In this article, we will discuss how to transform ESG with technology. The benefits of being compliant with them, and the ways for improving your sustainability strategy with the help of ESG solutions.
What Is ESG?
ESG is the concept that entails three important criteria investors analyze when deciding on the risks. and advantages of investing in a specific company. Sometimes, ESG is discussed in a single and particular context with Corporate Social Responsibility (CSR). The latter, in turn, is a business model the company follows to create an intentional effort toward improving its positive social impact. And reducing harmful environmental influence.
While CSR is a set of country-specific rules, to transform ESG with technology is a set of standards the business should meet to make the company more attractive and reasonable to invest in.
From the businesses’ perspective, to transform ESG with technology is a framework covering the policies they should follow for mitigating the environmental impact, building social relations, and governing the company.
Environmental criteria (E)- are used to measure the energy and resources the company consumes, waste and emissions it produces, and the environmental consequences it creates, with a great emphasis on climate change.
Social criteria (S) – it is addressing the social relations the company develops with the customers, partners, employees, and communities. When accessing this criterion, special attention is paid to the employer’s brand. And the overall social impact the company is creating.
Governance criterion (G)- it is covering the set of practices, regulations, and procedures the company is following to stay law-compliant. Thereby, making effective business decisions, and meeting the needs of stakeholders.
Why Is ESG Important for Modern Businesses?
What is the importance of ESG for modern companies? Following ESG standards is an approach to meeting modern customers’ preferences. And keeping pace with changing business requirements, triggered by climate change and a shift in a global thinking paradigm. Being led by Millennials. Also, to some extent Gen Z, the eco-aware generations of today that also stand for governmental transparency and human rights. Modern customers expect the brands to be ESG-compliant in their business processes.
Ultimately, potential employees would also like the companies they work for to be ecologically and socially sustainable, led by honest and transparent management.
Why Do Companies Need ESG Technology Software?
Therefore, to transform ESG with technology compliance-focused solutions is the best way to follow ESG practices by leveraging the power of data analysis. Therefore, setting business goals and related metrics, decreasing the sustainability risks, and improving resilience.
Below are three crucial tasks ESG software helps with, driving the listed benefits for the companies following ESG principles.
Long-term performance monitoring.
Also, when investors are analyzing the potential profitability of investing in a particular company. They pay attention to long-term company performance. Subsequently, analyzing a historical data set, revealing the performance trends, and making predictions for the long run. Consequently, ESG technology software is allowing for monitoring the necessary performance indicators for a certain period of time and creating insightful reporting.
Reduced ESG risks.
An ESG risk is a certain environmental, social or governmental event that is impacting the company’s performance, environment, and community in a harmful way. For instance, the release of chemicals in production is a result of equipment overheating. In this case, using ESG software along with predictive maintenance solutions decreases such a risk.
Simplified sustainability data collection.
Following ESG principles implies using the entire set of applications and devices that enable the company to make its activities greener. Sustainability data comes from different sources and requires to undergo clear classification and smart analysis to become valuable. AI-powered ESG software is allowing for data consolidation in a single place, improving transparency as well.
To transform ESG with technology is one of the winning ways to accomplish better sustainability and resilience. Therefore, developing a competitive edge, reducing operational costs, and becoming more attractive to potential investors.
Aeologic Technologies can help you with integrating an ESG solution from the leading vendors with your business processes, resulting in more value-adding decisions and higher ESG scores.
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How technology is helping ESG?
Moreover, investors can also benefit from technologies such as blockchain which are enabling trusted and standardized ESG data collection and reporting. For instance, a global phone manufacturer is using this technology for tracing the origin of raw materials. And work-in-process inventory across its global supply chain
Why is ESG imperative for tech companies?
Hence, ESG is a framework for conscious consumerism. Moreover, it is helping businesses attract investors, building customer loyalty, improving financial performance and making business operations sustainable.