Council Says IoT can Support Fundamental ESG Solutions
Environmental, social, and governance (ESG) metrics can be used to assess and define an organization's impact, the trust it fosters, and the value it adds to the ecosystem in addition to its shareholder base.
According to Sphamandla Dlamini, chair of the IoT Industry Council of South Africa (IOTIC), solutions enabled by the Internet of Things (IoT) can fundamentally drive ESG criteria.
Companies should use technology to achieve ESG objectives and establish a solid foundation in a time of economic crisis. ESG projects generated $120 billion in funding in 2021. ESG integration has become a popular method of investing.
“ESG is a yardstick against which a company’s commitment to sustained outcomes is measured, and how investors respond to a company and its potential,” he says.
However, ESG reporting is difficult, time-consuming, and detail-oriented. It requires companies to carefully substantiate every claim with detailed facts and insights into each ESG criterion.
“Using IoT solutions will eliminate the risk of oversight, reduce the administrative burden associated with data collection and fast-track the delivery of insights to decision-makers,” adds Dlamini.
Most executives believe ESG will impact their ability to raise funds in the market. Companies have to analyse available information and deliver quantifiable insights to attract investment, he says.
The methods used by companies to measure their commitment to social, environmental, and financial success—the so-called "triple bottom line"—involve risks.
According to Dlamini, these risks include retrofitting ESG into the current company strategy, underinvesting in relevant data and analytics, overlooking the depth of ESG reporting with substandard metrics, and failing to pay attention to the validity of ESG measurement criteria.
“One clear way to minimise the risk of retrofitting ESG to the existing strategy, a route that will almost certainly limit results, is to make sustainability intrinsic to the strategy development process. This approach makes the data and information harvested by the technology both relevant and rich,” he notes.
It's crucial to control how companies approach ESG and IoT. These terms may lose some of their significance and the tangibleness of the significant results they can produce if they are overused in sales.
Companies should instead steer clear of acronym-heavy measures and concentrate on how technology may reshape company management while incorporating social equality.
“Smart operations are required that help decision-makers make sound decisions about day-to-day functions and approaches. In a digital world, operational transparency should be the first step that the organisation takes toward running a sustainable business.
“The second step is to decide on the targets and transformation roadmap it is to pursue under its ESG mandate,” says Dlamini.
Additionally, this mission and plan should serve as the company's foundation, not in isolation but rather as a component of a comprehensive strategy for conducting business. It should be included in every aspect of the business and covers the goals, value chain, transformation plan, and unique business circumstances.
“This can be achieved by undertaking a comprehensive study of the organisation’s value chain to develop a strategy that aligns with non-financial performance areas and ensures there is credibility built into ESG-related efforts. There are still high levels of uncertainty in the international and local communities,” he says.
“It will be a while before there are any generally accepted standards, but technology is critical to not only removing the admin burden but in ensuring that data collection is transparent, ethical, aligned and relevant.”
Organisations can significantly benefit from using technology, especially IoT-driven technology, to contribute positively to society. He emphasises that companies may integrate ESG directly into their operations using IoT embedded devices and sensor-driven data.
Source: Engineering News