How IT Departments Play A Vital Role In ESG

ESG, which stands for environment, social, and governance, is a framework that can be used to track an organisation’s impact on wider society.

ESG is no longer a nice-to-have add-on for businesses. It’s an essential element of a functional and successful company. For many investors, businesses that have a good ESG framework has a lower risk of reputational, operational, and financial loss. In fact, around 90% of investors now place more importance on companies’ ESG performances than they did before the pandemic.

As companies focus on greater digitalisation post-pandemic, this places many in the unique position to use that technology to support their ESG initiative. This means that IT departments have an important role to play.

IT Departments and ESG

In addition to being more attractive to investors, a study by CIO found that 76% of consumers would not buy from companies that treat their employees poorly and do not engage and actively participate in their communities and the environment.

Thus, having an ESG initiative that is clear, transparent, and accessible can help to build trust and confidence from socially conscious clients, customers, and investors.

An increasing number of clients and customers are beginning to question not only if organisations have ESG directives, but are also asking for evidence, data, and specifics to ensure companies are not greenwashing. As such, IT departments are playing a bigger and more significant role in gathering data for businesses to use to inform day-to-day business decisions and wider transformative projects.

Environmental

Businesses can have a severe impact on the environment. From waste management to the use of heaters, air conditioners, and laptops, organisations use up a lot of energy. In fact, most businesses use between 15,000 kwh to 25,000kwh of energy per year; the main culprits being the commercial and public administration sectors.

This kind of usage is not only incredibly costly to the environment, but to businesses themselves too. To tackle this around 44% of businesses are making plans to reduce their gas emissions, and 60% of UK businesses have said they are actively concerned about climate change.

IT departments and the environment

For some people, IT and the environment may seem like an oxymoron. The IT sector is currently contributing 4% of global CO2 emissions which is predicted rise to 14% by 2040. That being said, businesses shouldn’t avoid assessing how their tech is contributing to carbon emissions and other environmental issues and finding ways to limit this. There are a number of ways IT departments can help support their organisations’ ESG aims. One of these ways is using technology to reduce environmental impact.

IT departments can aid sustainability through:

• Limiting the number of systems the business uses
• Exploring switching to renewable energy sources
• Phasing out legacy systems
• Automating machines to switch off when not in use
• Tracking energy consumption across the business
• Finding ways to recycle or prolong the life of devices in the workplace
• Looking at the environmental impact of those in their supply chain

There is now an expectation on businesses to move towards more sustainable practices and to review their green policies accordingly. IT departments can play a key role in this endeavour by facilitating their own changes and that of the wider business. By making moves now and following these actions, they will future proof their organisation.

Societal

Organisations’ social impact refers to their responsibility to internal personnel and workplace culture, but also to external stakeholders, customers, clients and wider society.

Questions businesses should investigate when judging their social impact include:

• Are they an equal opportunities employer?
• Do they support the local community through charity, volunteering, or donating profits?
• Are they committed to high employee health, safety, and wellbeing?
• Do they take unethical advantage of their customers/ clients?
• Do they hold their suppliers to the same standard as the business?

Equality and fairness towards internal talent, stakeholders, customers, and clients are integral to many businesses’ ESG framework. Tech departments have a role in aiding the answer to some of these questions by providing data and statistics where needed, but also tech can be used to bolster social impact.

IT departments and equality

IT departments can use technology to drive social fairness in a number of ways, including boosting efforts in establishing diversity and equal opportunities in the recruitment process.

This can be done through identifying and implementing tools that limit biases in the recruitment process. For instance, gender decoder tools ensure job descriptions are free from gender-specific language and there are a number of other AI tools that remove personal information from CVs and personal statements.

IT departments can also work to improve the diversity in their own teams, such as through:

• Considering alternative methods to employment. This might include apprenticeships or internships that can encourage candidates from various backgrounds to apply
• Looking into the benefits offered. Hybrid and remote working practices can help to benefit disabled individuals as well as parents, those caring for elderly relatives etc.
• Rolling out an internal employee engagement. An engagement or happiness survey, and asking questions around healthy work culture can help to spot potential problems
• Installing an easy complaints procedure. This will empower employees to report incidences of discrimination or prejudice that they may see or experience
• Enforcing managers to go on anti-bias, bullying, and anti-discrimination training. Training can help to manage instances of prejudice managers may see in their teams

By becoming an equal opportunity employer, businesses will limit the risk of bias in the workplace. In this way, IT departments can support an organisation’s efforts to become more socially conscious.

Governance

The governance aspect of an ESG is how companies are led and managed. It covers the makeup of the board of directors, stakeholder rights, management structure, auditing, and corporate compliance. These are all crucial to functioning businesses. Poor governance leads to increased risk and potential corporate scandal. These incidents can cause financial, operational, and reputational damage to businesses.

IT departments and governance

Transparency is a crucial part of governance, so continuously evaluating and making data available is a crucial role for many IT departments. Additionally, businesses can use data visualisation tools to provide management with all the data necessary to make well informed business decisions.

Digitalisation can allow businesses to disseminate information to stakeholders and shareholders quickly, which improves communication and creates greater democracy within an organisation. IT departments can help support improved governance through the planning and implementation of digitalisation strategies.

Overall, as investors, clients, and customers take a magnifying glass to an organisation’s ESG framework, their policies and data, IT departments can play a vital role in both improving internal efforts and providing all the data necessary for greater transparency and carefully considering how the technology they choose and actions they take impact the environment. From using technology to improve their organisations’ green efforts, to supporting diverse recruitment strategies and increase shareholder rights and governance, there are many ways IT departments can aid ESG aims.

VIQU is an IT recruitment agency that helps support organisations secure the tech talent they need. We also have published our green initiatives which can be viewed here.

If you are looking for a new addition to your tech teams, get in touch with our team here.