The Strategic CIO: 5 Ways to Champion ESG

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More than 70% of CEOs of the world’s largest companies are prioritizing environmental, social, and governance (ESG) strategies.1 These leaders recognize the core value of technology-driven sustainability and are capitalizing on it to create new businesses, increase revenue, enrich customer engagement, and attract top-tier tech talent.1

Yet, a significant portion of these CEOs say they have not fully integrated ESG into their business and technology strategies. For now, this group approaches integration as a short-term value, mainly related to enhancing customer relationships, brand reputation, and M&A plans.1 They do, however, understand that failure to embrace ESG policies wholly can give their competitors an edge. As leaders direct their companies through the transition, they should embrace the opportunity to work closely with their CIOs to integrate viable ESG.

CIOs, traditionally the gatekeepers of organizational security and technology, are emerging as influential leaders guiding the ESG agenda.2 And while barriers to ESG transformation exist, CIOs are in a position to sway colleagues’ perspectives and impact positive change.

Top Hurdles to ESG Adoption

  1. Inconsistent reporting frameworks and regulations: Organizations face a labyrinth of ESG reporting standards and regulatory requirements that vary widely across different regions and sectors. This inconsistency makes it challenging to create cohesive strategies that satisfy all stakeholders and comply with global standards.3
  2. Political and social pressure and lobbying efforts: Companies often find themselves at the crossroads of intense political and social dynamics. Pressure groups and lobbying efforts can sway priorities and resource allocation, sometimes at the expense of comprehensive ESG initiatives. 3
  3. Variable supply chain policies: With global operations, firms must navigate a patchwork of local supply chain regulations. These differences can hinder the implementation of uniform ESG policies, especially when trying to manage suppliers’ adherence to these standards.3
  4. Lack of solutions and talent: There is a gap in the market for ESG-focused solutions that can be integrated into existing business models. Additionally, a talent shortage in the ESG sector often impedes the momentum of initiatives.4
  5. Unsustainable legacy systems: Many organizations operate on outdated systems not designed with ESG considerations in mind. Transforming these legacy systems to support sustainable practices requires significant investment and can be a substantial barrier to full ESG integration.4

The Evolving Role of the CIO

While the roadblocks to fully embedding ESG policies and processes are significant, CIOs are front and center in overcoming these obstacles.

“As sustainability strategies take shape, the CIO will be the common denominator as different members of the C-suite take ‘ownership’ of specific aspects and become reliant on technology to achieve their objectives.” 4

A recent industry report highlights the growing importance of ESG for CIOs. Analysts found that 77% of CIOs are spending more time selling ideas to their boards of directors, and 79% of CIOs expect to increase spending on customer experience in 2023.5 These trends suggest that CIOs are increasingly taking on a more strategic role in the organization and that ESG is a key priority.

A CIO’s responsibilities now extend beyond traditional IT management and focus on aligning technology, services, and supporting infrastructure with their organization’s ESG goals. They often:

  • Participate in strategic decision-making and play a key role in helping to define what the business does. Move beyond simply implementing the infrastructure to support it.
  • Collaborate with other departments like operations, security, marketing, procurement, and legal.
  • Implement data-driven ESG management systems that collect and analyze the organization’s ESG performance data.
  • Invest in sustainable technologies that can reduce the organization’s environmental impact.
  • Use technology to improve employee productivity and satisfaction, including collaboration tools and flexible work arrangements.
  • Focus on improving customer experience through e-commerce platforms, customer relationship management (CRM) systems, and artificial intelligence (AI)-powered chatbots.

Five Ways CIOs Can Facilitate ESG Adoption

Here are five tactics CIOs can use to steer ESG initiatives.

  1. Be practical and proactive in engaging with your peers. Identify ESG goals, clearly state them, and prioritize them, noting where IT can deliver improvements through its own digital transformation.
  2. Get buy-in from every direction. Build the business case for strategic ESG initiatives, connecting it back to short- and long-term financial value.
  3. Work with third-party partners to align on ESG. Ninety-three percent of IT leaders said they expect suppliers’ ESG performance to increasingly affect software buying decisions.6
  4. Weave ESG data into the organization’s strategy, plans, and programs. Look for ways to improve data quality and real-time accountability. When possible, build data platforms that drive sustainable business strategies.
  5. Continually evaluate cross-functionally and realign when necessary.

CIOS Are Leading a Sustainable Change

In today’s shift toward sustainable practices, it’s clear that CIOs have a critical role to play. They can lead with ESG initiatives, going beyond compliance to drive authentic transformation. By partnering across departments, CIOs can ensure their company’s ESG efforts are substantive and transparent, avoiding the pitfalls of green-washing.

Organizations with a strong focus on stakeholders’ interests not only perform better in sustainability but also create more value. CIOs can use new technologies and ESG data to build resilient supply chains, embrace diversity for innovation, and meet stakeholders’ needs in product and market development.

  1. KPMG, KPMG 2023 CEO Outlook, 2023
  2. PwC, ESG in supply chains: Early integration can bolster your business, 2022
  3. KPMG, KPMG 2023 CEO Outlook, 2023
  4. Accenture, Shaping the sustainable organization, 2021
  5. Logicalis, Logicalis Global CIO Report 2023: The meteoric rise of the CIO, 2023
  6. TechTarget, 5 key ESG insights for CIOs and IT leaders, 2023
  7. EY, What is the CIO’s role in the ESG equation?, 2022
  8. Logicalis, Logicalis Global CIO Report 2023: The meteoric rise of the CIO, 2023
Posted in ESG