A rising priority for many companies is implementing environmental, social, and corporate governance (ESG) practices into their business strategies. Adopting these practices can prominently influence your brand’s reputation, customer relationships, and your company’s overall success. But why is this the case now? After years of talking about ESG, what’s changed now?
Consumers are increasingly factoring ESG and sustainability into their purchasing power to ensure their dollars align with their values. The data shows that ethical and sustainable sourcing are becoming measurably more important to consumers—and a company’s oversight of supplier or partner practices is no longer an excuse. One survey found that 88% of global consumers would choose to buy from companies with ethical sourcing structures in place over ones that did not.
Markets are also changing, as ESG practices impact the bottom line. Incorporating ESG practices into your business strategy is now essential to attracting customers, and brings additional business benefits. The World Economic Forum estimates that sustainable and ethical sourcing processes can reduce costs in the supply chain by up to 16%. Additionally, a recent McKinsey report found that top-performing ESG companies experienced faster growth and higher valuations than others in their sector by a margin of 10% to 20% in each case. The report also found that strong ESG credentials cut costs by 5% to 10% due to increased operational efficiency and waste reduction.
These figures illustrate the value of ESG as a competitive differentiator and a critical way to advance supply-chain management. Prioritizing ESG initiatives is vital to long-term business success. For organizations that are new to ESG or looking to expand their efforts, business leaders can leverage modern technology solutions to innovate how they meet consumer demands for responsibly sourced goods and sustainable business practices. But a potent question remains: how do IT leaders bring ESG into the mix of their day-to-day priorities?
Below are a few ways that IT can help businesses achieve their sustainability goals.
A great place to begin mobilizing ESG initiatives is to see what processes can become more sustainable through digitization. While IT solutions can’t replace all material elements within a supply chain, digital tools can empower an organization to use resources and energy more efficiently. Many companies are already leveraging IT resources to meet their ESG goals. One Gartner survey found that 63% of respondents have made investments in IT and digital solutions as part of their sustainability programs.
There are a number of solutions available on the market that enable waste reduction and more sustainable resource management. Digital tools that employ the Internet of Things (IoT) and artificial intelligence (AI) can be used to improve ESG practices like product transparency. For example, sensors can identify a product’s origin, letting companies know where the item was sourced or created. Some AI-enabled tools can alert you when a product needs to be refurbished—preventing the item from breaking down beyond repair. Such actions are more difficult to accomplish without advanced technology, which hints at the benefits that digital tools can unlock.
Harness real-time data
Another powerful asset that comes with adopting digital resources is access to data and insights that inform decision-making. For instance, Acumatica’s cloud-based ERP solution can help in this regard. Organizations of any size can use an ERP system to unify data from across their technologies into a centralized system, where it is synchronized for real-time visibility.
Such an all-encompassing view enables companies to monitor every aspect of their businesses, including supply chain channels. With advanced cloud ERP technologies, companies can effortlessly monitor leading KPIs and respond rapidly. They can leverage data from across different areas of the organization’s supply chain to improve their ability to anticipate shortages and changing demands in advance. For instance, using Acumatica, companies can better navigate supply chain disruptions or change suppliers if their existing partner isn’t aligned with the organization’s ESG standards. ERP solutions also enable better overall monitoring of the company’s digital systems and tools, so enterprises have greater visibility of progress toward meeting ESG goals.
Utilize cloud-based services
When selecting the right IT tools to support your ESG strategy, target cloud-based resources that enable real-time data access and provide a 360-degree view of the company. Cloud-computing resources are maintained in remote data centers, which eliminates the need for physical, on-premises hardware.
Using a cloud-based ERP, for example, allows companies to immediately leverage ERP applications and rapidly track progress against ESG practices. In addition, cloud-based solutions are more resilient against disasters that would devastate on-prem solutions. With cloud-based tools, data is backed up offsite and often include a data recovery plan, so outages and interruptions won’t disrupt ongoing monitoring.
With modern IT solutions, companies can increase operational visibility across their business to achieve their ESG objectives. Digital tools, such as ERP solutions, help initiate innovation and enhance operations monitoring no matter the scale. Using real-time data, businesses and manufacturers can make informed decisions about their supply chain more rapidly. Companies can employ cloud-based resources to lighten their physical footprint, improve their operations monitoring, and implement ESG measures their customers will love.