IT Leaders Positioned to Take an Active Approach to Changing Conditions and Achieve ESG Goals, Says Info-Tech Research Group

Organizations will rely on IT for ESG execution, and IT leaders will need to be ready for it

TORONTO, Nov. 18, 2022 /PRNewswire/ - With environmental, social, and governance (ESG) becoming an ongoing corporate imperative, global IT research and advisory firm Info-Tech Research Group has released its timely research-backed blueprint titled The ESG Imperative and Its Impact on Organizations. The firm's research indicates that IT will likely play a critical role in achieving ESG goals, but to do so successfully will also require clarification of IT's role in the process.

The new industry resource was created to help IT leaders better understand ESG factors and the broader concept of sustainability. It will also help identify changes that may be needed in the organizational operating model, as well as discover areas of IT that may need to be prioritized and resourced.

Info-Tech's findings show that a major challenge for organizations in their ESG program journey is the constantly evolving and inconsistent regulatory requirements for climate disclosure. Other challenges can be attributed to the difficulty of communicating long-term value within an organization when customer and employee expectations shift, or collecting data from across the functional business, geographical locations, supplier base, and supply chains while trying to meet ESG objectives.

The top impacts of ESG on IT departments identified by Info-Tech's blueprint include the following:

1. ESG requires corporations to keep track of ESG-related risks of third parties. This will mean more robust assessments and monitoring.
2. Many areas of ESG are new and will require new processes and tools.
3. The SEC has upped the ante recently, requiring more rigorous accountability and reporting on cyber incidents.
4. New IT systems and architecture may be needed to support ESG programs.
5. Current reporting frameworks may need updating as regulators move to digital.
6. Ethical design will need to be considered when AI is used to support risk/data management and when it is used as part of product solutions.

The research suggests that an organization's approach to ESG cannot be static or tactical, as ESG is a moving landscape that requires a flexible, holistic approach across the organization. Instead, the process must become part of the way IT fundamentally works to enable an active response to changing conditions.

"Environmental, social, and governance (ESG) is a corporate imperative that is tied to long-term value creation. An organization's social license to operate and future corporate performance depends on managing ESG factors well," says Donna Bales, principal research director at Info-Tech Research Group. "Central to an ESG program is having a good understanding of the ESG factors that may have a material impact on enterprise value and key internal and external stakeholders. A comprehensive ESG strategy supported by strong governance and risk management is essential to success."

The firm's blueprint highlights that organizations should be knowledgeable about ESG factors and the broader concept of sustainability to overcome the challenges.  This can be accomplished through an ESG program journey. When embarking on an ESG program journey, IT leaders must consider the following:

• Understand the ESG Drivers – This includes an understanding of the visibility of climate change, regulatory requirements, rise in ESG investing, and a younger generation with strong convictions and financial influence.
• Set the Program Purpose – Leaders need to clarify ESG goals and intentions with respect to the organization while considering the role of the corporation in society and its impact on key stakeholders.
• Assess the Material Impact of ESG Factors on the Business – It is important for IT leaders to survey key stakeholders to obtain a more holistic viewpoint of expectations and the industry landscape in order to anticipate how stakeholders will react to emerging issues. When done correctly, this will lead to increased credibility and trust.
• Weigh Risks, Opportunities, and Financial Impact – Leaders are responsible for weighing options and adjusting the business operating model to align with ESG goals.
• Approach and Governance – Effective governance is essential to instill trust, support sound decision making, and manage ESG. The organizational approach to ESG will differ across industry segments and corporations depending on material risks and their upstream and downstream value change.
• Identify Gaps Against Desired Outcomes – Like any journey, the ESG journey requires assessing the start point of the organization and defining the end goal. Using the results of the materiality assessment, leaders must weigh the risk, opportunities, and financial impact to help prioritize and determine vulnerabilities.
• Deliver on Goals and Disclosure – Organizations will rely on IT for execution, and IT leaders will need to be prepared and supported to accomplish successful implementation.
• Continually Report and Measure – Metrics are key to telling an organization's ESG story, so leaders must place the appropriate importance on the information that will be reported.

IT groups can help organizations develop strategic plans to meet ESG goals, measure performance, monitor risks, and deliver on disclosure requirements. This aid can extend from the CIO providing input at a strategic level to leading the charge within IT to instill new goals and adapt the culture toward one focused on sustainability. However, to set the tone, CIOs should begin by updating their IT governance structure and setting ESG goals for their IT teams. In addition, IT leaders must consider resource use and efficiency and incorporate this into their IT strategy as they move forward.

Info-Tech research highlights that ESG has moved beyond the tipping point to corporate table stakes and that IT plays a critical role in achieving ESG goals. IT leaders need to work collaboratively with risk management to optimize decision making and continually improve ESG performance and disclosure.

"For many organizations, the ESG program journey has just begun, and collaboration between IT and risk, procurement, and compliance will be critical in shaping program success," adds Bales.

To learn more, download the The ESG Imperative and Its Impact on Organizations blueprint.

For more about Info-Tech Research Group and to download the latest research, visit infotech.com.

About Info-Tech Research Group  

Info-Tech Research Group is one of the world's leading information technology research and advisory firms, proudly serving over 30,000 IT professionals. The company produces unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. For 25 years, Info-Tech has partnered closely with IT teams to provide them with everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.  

Media professionals can register for unrestricted access to research across IT, HR, and software and over 200 IT and Industry analysts through the ITRG Media Insiders Program. To gain access, contact [email protected].

SOURCE Info-Tech Research Group