Outlook on Sustainability: Is ESG an Investment Strategy or a Path to a Sustainable World?
- Elsa Barron
- Jun 26, 2023
- 2 min read
Every new day, sustainability takes the stage, and organisations are gradually easing into incorporating environmental, social, and governance (ESG) factors into their business decisions.
ESG is extremely important to nearly 87% of senior management and 74% of senior leadership. CEOs are now scrutinising internal systems, while asset owners are demanding greater transparency on ESG reporting from the underlying companies in which they invest. In a CNBC interview, Microsoft’s Bill Gates remarked that corporations who inflate their ESG credentials asserted that, while corporate sustainability credentials are controversial, they are critical in determining whether to invest in a company.
According to a KMPG survey, global CEOs are putting ESG aspirations on hold in order to prepare for the impending crisis. According to the survey, while organisations are dedicated to investing in transformational prospects for future growth, their ESG initiatives will be paused or reconsidered in 2023.
ESG has received some unfavourable attention as a result of a variety of difficulties, however definitions of ESG differ by industry. Some attribute it to a lack of standards or measuring methods, while others attribute it to marketing hype and, in some cases, political backlash. According to the 2017 EY Outlook Report, 34% of CEOs polled expressed concern about the impact of the climate issue, as well as the need to construct a new infrastructure.
Organisations are implementing new techniques to submit their data faster and more correctly as governments impose additional regulatory obligations. And this trend is only going to get stronger, especially in light of the present economic downturn.
Technology’s Role
For many industries, the way to sustainability is through technology. In this regard, the technology sector has a disproportionate role to play in aiding all other industries with ESG tracking and measurement, as well as effective change.
According to a recent KPMG analysis, despite the pause caused by the worldwide pandemic, supply chain disruption, and impending recession, the use case for ESG remains good. According to the same survey, nearly 70% of worldwide CEOs believe that their company’s ESG programmes have aided in improving financial performance.
Technology such as IoT, edge computing, digital twinning, blockchain, and other software architecture are assisting organisations in identifying and regulating end-to-end emission flows throughout their operational networks.
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