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Why CIO’s Should Expand “Green IT” to “ESG IT”

Meadows CJ, Chief, Innovation Center at SP Jain School of Global Management

Meadows CJ, Chief, Innovation Center at SP Jain School of Global Management

It has become appallingly obvious that our technology has exceeded our humanity. - Albert Einstein

Einstein is not the only person who’s questioned the state of our technology and humanity. Most large companies include ESG and CSR departments, but do they have anything to do with IT?

They should.

Not only do those departments need dashboards to track and support their efforts (and report to regulators), but IT has its own carbon and social footprint, as well. It can enable more efficient use of – or even replace – physical assets and activities.

Bottom line: with ESG, IT has an opportunity to lower a variety of costs, make regulators happy (or less grumpy, anyway), and boost your brand. In fact, according to McKinsey, improving ESG can result in up to 10 percent lower cost of capital (due to lower risk).

Have companies made it a priority? Yes.

IT budgets of leading companies are now split fairly evenly between two top priorities – (1) digital transformation and (2) sustainability. Over 90 percent of IT leaders believe the former is key to the latter. If you’re not well along your digital transformation pathway and using it for sustainability, you may be left behind.

Does that mean everyone is poised to deliver? No.

According to a study by Capgemini, only 43 percent of corporate executives know what their IT department’s environmental footprint is, and only 50 percent of organizations have an enterprise-wide sustainability strategy (including IT) with goals and timelines (only 18 percent are comprehensive). Nearly 50 percent lack the capability to implement, and 53 percent lack expertise. Over 80 percent of IT professionals say clear targets and reporting exist for commercial concerns -- but not sustainability. Further, up to 90 percent of IT leaders believe that without a clear sustainability strategy, employees and investors will walk away.

Before we discuss further, let’s define what we’re talking about. Sustainable IT (or ‘green IT’) is an environmentally-positive approach to making, using, managing, and disposing of hardware, software, and tech-enabled business processes.

However, I’d like to introduce a new term – ‘ESG IT’ – to encompass not only green but also social and governance elements.

First, what can IT do for the environment? Beyond ESG regulatory compliance systems (far more comprehensive than the old factory emissions systems), IT leaders need to be aware that the IT industry itself is a significant contributor to global carbon emissions.

The big-5 tech companies (Amazon, Apple, Google, Meta, and Microsoft) are all planning to use 100 percent renewable energy, with Microsoft planning to be carbon-negative by 2030. Datacenters use a significant amount of energy and are generally moving to renewables. Migrating to the cloud with vendor-managed services can reduce energy use by up to 88 percent and enable a distributed workforce, leading to further environmental benefits as well as social. With a distributed workforce, you may have some decisions to make about laptops. Over 160,000 laptops are disposed of in the EU every day, and despite depreciation conventions, IT leaders are rethinking how long to keep them, where they go next (CSR?), and buying rebuilds.

How about Social – the ‘S’ in ESG? IT doesn’t just track worker safety. IT provides DEI management systems and DEI policies for its own staff. Research links digital transformation progress with IT-staff DEI and DEI overall with stronger financial performance. Talent strategies are embracing mission-driven work and sustainable lifestyles (no more 100-hour workweeks) to attract talent. Tools can also help. According to 451 Research, 35 percent of employees would accept a new job if the only difference were better devices and systems. You’ll have to address your AI biases in both hiring and promotion -- and be aware that ethical use of data (privacy and security) can become an employee and consumer differentiator.

Does the CIO have to think about governance? Absolutely. Technologies that make decisions will need careful and continuous oversight. An AI ethicist or ethics team is a must. As IoT and smart devices proliferate, you’ll have to manage data privacy and cybersecurity issues, as well as manage distributed decision-making by your devices. Governance of the IT department itself will require transparent policies, procedures, monitoring, auditing, and reporting.

Even if you’ve taken action on the above, chances are (if you're like most busy CIOs) you’ve not reached out to CSR. Do you have any tech or tech-skilled workforce you could share with that department or their clients? How about data – which can be aggregated, sanitized, or collected into data commons/lakes? In 2011, the United Nations coined the term ‘data philanthropy,’ hoping to encourage more companies to donate data for humanitarian aid (e.g., post-hurricane logistics and medical care), poverty alleviation (e.g., for microfinance and other product/service development), research (e.g., Twitter's program to selectively grant real-time data access), and human rights efforts (e.g., abuse monitoring in war zones).

Synergizing IT, ESG, and CSR may produce our biggest environmentally-, socially-, and organizationally sustainable innovations to date

In fact, cloud computing, data integration, and edge computing have been named the top-three information technologies for sustainability. IT was fundamental to the Gates Foundation’s efforts to eradicate polio. Mobile phones are being strapped to rainforest trees to provide logging alerts, as well as wildlife and environmental data. Camera traps, drones, E-Eye surveillance, GPS collars, and the M-STrIPES system have all supported tiger conservation. An award-winning not-for-profit organization, The Tiger Center, is supported by technology-company donations, tech-enabled operations, and medical technologies to provide healthcare for the guardians of tigers and forests – local people. Company collaborators not only achieve environmental and social impact, but they find that social conscience impresses shareholders, regulators, consumers, and potential new talent.

Synergizing IT, ESG and CSR may produce our biggest environmentally-, socially-and organizationally-sustainable innovations to date.

It’s worth thinking about – and doing.

The real problem is not whether machines think but whether men do. - B. F. Skinner

To learn more about integrating people, profit, and the planet, as well as ESG, CSR, and entrepreneurial insights, see the author’s latest book, Sustainable Business: People, Profit, and Planet, at The Tiger Center (available on Amazon). For a free multimedia intro, check out Sustainable Business Intro, available on Gnowbe via drcjmeadows.com/sustainability.