As regulators and consumers demand more sustainable business practices, companies need an ESG enabler. Here’s why the CIO must step into that role.
We can all agree that running a sustainable organisation is the right thing to do. Not just to help slow-down the impacts of climate change, but also in terms of business results – companies with consistently high environmental, social and governance (ESG) performance report 2.6x higher total share value than the average.
Yet despite enthusiasm for ESG activities, and the clear link they have to strong business performance, just 5% of companies in Europe are on track to meet their net-zero targets.
Something is holding organisations back from achieving their sustainable ambitions. But who’s responsible for helping the organisation overcome these barriers?
This blog will explore where the CIO comes into the sustainability conversation, and the two ways in which today’s technology leaders can support ESG efforts to create greener, higher-performing organisations.
What is the modern CIO’s sustainability remit?
While in the past, the CIO might have sat on the peripheries of the sustainability discussion, we now live in a different world. With eco-regulations becoming more stringent and a significant 98% of consumers believing that brands are responsible for making the world a better place, the pressure is piling on all members of the C-suite.
With digital technologies responsible for just 4% of the world’s CO2 emissions, CIOs arguably have a small impact on any organisation’s carbon footprint compared to functions responsible for procurement, supply chains and even building management.
This may be why not all companies are ready to bring IT leaders to the table on ESG matters. But organisations must start engaging CIOs in the conversation, as IT leaders can take on two vital roles in driving a greener enterprise.
The two layers of CIO-driven sustainability
Technology footprintThe obvious direct impact of the CIO is on technology procurement and use throughout the business. By deploying more energy-efficient on-premises infrastructure, end points and other devices, the CIO can have a decisive impact on emissions.
The challenge here is that this remit, while important, is limited in scale and scope. IT systems will hold a line on the organisation’s carbon calculator, but it’s likely a number that’s dwarfed by the carbon footprint of buildings the organisation owns and manages.
While the CIO can still have great impact by reducing data centre emissions, there is a limit to what they can achieve here. While more extreme solutions like deploying underwater data centres can reduce carbon emissions by approximately 40% compared to conventional approaches, those total savings only go so far unless you manage dozens of data centres.
And when you get into indirect, scope 3 emissions, the impact of IT systems can feel even smaller. These include all emissions not directly related to a business or its assets, including emissions caused by everything from employees commuting patterns, to the impact of waste management and supplier operations. In short, there are plenty of emissions that add up before you even begin thinking about the carbon impacts of IT.
That’s where the CIO’s other role can help.
Climate visibility and reportingWhile other departments like Finance and Procurement may arguably have a greater impact on scope 3 emissions than IT, there is no doubt technology helps these functions in many ways.
The most vital contribution the CIO can make is offering the climate data and reporting other leaders need to make informed, sustainable decisions. Alone, IT can contribute in part to sustainable initiatives. But by accurately forecasting reduction scenarios, the CIO can help reduce carbon emissions across the business by 15-20%.
Shift from enablement to acceleration
Far from just delivering their own reduction in carbon emissions, climate insights, reporting and forecasting capabilities, CIOs do something even more important: they help organisations plan and accelerate their sustainability goals.
The acceleration part is key. While over 1,200 companies around the world have committed to science-based targets to reach net zero, many of them have set a 2050 deadline to achieve these goals. By any metric, that’s quite some time away.
While a 2050 goal for net zero will certainly meet the Paris Agreement to keep global warming beneath 1.5°C, emissions also need to be reduced by 45% by 2030 to avoid escalating global temperatures.
Strong reporting and forecasting will be vital in understanding where companies are currently succeeding, where improvements can be made, and what sustainability initiatives can be brought forward to meet these 2030 and 2050 goals.
While some businesses can already collate the data they need to report on carbon emissions from internal infrastructure and processes, few can deliver accurate forecasting and pull data in from external sources to truly understand emissions across users, partners and the rest of the supply chain.
And even if an enterprise can access this level of data and deliver full forecasts and what-if scenario planning, it then needs the tools and expertise to manage its climate projects with ruthless efficiency. To achieve net zero in good time, there’s very little room for shifting deadlines or project slippage.
The CIO plays a transformational role in ESG success
Far from just a small part of the CIO’s on-going workload, the climate question could be a defining moment for technology leaders over the coming years. It’s a transformational time for IT heads – and the businesses they work in – and we’re inviting all sustainability focused CIOs to join us in the conversation.
That’s why we’re running a new series of virtual events where industry leaders will share their insights on how to approach the most pressing transformation opportunities facing businesses today. The first part of our Transformational Insights series is coming soon, with a focus on how industry and climate leaders can power a more responsible, sustainable future.