ESG is a massive movement in the global market that’s forcing businesses to adjust their approach to sustainability and corporate practices. ESG (environmental, social, and governance) practices are measured in scores that are beginning to dictate whether people invest in the company or not.
The scores generally go from 0-100; anything below 50 is bad and will impact the company's reputation, bottom line, and long-term potential. Anything above 70 is great and consumers will look at the company as though supporting them is supporting the good of people and the planet.
This recent commercial from Apple will give you a good idea of how that looks:
When it comes to software and technology, companies are under a ton of pressure to minimize their carbon footprint, reduce energy consumption, and implement eco-friendly practices throughout the software development lifecycle.
The “S” or the social component is measured based on the work environment (diversity and inclusivity). This is going to be crucial for attracting and retaining talent.
And lastly, when it comes to the governance of technology - the focus is on using data ethically and being transparent when making decisions. Data privacy is a focal point, especially now with six million data records being exposed in the first quarter of 2023.
Finding Your Solution
Sustainable IT isn’t an easy or replicable task but it’s absolutely necessary for companies to prioritize as we go forward with heightened environmental and ethical awareness. Custom software is a massive influence in this sense as it’s the focus of sustainable technology and can completely change the image of a company looking to improve its ESG.
These are some ways custom software enhances this process:
ESG practices for custom software development are like an umbrella that encompasses the process of tracking, managing, improving, and repeat. Microsoft is one of the best examples of this, and they check each box adequately:
Environmental sustainability: Microsoft wants to become carbon-negative by 2030 and to remove all the carbon it has emitted since it was founded by 2050. The company also invested in renewable energy and has implemented sustainable practices in its offices and data centers.
Social responsibility: Microsoft has implemented a handful of social responsibility initiatives, like giving $3.2 billion in donated and discounted technology to over 300,000 nonprofits serving over 1.2 billion people globally.
Governance practices: In the ESG report from Microsoft, they talk about prioritizing transparency, accountability, and ethical decision-making (As you would hope). In addition, the company has also set goals to improve its cybersecurity and data privacy practices.
Managing and tracking this entire process in addition to the logistics aspect of technical adjustments are made possible through custom software. KPI monitoring, automating workflows, IoT tracking of energy usage, scalable metrics, and accessible data storage systems, all fall under the IT umbrella.
Not Investing in Technology
One way or another, the market is headed in this direction - companies who don’t pivot can expect the following:
Missed Opportunities: Stakeholders are looking at ESG as a benchmark of a company's longevity. Without it, companies are going to struggle to attract environmentally and socially conscious customers as well as investors.
Increased Risk: Without adequate technology investments in data security and privacy, companies run the risk of data breaches and cyberattacks. These incidents can not only damage the company's reputation but also lead to financial losses and legal liabilities.
Competition: Imagine your competitor not investing in ESG practices, but you do. Would you say you have a leg up when it comes to marketability? If your answer is yes - why are you still in the reversed role?
ESG Going Forward
The futures for both ESG and technology are promising, and their relevance in the marketplace is only expected to grow. How will the two merge? Will AI embody quality assurance managers for companies' ESG practices? How will your company leverage each component?
Most companies don’t know where to begin, which is why we created this free tool to get you started on the right foot. While it won’t create an ESG plan for you, it can help you make informed decisions and navigate the dynamic landscape of sustainability and technology.
Written By Ben Brown
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ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.
Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to Fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.
