Organizational sustainability has hit mainstream adoption levels, evidenced by a global swell in sustainability and environmental, social and governance (ESG) commitments across all industries. While many organizations have made progress towards these goals, execution at the required impact and scale remains challenging.
From navigating an increasingly complex data jungle to overcoming team silos and competing priorities, sustainability efforts are being hindered – and that could create a new set of commercial risks. These risks may include new compliance requirements triggered by legislation, restricted access to capital, increasing operational costs or product substitution as customers switch to more sustainable alternatives. Mitigating sustainability risks now will help protect long term value creation across business and operating models.
Sustainability teams are therefore custodians of broad, multi-functional programs of work, impacting many parts of an organization. Increased regulatory and stakeholder requirements add a new sense of urgency to their remit.
The Australian Government is expected to mandate large, publicly listed organizations to disclose climate-related financial information from 2024, aligning with a growing global appreciation of the commercial imperative for enhanced sustainability and ESG disclosure. This follows markets such as the EU, UK, and New Zealand, in which sustainability and climate disclosure laws are in place, and the US, which is set to announce its own ruling in 2023.
In addition, in June 2023, the International Sustainability Standards Board launched sustainability disclosure standards backed by the G7, the G20, and Central Banks from more than 40 jurisdictions. These are likely to form the basis for evolving regulation around the world, and require organizations to report sustainability-related financial information, including climate impact and action.
Reporting organizations will be expected to disclose information such as:
ESG metrics, targets and assessments of ESG-related risks and opportunities.
Climate action targets, governance and transition plans.
Comprehensive disclosure of Scope 1, 2 and 3 carbon emissions.
These emerging requirements create a shortened timeframe for action, and greater regulatory and commercial exposure for organizations failing to execute on sustainability. To address these challenges, organizations need a robust and efficient approach to making their organizational-wide sustainability and ESG performance visible, allowing multiple teams to own and act on targets, and ensure accurate and verifiable external reporting.
What’s holding organizations back?
Executing on sustainability invariably requires the effort of many leaders and teams to address complex challenges. Determining ownership for these multifaceted outcomes is a barrier many organizations are yet to overcome. Without clear accountability, leaders are unable to set targets or implement initiatives that may meaningfully impact their organization’s sustainability performance. No matter how willing, leaders find themselves unable to confidently commit to and invest in action.
Organizations require ongoing access to current sustainability data, so leaders and teams can monitor impact, take corrective action and drive progress.
A further constraint on sustainability execution is a lack of timely data and insights. For many organizations, sustainability data is primarily generated for annual reporting and other external purposes. This process is usually time consuming and inefficient, and delivers only an historical view. Organizations require ongoing access to current sustainability data, so leaders and teams can continuously monitor impact, take corrective action and drive progress.
Many organizations also struggle to navigate the role of technology solutions in implementing sustainability action at scale. As the market for sustainability tools and other tech investments continues to expand, the best path forward is often unclear. Many organizations fear over-investing in new solutions while underutilizing current capabilities, or establishing long, resource-heavy tech roadmaps that will tie up capacity and fail to meet expectations.
How you can bridge the sustainability execution gap
The role of technology teams and solutions is critical to closing the gap between sustainability aspiration and action. Through tech, the achievement of your sustainability strategy can be organizational-wide, data-enabled and supported by co-ordinated, efficient and timely programs of execution.
Technology is critical for wide scale sustainability execution and the delivery of quick wins and long-term impact. It can help you break down complexity, assign internal accountability, set targets, track progress and build resilience into the organization to keep on track.
Close the sustainability execution gap through tech.
Break down complexity and assign accountability.
Set measures, agree on targets and track progress.
Co-ordinate efficient, adaptive programs of action.
Embed data-driven decision-making.
Build organizational sustainability resilience.
A client recently asked us to help them understand the impact of team travel on its carbon emissions targets. We soon realized the opportunity for impact was far broader – the sustainability team needed a plan to engage with and use technology to drive outcomes right across their sustainability strategy. And they’re not alone.
Sustainability execution is often constrained by a lack of alignment with the technology team or enablement by technology solutions. Only 7% of businesses have fully integrated technology and sustainability strategies, and less than half of CIOs are included in their organization’s sustainability decision making process.
Accelerating sustainability through tech begins with the alignment of strategy and empowerment of people. It’s critically important to work with your sustainability team to understand how the organization's technology priorities can enable the sustainability strategy, and how to avoid technology choices that may constrain sustainability execution.
Execute sustainability through tech by aligning strategies and empowering people.
Sustainability leaders need growing levels of tech capability and confidence.
Tech leaders must prepare for new accountabilities, mandates and measures.
As the role of technology becomes increasingly important, sustainability teams and leaders must build new capabilities and confidence. The way forward is not to embark on building deep tech expertise within your sustainability team – instead, be proactive about leveraging internal tech knowledge, priorities and people to understand and align with your organization’s tech capabilities.
Similarly, tech leaders can be empowered to contribute to sustainability strategies and take accountability for outcomes – provided they understand the role they play in achieving those goals. For example, the safe handling of customer data is a critical ESG consideration, impacting both social and governance responsibilities. Data and security teams should understand their obligations' importance in this regard, and take ownership of those metrics.
Tech leaders will be held responsible for new outcomes due to the growing commercial implications of sustainability. As the need for more efficient and higher-impact sustainability efforts increases, Boards and senior leaders will look to tech to play a central role, and innovation will be key. For example, a recent client discovered the potential of their data platform to aid organizational responses to sustainability information in real-time, and automate sustainability-aware decision- making into core processes.
Partnering for tech-enabled sustainability
The pressure is on for organizations to stop spinning their sustainability wheels. The need for sustainability and tech alignment is clear, but differences in strategies, priorities and ways of working make navigating the intersection of sustainability and technology complex.
Sustainability teams will benefit from working with a partner with deep tech expertise coupled with the capability to support non-tech stakeholders to apply that knowledge. Technology teams appreciate the need to act but are looking for credible guidance based on an understanding of their specific challenges and context.
By aligning your sustainability and tech teams, articulating an optimal future state and outlining key steps forward, an effective tech partner can provide you with the clarity and confidence to move from sustainability aspiration to action.
Discover how Xero partnered with Thoughtworks to develop a tech-enabled sustainability strategy.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
