Environmental, social, and governance (ESG) practices are designed to evaluate a company’s influence in those three areas. However, the swift progression of technological innovations and the growing necessity to generate and retain vast amounts of data daily is resulting in escalated demands on our limited technical resources.
ESG practices are insufficient in fully tackling the sustainability hurdles inherent to the technology sector as they don’t specifically offer guidelines for computing power, memory, and bandwidth for data analytics and management.
It’s my belief that only by changing the mindset of technology workers to understand the impact of their actions today on the world tomorrow—as well as the costs that could be eliminated if such a mindset was adopted at the highest levels and communicated down throughout the entire company—can the technology industry stand a chance at becoming truly sustainable.
The Limitations of Current ESG Practices
While ESG practices are progressive, they predominantly emphasize the environmental aspects of sustainability. A comprehensive approach for technology companies encompassing entire product lifecycles, from sourcing to disposal, is crucial.
Consider that traditional hardware lifespans are only three to five years. Extending hardware longevity is but one effort to reduce resource consumption. A holistic perspective that also addresses inefficient and resource-intensive applications running on the hardware is pivotal for achieving effective technology consumption dynamics.
Further, the proliferation of technology has led to significant societal impacts, including the exponential amount of data growth and inefficiencies of data centers, not to mention the displacement of jobs, data privacy concerns, and the potential for biases in algorithms. Technology companies must consider the long-term effects of their actions on society, both from a climate and environmental perspective, as well as an economic one, and take proactive measures to ensure socio-economic sustainability.
ESG Practices: Lessons from Europe
ESG practices vary significantly between the US and Europe. European technology firms are often ahead in integrating ESG practices into their operations. Driven by stricter regulations, these companies tend to have comprehensive ESG disclosures, encompassing their energy use, carbon footprint, data privacy policies, and workforce diversity.
In the US, on the other hand, technology companies’ ESG practices are largely influenced by investor expectations. While there has been a growing emphasis on transparency and ESG disclosures, the focus has been more on data privacy and security, following high-profile data breaches.
Increasing awareness of climate change and diversity issues is pushing more US tech companies to broaden their ESG focus. Still, we can’t leave it to the regulatory bodies alone to change our mindset about sustainability.
4 Ways Technology Companies Can Establish a True ESG Mindset
1. Take a Pledge for Sustainability
SDG is a global framework for development and sustainability. It consists of 17 goals that aim to end poverty, protect the planet, and ensure peace and prosperity for all. Tech companies can integrate SDGs into their strategies and align their technology with the global goals. By integrating SDGs, companies can demonstrate their commitment to sustainability, promote sustainable business practices, and contribute to global development initiatives.
For example, Lenovo has included the SDGs into its Corporate Social Responsibility (CSR) framework and has pledged to deliver solutions that align with the SDGs. Similarly, Microsoft is working towards environmental sustainability by setting ambitious carbon reduction goals.
Outdoor apparel retailer Patagonia encourages all companies to join them in taking a pledge to 1% for the Planet, an alliance of businesses that understand the necessity of protecting the natural environment. From the Patagonia website:
“If you’re a business owner (or have any influence over your boss), please consider becoming a member of this socially and environmentally progressive group. By contributing 1% of total annual sales to grassroots environmental groups, members of 1% for the Planet affect real change.
And members receive other benefits: The satisfaction of paving the way for more corporate responsibility in the business community and the recognition, support and patronage of conscientious consumers who value serious commitment to the environment.”
2. Implement Green Coding Practices
In a previous blog, I discussed the need for green coding as a way to make our data, and therefore our data systems, more efficient. By focusing on writing efficient, optimized code, we can reduce the energy and resource footprint of our software. Along with a commitment to using certified green data centers, businesses should pledge to incorporate green coding practices such as efficient algorithms and data structures, reducing redundancy, code profiling, and cloud optimization.
3. Implement a Circular Economy Approach
A circular economy is an economic model that aims to eliminate waste and the continual use of resources. It replaces the conventional linear economy, which operates on a “take, make, and dispose” model, with a closed-loop system that focuses on reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a more sustainable economic system.
The concept of a circular economy is based on nature’s cycles where nothing is wasted. Thus, a circular economy not only benefits the environment but also offers opportunities for innovative business models that can lead to economic growth.
4. Institute Employee Training and Awareness
It’s imperative for organizations to educate current and future developers on environmentally conscious technology design, beginning with eco-friendly coding practices. Frequently, developers remain unaware of how inefficient code can contribute to a larger carbon footprint due to the CPU, memory, and bandwidth consumption.
Prioritizing energy efficiency is paramount. Developers should be incentivized to attain eco-friendly goals aimed at reducing resource consumption and minimizing their code’s carbon footprint. Employees should also be encouraged to make informed decisions related to technology use, disposal, and recycling. Companies can go a step further and actively promote sustainable living among their employees, providing incentives for eco-friendly commuting or virtual offices, implementing recycling programs, and educating staff about their role in environmental sustainability.
What Could True ESG for Technology Sustainability Look Like in the US?
ESG practices vary significantly across the 50 states. Certain states, such as California and New York, have been leaders in implementing and promoting progressive ESG policies.
The variation can be attributed to differing political landscapes, resource availability, and local attitudes towards issues such as climate change and social justice. However, even in the absence of a common standard, many businesses are voluntarily adopting ESG practices, driven by stakeholder expectations and recognition of the long-term benefits of sustainable business practices.If the U.S. were to adopt a federal policy that addresses ESG for all companies, with particular attention to the requirements of software companies and vendors, we would be on the road to true ESG for the technology industry.
Until then, it’s up to every company no matter the size to pledge to sustainability practices, incorporate green coding, educate, and reward employees for their efforts, adopt a circular economy approach, and build other practices into their DNA that train future generations of workers in a new ESG mindset from the start.