The effects of climate change are impossible to ignore: over the past decade, the planet has endured a record number of severe storms, hotter temperatures and rapidly rising sea levels. If immediate action is not taken, there will be more droughts, more flooding, and a global climate refugee crisis unlike anything seen before.
As we consider our role in addressing the impact of climate change, it’s up to us — business and technology leaders — to lead by example. Not only must we continue to instill green practices in the workplace, but it’s also critical for us to integrate sustainability into every business decision we make for a more holistic environmental, social, and corporate governance (ESG) approach. However, the climate crisis isn't the only thing driving green initiatives. More frequently, consumers are now "voting with their wallets," choosing to support businesses that embrace sustainable practices. Being green is quickly becoming a key business differentiator in every industry and a success metric for leading organizations.
My Splunk colleagues and I recently predicted that, beginning in 2024, organizations will ditch standalone sustainability “targets” and ESG will become the new “business as usual.” From your Board of Directors to your C-suite executives, to your employees, here’s why it’s important for everyone at your org to prioritize sustainability practices.
Engaging the board and C-suite
With new reporting mandates taking effect this year, regulation is already prompting organizations around the world to re-examine their ESG approaches:
Not only do these regulations serve as a catalyst for large enterprises to invest in greener solutions, they also help establish a direct correlation between ESG and ROI. From a business standpoint, sustainability tends to be built into the OT layer. With a holistic approach to sustainability, soon we will see it incorporated into the IT layer as well. As my colleague Mark Woods, chief technical advisor in EMEA, states: “When you think holistically about sustainability, what we call ‘green data’ is actually the same data that keeps a business running, just viewed through a sustainability lens. Since that data is already part of day-to-day operations, business leaders are empowered to make smarter sustainability improvements … without detracting from business objectives.”
So, why should you engage with your board and other executives on adopting a more holistic ESG approach? Besides the fact that ESG reporting mandates are (or very soon will be) law, McKinsey outlines Five ways that ESG creates value:
- Top-line growth. “A strong ESG proposition helps companies tap new markets and expand into existing ones. When governing authorities trust corporate actors, they are more likely to award them the access, approvals, and licenses that afford fresh opportunities for growth.”
- Cost reductions. "Executing ESG effectively can help combat rising operating expenses (such as raw-material costs and the true cost of water or carbon)."
- Reduced regulatory and legal interventions. "A stronger external-value proposition can enable companies to achieve greater strategic freedom, easing regulatory pressure."
- Employee productivity uplift. "A strong ESG proposition can help companies attract and retain quality employees, enhance employee motivation by instilling a sense of purpose, and increase productivity overall. Employee satisfaction is positively correlated with shareholder returns."
- Investment and asset optimization. "A strong ESG proposition can enhance investment returns by allocating capital to more promising and more sustainable opportunities (for example, renewables, waste reduction, and scrubbers). It can also help companies avoid stranded investments that may not pay off because of longer-term environmental issues."
The bottom line: Sustainability is actually good for business and is quickly becoming a success metric for leading organizations.
Engaging your workforce
ESG is not just some corporate function or a mere box to check off. It needs to fit in with an organization’s business values and model. In many ways, the best approach to sustainability is one that harnesses grassroots efforts within a company. To champion true change, you have to get the buy-in of your workforce.
For example, organizations can foster communities like employee resource groups (ERGs) to activate their workforce and create interactivity, evolution, and amplification, which is key to not only drive business values, but business objectives as well. And, per McKinsey: "Just as a sense of higher purpose can inspire your employees to perform better, a weaker ESG proposition can drag productivity down."
Hope is on the horizon
In the end, it will be humans, not machines, that drive sustainability. With the support of your organization’s board, C-suite, and workforce, I see hope on the horizon: Hope for enterprises to see how easy it truly is to instill sustainable practices into their business operations (without sacrificing the bottom line) and for their investments in ESG to be a leading factor of their success. The time is now — get started engaging the support of these groups today.
To find out what other predictions my colleagues and I made for next year, read Splunk’s 2024 Executive Predictions.
