This article was co-authored by Katherine Kennedy, an Associate at Metis Strategy.
For years, ESG has been little more than a sub-bullet or appendix slide in most CIOs’ strategy decks. But changing consumer sensibilities and heightened investor scrutiny have swept ESG, and technology’s role in it, to the top of the agenda. Corporate strategies hinge on it.
ESG is new territory for many technology leaders and getting up to speed quickly is essential. In a recent survey conducted by Lenovo, 45% of respondents said the CIO should play a critical role in executing the enterprise’s ESG mission. While the scope of ESG is of course much broader than environmental sustainability, the need for speed here is particularly heightened as the SEC moves to enact rules that will require publicly traded companies to disclose their emissions data as early as 2024. For many CIOs today, the first question often is: Where do I start?
Nick Colisto, SVP & CIO of Avery Dennison Corporation, has some ideas. ESG has been a priority for him since he joined the company, which designs and manufactures a variety of labeling and functional materials, like tapes and bonding solutions. Over the past several years alone, his team launched a web application that powers AD Circular, a program for recycling used paper and filmic label liners. The team also developed an enterprise-wide system for tracking ESG metrics, like Scope 1 and 2 GHG emissions. Insights from that system are highlighted regularly in the company’s sustainability reports.
Below, Nick suggests a few areas CIOs can start on the journey to creating a proactive ESG agenda that anticipates compliance requirements:
Dedicate a sustainability leader to the CIO organization
A dedicated sustainability expert focused on how data can drive the enterprise agenda while satisfying relevant ESG policies and guidelines is essential, Nick says. “Data is essential to a modern ESG strategy, and you won’t make strides of any respectable length if you’re constantly fighting for the time of the company’s shared ESG resource.”
If your search comes down to hiring someone with ESG policy knowledge versus technical expertise, prioritize the former, Nick says. That way, the person can narrow the scope of ESG use cases to those that will drive the most meaningful results before involving the technical talent responsible for delivery.
Of course, finding the right person is only half the battle. CIOs must set sustainability leads up for success. That means giving them visibility and access. Nick’s leader sits on Avery Dennison’s sustainability council, where he has visibility into the enterprise ESG agenda. He also has a mandate to engage business leaders to collect requirements for any initiative the council pursues, which he then translates into technical specifications and tracks from start to finish.
Data governance is vital to ESG initiatives. At minimum, it will form the backbone of your ESG reports, which will command much of your focus at the start of your ESG journey. In addition to ensuring compliance, data will also inform which goals your organization pursues and how it tracks them. Thus, the quality of your data must be exemplary.
Securing that high-quality data, Nick says, starts with establishing a single source of truth. This has been on many a CIO’s docket for a while, but the work often is not prioritized because the value of the data was relatively low, used mostly for historical reporting to support brand positioning and annual sustainability reports. “As investors demand increasingly detailed data to assess climate-related risk, data quality is critical,” Nick says. “Disparate data will not work for ESG as it’s too difficult to analyze and report on. Also, consolidated ESG data has increased operational and strategic value.”
Once a single source of truth has been established, it must be maintained with robust data governance and management policies. These policies will become especially critical once the scope of regulatory reporting expands to include Scope 3 emissions, those a company generates indirectly, through its supply chain, products, and partners, which are particularly hard to track, says Nick.
Drive accessibility and transparency
Once a lead has been established and a clear governance process put in place, the next step is to make your data accessible and transparent. That means making sure anyone who needs the data can get their hands on it and, once they do, easily understand it. That task is harder than it sounds, but it’s worth your while. ESG programs are unlikely to gain momentum if every routine compliance report requires employees to endure a scavenger hunt for the necessary data. More importantly, people are less likely to invest themselves in a cause that is opaque or poorly understood. Knowing your ESG goals, who they involve, what data they rely on, and what activities will move the needle will make your employees feel they are part of the process. Our team sees four key ways to do this:
- Publish a dashboard of the ESG metrics your organization values most: It might include metrics such as carbon offset, DEI ratings, or aggregate scores published by a third-party ESG rating provider. To drive adoption, involve leaders from various departments early in the dashboard design process.
- Contextualize ESG data and share it with the enterprise: ESG metrics are frequently affected by operational decisions. Yet, the people making those decisions often lack the skills to analyze and interpret ESG data effectively. Provide employees access to low/no-code analytics tools such as PowerBI and Tableau to help them understand their impact on each metric.
- Incentivize teams to make ESG-smart decisions: Moving the needle on ESG goals requires leaders and their teams to change the way they work. To do that, they need a reason. Give leaders incentives to get smart on the company’s ESG vision, the core metrics, and the role each team plays in realizing the future. For instance, Bank of America’s My Environment® employee program offers, among many incentives, to reimburse a portion of the cost of an employee’s electric vehicle or charger.
The principles above, when applied in earnest, can do much more for companies than simply earn them a sticker for compliance. Nick’s focus on ESG at Avery Dennison demonstrates the central role CIOs can play in asserting IT’s role not only as a service provider, but also an active contributor to an organization’s ESG mission and, ultimately, its growth.