How Technological Innovations Drive Sustainable Business Practices and Enhance ESG Performance
Environmental, Social and Governance (ESG) factors are gaining more importance in today’s corporate world. Business assessments these days extend beyond financial performance to include commitment and practice efficiency. Technological advancements that have enhanced transparency, efficiency and overall impact across ESG initiatives are primarily responsible for this change. Consequently, the concept of sustainability has evolved significantly for businesses and investors. Technology simplifies the decision-making process for ESG-focused initiatives by providing essential data to develop sustainable business strategies and solutions.
One of technology’s most notable contributions to ESG is its ability to assimilate and analyse vast amounts of information from diverse sources. Unlike traditional methods, modern technologies, such as AI and machine learning can process unstructured data from sources such as news articles, social media platforms and company reports. This capability makes it possible to quantify environmental impact, assess social responsibility and evaluate governance practices.
Furthermore, technology enables the collection, analysis and reporting of ESG data through integrated platforms that consolidate information into a single report. This showcases the company’s dedication to sustainability and ethical practices, ensuring adherence to evolving ESG standards and frameworks, supported by strong cybersecurity measures to safeguard sensitive data
AI tools play a crucial role in ESG performance by conducting risk assessments that identify threats and ensure proactive risk management. This protects corporate assets and builds stakeholder trust by highlighting areas for improvement and providing insights that enable companies to operate more sustainably.
Technology also facilitates real-time monitoring and management of environmental factors through data analytics powered by AI and IoT sensors. Real-time tracking of carbon emissions, water consumption and waste management allows organisations to identify inefficiencies and make targeted improvements to reduce their environmental footprint. For instance, Deloitte’s “Biodiversity Dashboard” monitors data from multiple sources, calculates performance payments and provides interactive data visualisations using AI and cloud technology to support community-based conservation efforts.
Technology promotes diversity, inclusion and community engagement in terms of social responsibility by identifying biases in hiring and promotion practices using AI-driven analytics. Digital platforms facilitate meaningful conversations with local communities, amplifying their voices and addressing their needs.
Integrating ESG considerations into financial decision-making is essential for sustainable growth. Technology facilitates this by providing ESG metrics and benchmarks, aligning investment decisions with both financial and environmental and social goals, thereby creating long-term value for investors and society.
Innovation in climate technologies is crucial for achieving global net-zero targets. In 2022, one-fifth of emissions came from hard-to-decarbonise sectors, such as construction, manufacturing, and iron and steel. Advanced technologies currently reduce emissions in these sectors by 50–60 percent. Bridging this gap will require pushing the boundaries of climate technology innovation. Key interventions, such as running cement kilns on renewable energy, can expedite the global industrial transition to sustainable energy. Deloitte’s GreenSpace Tech connects new climate technologies to industries, accelerates intelligence and expertise and focuses on delivering growth through abatement pathways. This helps businesses access and select the right technology, reduce investment risks and support rapid application.
To sum it up, technology supports ESG by increasing data accessibility, enhancing analysis capabilities and improving decision-making frameworks. Businesses and investors can better navigate sustainability by using technological innovations to align financial success with environmental stewardship and social responsibility. Future ESG agenda advancement will depend on technological innovation, which will allow stakeholders to make decisions that are good for the planet and profitable.
Author
Viral Thakker, Partner and Sustainability and Climate Leader, Deloitte South Asia
The views expressed here are personal and do not necessarily represent those of the organisation or the publication