety indicates an evolution from a focus on internal operations to a broader perspective where businesses consider the ripple effects of their practices on consumers, communities, and the global tech ecosystem.
Artificial Intelligence’s Emergence in ESG
Within the context of ESG, the relationship between tech companies and AI is multifaceted.
On the one hand, AI assumes a pivotal role in ESG management software, empowering companies to process vast amounts of ESG data and derive meaningful insights. However, AI also presents ESG risks that extend across all three dimensions of environmental, social, and governance concerns. Its impact reaches beyond governance matters, encompassing climate risk analysis, hiring practices, conduct, and compliance. A recurrent and critical theme revolves around the ethical use of AI, emphasizing the need for responsible practices in its application.
Organizations like OpenAI strive to promote ethical considerations in AI, reflecting the far-reaching societal implications of this technology. As AI’s decision-making role expands, it becomes vital to uphold the ethical standards we expect of ourselves. This focus on ethical AI is a significant step forward, demonstrating industry readiness to address challenges ranging from ensuring fairness to preventing harmful outcomes.
Ultimately, the objective lies in harnessing AI’s power responsibly to drive sustainability goals, accompanied by implementing robust controls to effectively manage potential risk.
The role of ESG in the technology sector is expanding, from privacy protection to planetary stewardship. ESG is shifting how success is defined and measured in the corporate world. It’s not solely about financial performance anymore. The sustainability agenda is reshaping the narrative of what it means to be a successful tech firm in the 21st century, where value is as much about principles and impacts as it is about profits.
About the Authors
Kiran Bhujle, Global Managing Director at SVAM International, oversees its Security Advisory Group. With over 25 years of experience in risk management, he helped numerous organizations manage their technology risks and transformation programs, and is a member of the Cybersecurity Advisory Board for Harvard Business Review and an Executive member of the Forbes Technology Council. Bhujle is an adjunct faculty member in Columbia University’s Masters in Enterprise Risk Management Program. He teaches the elective course Technology Risk Management, offered every term, and the core course Strategic Communications for Risk Professionals, available in the fall and spring semesters.
Tahmina Day has over 18 years of experience in risk management and sustainability. For over 11 years, Ms. Day served as a Corporate Governance Officer of the International Finance Corporation (IFC, a member of the World Bank Group) within the ESG Group. Recently, Ms. Day served as a risk and compliance leader at CIT Group, Inc., Fannie Mae, and Seacoast Bank. At her current role as a Global ESG Solution Lead at Archer, she leads the ESG vertical to develop a holistic ESG technology that is integrated with ERM.
Ms. Day holds an MBA degree from the Darden School of Business at the University of Virginia. Tahmina is a Certified Enterprise Risk Professional (CERP).
About the Program
The Master of Science in Enterprise Risk Management (ERM) program at Columbia University prepares graduates to inform better risk-reward decisions by providing a complete, robust, and integrated picture of both upside and downside volatility across an entire enterprise.