Sustainability is a mainstream business concern across all industries – fueled by greater scrutiny from stakeholders comprising investors, regulators, customers, and consumers. As business leaders respond to this stakeholder pressure and incorporate sustainability initiatives into broader business strategies, many are looking at ways to address the environmental, social, and governance (ESG) issues with the greatest impact on enterprise value. These business leaders are looking beyond the costs of building and implementing sustainability programs and see an opportunity to create competitive differentiation by increasing operational and financial performance through sustainable transformation.
Operationalizing ESG
In order to comply with regulatory requirements and demonstrate progress on sustainability initiatives, organizations need a technology platform to help automate the capture, curation, analysis, and reporting of ESG data. But, simply reporting information and ‘checking off boxes’ aren’t enough for businesses that seek competitive advantage. They must operationalize ESG.
Operationalizing ESG is the next maturity step for organizations’ sustainability journey and requires a technology-enabled infusion of ESG into every part of the organization.
For organizations to be successful in their sustainability journeys, they need to take a more holistic approach across all material ESG topic areas, including social sustainability. IDC has been tracking a rapid rise in the importance of human and social capital topics, including diversity, equity, and inclusion (DEI), employee well-being, and human rights management and responsible sourcing. And once again, IT and professional services will play a critical role in these sustainability efforts.
IDC’s top 10 predictions for sustainability/ESG are:
- Prediction 1: By 2024, 80% of G2000 companies will capture their carbon data and report their
Enterprise-wide carbon footprint using quantifiable metrics compared with 50% today.
- Prediction 2: By 2026, ESG performance will be viewed as a top 3 decision factor for IT equipment purchases and over 50% of RFPs will include metrics regarding carbon emissions, material use, and labor conditions.
- Prediction 3: By 2025, more than 60% of organizations will require datacenter providers to disclose to them their energy usage, use of renewable energy sources, and recyclable IT equipment.
- Prediction 4: By 2026, circularity will become a key component of PLM and 60% of organizations will require their IT equipment vendors and partners to provide end-to-end visibility of their sustainability process.
- Prediction 5: By 2024, 30% of organizations will leverage ESG data management platforms to steer ESG KPIs via a centralized system of record for reporting purposes and real-time operational decision-making support.
- Prediction 6: By 2027, 25% of G2000 companies will have assigned a chief sustainability officer responsible for meeting their organization’s ESG goals and making ESG-related IT purchasing decisions.
- Prediction 7: By 2023, ESG performance will become a standard component for third-party risk assessment with 20% of organizations placing greater weight on these risks than security, financial, or operational risks.
- Prediction 8: By 2025, 40% of ESG services engagements will require a managed services component to better address the long-term nature and intense data needs of sustainable transformation and ESG reporting.
- Prediction 9: By 2026, 70% of organizations with integrated planning and execution will achieve improved operational efficiencies leading to distinctive business benefit of improved ESG and financial performance.
- Prediction 10: By 2024, 40% of use cases for sustainability/ESG software worldwide will have a strong focus on social sustainability topics due to organizations’ more integrated approaches to ESG.
Interested in learning more? Watch our on-demand webinar, IDC FutureScape: Worldwide Sustainability/ESG 2023 Predictions.
