How to transform ESG with technology.

For corporate leaders, their firm’s performance on environmental, social and governance (ESG) parameters has become increasingly critical. It is not just a reporting requirement – it is also important because big investors and customers are scrutinising the record and initiatives taken by the management in these areas. According to EY’s most recent CEO survey, almost 40% of global executives state that they would like to increase their oversight of ESG factors in assessing enterprise-wise risk.

In most companies, ESG discussions typically focus on issues such as pollution control, biodiversity, health and safety, business ethics and boardroom diversity. Technology-related risks and opportunities do not receive adequate attention. But three areas where corporate managements need to start focusing on now are Green Software, AI bias and Trusted Data. In the future, they will have enormous implications in all the three – E, S and G.

It has come to the forefront because of the pandemic-fuelled exponential increase in cloud adoption by global enterprises. Data centres already account for over 1% of the total global electricity consumption annually. That is expected to skyrocket and become 8% of total global electricity demand over the next 10 years.

Data centres not only consume a lot of electricity, they also require a lot of water to keep cool. The environmental footprint of data centres is becoming a big area of concern around the world. Optimising hardware and using solar or other renewable sources for electricity helps in reducing the carbon footprint to an extent. But an area that can also help immensely is green software – where the software’s algorithm ensures maximum energy efficiency. This is critical because the electricity consumed in data centres is directly dependant on how efficiently software applications handle hardware resources.