Industry leaders discuss how moving the needle on ESG can help the tech sector thrive in an age of distrust.
The planet’s heating up and public trust is melting down. These two challenges are connected—we won’t solve one without solving the other. But can we really rescue ourselves with a three-letter acronym?
Tech companies can use ESG (environmental, social, and governance) programs to build (or build back) credibility with employees, customers, and investors. Daunting, in some cases—but possible. As with so many things, the “what” of your ESG journey is only part of the point. The “why” and the “how” arguably matter as much or more.
In a new Workflow special report industry leaders share insights on how ESG progress can help tech companies build trust with all their stakeholders.
The why
The tech space has historically enjoyed above-average consumer trust, but that’s no longer something to take for granted. Multiple factors have contributed to declining tech-trust: data privacy and control challenges, rising cybersecurity risks, the influence of social media in politics, job volatility, and social equity concerns. Ignoring these issues is increasingly likely to create serious reputational harm.
This matters for the relationship between tech companies and consumers, but it’s also key to building and maintaining an aligned, high-morale employee base. The SEC has started to require that public companies use human capital metrics. The mental health of employees is already a top HR priority, as stress and burnout handicaps company performance. It also is increasingly a critical—and often complicated—element in a company’s environmental, social, and governance goals.
“Companies want to hire and keep the best people,” according to leading HR expert Josh Bersin.“ Key factors in attracting and retaining talent include not only fair pay, but also meaningful jobs and a sense of purpose and belonging.” Wise companies understand that ESG begins at home: low retention or high attrition are red flags that a company has employee experience issues, which is a reflection of ESG among other factors.
The how
Boiled down to a single word, we’re talking about integrity—in the sense of sound ethics and in the arithmetic sense of wholeness. ESG should be woven into the business at every layer, up to, and perhaps especially including, the board.
Lynelle Cameron, former director of sustainability for Autodesk, notes that boards should be able to answer these questions: Who is accountable for ESG at the board level? What are the material ESG and/or climate risks and opportunities for the company? How is the business performing on ESG goals and how is that measured? Does the company have an effective strategy for mitigating ESG risks and seizing opportunities, and is that strategy integrated into the core strategy of the business?
“It’s not a marketing play or a PR play; it’s a critical piece of business strategy. Companies that are serious about ESG understand that trust takes time and losing it can happen in seconds.”
Edua Dickerson, VP of ESG and finance strategy at ServiceNow, emphasizes that successful ESG efforts require “…intentionality and scrutiny. It’s not a marketing play or a PR play; it’s a critical piece of business strategy. Companies that are serious about ESG understand that trust takes time and losing it can happen in seconds.” A sincere and serious ESG mission gives employees a sense of trust that they are working for a company that is ethical, mindful of its impacts, and striving to do good and affirmatively mitigate harm.
Professor Tom Davenport of Babson College notes that for tech companies in particular, consumer data privacy is a major governance issue.“Companies need to not only ask for more permission for how they use private data, they’re going to have to provide value in exchange for it.”
Doing well and being well are connected. This is true for virtually all systems, from biomes to societies to business models. Thinking systemically about sustainability, and factoring it into every aspect of the business, has the potential to enhance trust between managers and employees, and between businesses and consumers—leading to healthier revenues and a healthier world.
Article Credits: Forbes