hether we literally include a T in ESG, technology issues are ESG issues, technology risks are often ESG risks, and technology opportunities are ESG value influencers. Tech is an inextricable part of ESG and should, overtly or subtly, be subsumed in an organization’s consideration of ESG governance, strategy, opportunity, value protection, and creation.
Because we are in the midst of a major turning point in history—made amply evident by the staggering volume and breakneck velocity of technological change while other major ESG megatrends—climate, geopolitics, pandemics, social crises—also converge. I discuss this in greater detail here as headlined in the chart below.
Why all the ESG fuss?
Recently ESG has become both a business and a political football. There’s pervasive chatter amongst the ESG chattering class (investors, bankers, companies, pundits, regulators) about whether ESG adds or detracts value, should or should not be regulated, is mainly about “greenwashing”, is a misguided imposition of “woke” politics on business, or is even a “thing”!
Let’s step back for a moment. ESG isn’t exactly new—it’s been around for almost two decades as “ESG” per se but much longer as part of a “shareholder capitalism plus” approach since the 1970s when ethical investing began, corporate (social) responsibility followed as did sustainability, impact investing, etc. ESG as an object of financial investment began to explode right before the COVID-19 pandemic and has accelerated since only to slow down this year due to the Ukraine War, though it is projected to continue to grow dramatically over the long term.
Corralling ESG and ESGT Issues
ESG and related concepts are challenging to corral and define because they are more qualitative than quantitative by nature and therefore more difficult to measure than financial concepts. Plus, ESG issues have long been considered by business to be tangential. But no more. Our multiple, overlapping, and continuous ESGT risks and crises put that little ditty to bed.
And then there are some who have dared, like me, to add a letter to the already confusing ESG scenery ostensibly to help (but perhaps have added to the confusion). In my own defense (as far as I know), I added the T for tech to ESG before others added other letters when, in my 2020 book, Gloom to Boom: How Leaders Transform Risk into Resilience and Value, I tried to make the case that leaders must better manage ESG intangible value and that technology is a core and growing part of the intangible world. By doing so, leaders develop a more holistic and resilient business strategy to survive and thrive sustainably. Below is an example of the ESGT issues of a generic pharma company.
Tech and ESG: The Multidimensional Value Equation
As the aforementioned ESGT Megatrends continue to evolve and converge, they create intense pressure on all sectors to do something about material environmental, social, governance, and technological risks. Stakeholders beyond shareholders are clamoring, indeed demanding, accountability from government, business, and the social sector. And dare I say, not paying attention to ESGT issues, risks and opportunities means leaving money on the table at best and incurring financial and reputational cost at worst.
In addition to the myriad tech issues and risks that pop up daily, there are four dimensions in which tech intersects with ESG when it comes to opportunity and value as illustrated in the graphic and discussed below.
1. Tech as Value Destroyer
This is when a technology is based on defective design, fraud, opacity, or all of the above—like the Theranos fraudulent blood analysis device or some of the recently imploded algorithmic crypto coins like Terra and Luna. Instead of being value protectors, enhancers, or creators they are value destroyers.
2. Tech as Value Protector
This is when a technology is designed to protect existing value within an organization—like cybersecurity services from Microsoft, Wirex Systems or Crowdstrike or the early warning disinformation risk identification services of Crisp. These tech services are primarily value protectors though they can also be value enhancers as they help maintain and improve a customer’s resilience, financial stability, and reputation.
3. Tech as Value Enhancer
This is when a technology is deployed to qualitatively improve a company’s existing products or services—like a high-quality data aggregator providing ESG or GRC data collection and analytical services to a client or a machine learning program that is based on quality, anonymized, transparent, and trustworthy datasets. These tech services enhance the value of what the company already has in place and perhaps even help show the way to new products and services (thereby becoming a “value creator”).
4. Tech as Value Creator
This is when a new technology or a material development in an existing technology is created that not only protects and enhances existing value but creates brand new value— like the creation of MRNA based COVID-19 vaccines or the development of a more stable, asset backed, regulator ready, immediately redeemable stable coin (e.g., Circle and its USDC).
Despite the ESG headwinds, I’m here to tell you that ESG is a thing and a resilient one at that. ESG debates—pro and con—are an important part of the long-term development, clarification, and practical, value-added application of the concept to the real world. Adding or deleting letters to ESG or outright maligning the whole concept is OK if that’s your thing. What we should all care about, regardless of what we call it, is that companies take responsibility for their ESGT profile, portfolio, and impact.
In this world of instantaneous and immediate punishment and/or gratification, what do you want your company to be: an ESGT value destroyer, protector, enhancer, or creator?
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ESG Plus T: Tech as ESG Issue, Risk, and Value Influencer
Image via Adobe Stock.
July 21, 2022
Tech is an inextricable part of ESG and should, overtly or subtly, be subsumed in an organization’s consideration of ESG governance, strategy, opportunity, value protection, and creation, writes Andrea Bonime-Blanc.
W
hether we literally include a T in ESG, technology issues are ESG issues, technology risks are often ESG risks, and technology opportunities are ESG value influencers. Tech is an inextricable part of ESG and should, overtly or subtly, be subsumed in an organization’s consideration of ESG governance, strategy, opportunity, value protection, and creation.
Because we are in the midst of a major turning point in history—made amply evident by the staggering volume and breakneck velocity of technological change while other major ESG megatrends—climate, geopolitics, pandemics, social crises—also converge. I discuss this in greater detail here as headlined in the chart below.
Why all the ESG fuss?
Recently ESG has become both a business and a political football. There’s pervasive chatter amongst the ESG chattering class (investors, bankers, companies, pundits, regulators) about whether ESG adds or detracts value, should or should not be regulated, is mainly about “greenwashing”, is a misguided imposition of “woke” politics on business, or is even a “thing”!
Let’s step back for a moment. ESG isn’t exactly new—it’s been around for almost two decades as “ESG” per se but much longer as part of a “shareholder capitalism plus” approach since the 1970s when ethical investing began, corporate (social) responsibility followed as did sustainability, impact investing, etc. ESG as an object of financial investment began to explode right before the COVID-19 pandemic and has accelerated since only to slow down this year due to the Ukraine War, though it is projected to continue to grow dramatically over the long term.
Corralling ESG and ESGT Issues
ESG and related concepts are challenging to corral and define because they are more qualitative than quantitative by nature and therefore more difficult to measure than financial concepts. Plus, ESG issues have long been considered by business to be tangential. But no more. Our multiple, overlapping, and continuous ESGT risks and crises put that little ditty to bed.
And then there are some who have dared, like me, to add a letter to the already confusing ESG scenery ostensibly to help (but perhaps have added to the confusion). In my own defense (as far as I know), I added the T for tech to ESG before others added other letters when, in my 2020 book, Gloom to Boom: How Leaders Transform Risk into Resilience and Value, I tried to make the case that leaders must better manage ESG intangible value and that technology is a core and growing part of the intangible world. By doing so, leaders develop a more holistic and resilient business strategy to survive and thrive sustainably. Below is an example of the ESGT issues of a generic pharma company.
Tech and ESG: The Multidimensional Value Equation
As the aforementioned ESGT Megatrends continue to evolve and converge, they create intense pressure on all sectors to do something about material environmental, social, governance, and technological risks. Stakeholders beyond shareholders are clamoring, indeed demanding, accountability from government, business, and the social sector. And dare I say, not paying attention to ESGT issues, risks and opportunities means leaving money on the table at best and incurring financial and reputational cost at worst.
In addition to the myriad tech issues and risks that pop up daily, there are four dimensions in which tech intersects with ESG when it comes to opportunity and value as illustrated in the graphic and discussed below.
1. Tech as Value Destroyer
This is when a technology is based on defective design, fraud, opacity, or all of the above—like the Theranos fraudulent blood analysis device or some of the recently imploded algorithmic crypto coins like Terra and Luna. Instead of being value protectors, enhancers, or creators they are value destroyers.
2. Tech as Value Protector
This is when a technology is designed to protect existing value within an organization—like cybersecurity services from Microsoft, Wirex Systems or Crowdstrike or the early warning disinformation risk identification services of Crisp. These tech services are primarily value protectors though they can also be value enhancers as they help maintain and improve a customer’s resilience, financial stability, and reputation.
3. Tech as Value Enhancer
This is when a technology is deployed to qualitatively improve a company’s existing products or services—like a high-quality data aggregator providing ESG or GRC data collection and analytical services to a client or a machine learning program that is based on quality, anonymized, transparent, and trustworthy datasets. These tech services enhance the value of what the company already has in place and perhaps even help show the way to new products and services (thereby becoming a “value creator”).
4. Tech as Value Creator
This is when a new technology or a material development in an existing technology is created that not only protects and enhances existing value but creates brand new value— like the creation of MRNA based COVID-19 vaccines or the development of a more stable, asset backed, regulator ready, immediately redeemable stable coin (e.g., Circle and its USDC).
Despite the ESG headwinds, I’m here to tell you that ESG is a thing and a resilient one at that. ESG debates—pro and con—are an important part of the long-term development, clarification, and practical, value-added application of the concept to the real world. Adding or deleting letters to ESG or outright maligning the whole concept is OK if that’s your thing. What we should all care about, regardless of what we call it, is that companies take responsibility for their ESGT profile, portfolio, and impact.
In this world of instantaneous and immediate punishment and/or gratification, what do you want your company to be: an ESGT value destroyer, protector, enhancer, or creator?
