ESG software: The right tool for the job?
Green is looking for ESG management tools that can help aggregate data and generate reports in near real time, but also help make recommendations for reducing BCBSMA's carbon footprint — something his existing tools can’t deliver. “We want an actionable framework, one technology that can aggregate and measure carbon consumption and creation in real time,” he says.
Ten years ago, when BCBSMA hosted its own data centers, it used to gather data from the power grid and the data center. Unfortunately, “that data was a year old at best — when we could get it,” Green says. Rather than changing numerous financial and operational business processes focused on traditional invoicing/payment operations and cost management, the company collected and aggregated power and water consumption data on an annual basis.
In the late 2000s, the company gained efficiencies by moving to managed data center facilities, but “the data in terms of how you manage the footprint wasn’t always there.” Today, he says, “we run multiple virtual clouds, and we need that information to be more actionable and insightful. Unfortunately, aggregating that data can be overwhelming.”
With the new ESG tools, BCBSMA is hoping to introduce capabilities that can inform its stakeholders in the company’s Facilities and Real Estate group in near real time about the energy consumption of buildings. “ESG technologies allow us to access that data directly, without having to change those existing processes through modern integration and open APIs that utility, cloud and managed data centers have made available,” Green says.
Now, he continues, “we can report our progress with confidence back to our customer accounts looking to improve their own carbon footprints and that of their supply chains, as well as begin to offer insights to our social and environmental justice areas looking to improve health factors and access across New England.”
But is purchasing another enterprise software tool necessary? That’s a matter of debate. Stengel at IDC thinks so. He sees ESG tools as a “critical enabler for enterprises to climb the sustainability curve” due to the scale of the problem. “The complexity of corporate sustainability has increased so much that I can’t see how you can do a good job on this without the use of a sophisticated ESG software solution. Excel spreadsheets are not going to work at enterprise scale,” he says.
Patel at Capgemini is more equivocal. “ESG tools can measure how things are sourced, as well as calculated throughout the life cycle. You really need some version of it, whether it’s a homegrown system or dedicated tool,” says Patel.
But Genpact’s Srivastava thinks enterprises should make use of the tools they already have. “The world doesn’t need another piece of software,” he says. Instead, he recommends leveraging existing workflow, ERP, and data lake software. “You can do it with Microsoft Dynamics, ServiceNow, and Salesforce,” he says.
The choice of whether to use an ESG reporting tool or leverage existing enterprise software is complicated by the fact that the current crop of ESG tools, and the reporting metrics for ESG, aren’t yet fully mature, says Patel. “When the SEC finally mandates what reporting must be in place, you’ll see a maturation of the landscape.”
Enterprises shouldn’t wait for that to happen, however. Many organizations aren’t collecting and reporting out ESG data, which remains tucked away in many different silos. Whether you use an ESG tool or other software, data aggregation, analytics, and actionable reporting are essential to meet ESG goals.
Next steps
Sustainability is not a passing fad, says Srivastava. “Consumers care about sustainability in deep ways,” so every IT organization should be moving forward.
“[CIOs] and other IT leaders need a seat at the table earlier in the planning and design process,” says Cisco’s Lee. “Data is key. Much of an organization's carbon footprint is attributed to energy use, which can be made more efficient through IT.”
But, she adds, IT plays a critical role to drive change. “A recent study from Accenture showed that of those global organizations making goals and commitments, 93% are on track to fail because they’re not moving fast enough.”
Kirkland at Choice Hotels advises, “Start with data center energy management and emissions reporting, hold your vendors accountable,” and focus on how you circulate and recycle hardware.
“First, get the reporting right to stay compliant – that’s the bare minimum,” says IDC’s Stengel. “Next, figure out operational efficiencies and optimize processes, [then] fully drive business value through sustainability, enabled by IT. Get the reporting right and find processes that can be optimized so there’s a link between sustainability measures and the financial benefits. That’s what it’s all about.”
And get the support you need, says Kirkland. It’s hard for CIOs to know where to begin with sustainability, so he joined SustainableIT.org, which he describes as “a community of tech leaders with the same goals. It’s an IT-specific ecosystem to support us — a place to share ideas and advocacy.”
Ultimately the measures that matter are external to IT, says Srivastava. “Are you able to grow revenue through more sustainable product launches? Can you improve customer satisfaction scores by showing you’re progressing as a more sustainable company? And what carbon footprint numbers did you achieve? Because IT leaders have access to the data and latest AI and modeling techniques, it falls on them to take the bull by the horns and drive that.”