With investors, consumers and governments continuing to prioritize societal initiatives, environmental, social and governance (ESG) performance is becoming critical for organizations to stay competitive in an increasingly socially conscious world. No longer can a strong product or service carry a business. Modern behaviours have shifted, and new preferences have emerged as this generation – and every generation to come – are committing to making the world a better place. They expect that same commitment from the companies with which they engage.
The lessons we’ve learned at Kinaxis may help other software companies enhance their sustainability strategies as well. ESG strategies will vary from industry to industry, but our experience within the technology sector has shaped four specific factors that fellow companies should consider when developing their ESG programs. With that, below are four takeaways we’ve compiled through Kinaxis’ own experiences.
ESG starts from the top down
A clear vision at the senior leadership level, as well as a commitment to ensuring that the proper resources and processes are in place, is the catalyst for software companies to have a successful ESG journey.
A strong ESG strategy starts from the top down and should be overseen by a governance committee represented by internal stakeholders across every department (e.g., marketing, sales, operations, executive leadership, etc.). To further extend ESG initiatives across an organization, companies can look to cross-functional steering committees (e.g., DEI committees), to ensure that the stakeholders are receiving the input and guidance needed to improve ESG performance.
The purpose of these structures is to collect ideas and comments from people all around the business on how the company can better achieve its sustainability goals. These committees can also provide significant advice to those who are ultimately accountable for ESG performance, to broaden the scope, activity and impact of environmental and social initiatives.
Engage sustainability experts
It takes time and effort to transform a software company into a more environmentally responsible one. Often, the transformation is demanding, and too difficult and time-consuming for in-house personnel to manage and push on their own. As a result, collaborating with professional sustainability specialists who understand how to assess and optimize a company’s environmental impact is an essential investment.
Sustainability specialists can assist organizations in calculating existing emissions, identifying energy-saving options, discovering carbon offset opportunities and choosing the best goods or solutions for each industry and use case. They can also work full-time or on a contract basis, supplementing your staff as needed.
If you are unsure about your team’s ability to pursue sustainability, consult with professionals who can steer you in the right direction. Consider joining the UN Global Compact and associated Accelerator initiatives, which provide advice in reaching ESG objectives.
Read the fine print
While typically not a carbon-intensive industry, software development can still produce carbon footprints from indirect emissions sources. For example, third-party data centers require a lot of energy to run and maintain servers, and keep computing hardware cool.
Today, there are seven million data centers in the world, according to Statista. Just two years ago, China’s data centers alone were emitting the equivalent of 21 million automobiles‘ worth of CO2 in a single year. Some experts warn that, if we are not careful, data centers might account for 10 percent of world power usage by 2030. As more individuals gain internet access and purchase new devices, data center emissions will rise unless corporations use more renewable energy for computational power.
Finding a data center provider that is committed to achieving carbon neutrality is one method that can help on this front. Working with providers that have established data centers with environmental-friendly infrastructure can compensate for emissions software companies cannot avoid. These service providers do much of the effort of reducing emissions themselves, making life easier for software clients.
Aside from data centers, there are numerous other possible sources of carbon emissions, including commuting and inefficient office spaces. As a software company, it’s critical to examine your operations to identify possibilities to reduce your organization’s overall carbon footprint.
It’s a marathon, not a sprint
Some of what we’ve learned may be useful to other software firms looking to kickstart their ESG operations and move closer to carbon neutrality. Setting up accountability mechanisms, collaborating with specialists, and investigating emission sources have all been beneficial in Kinaxis’ path.
However, there is another crucial point to consider: it takes time to build more sustainable software enterprises. There aren’t any shortcuts. It takes time to cultivate and sustain carbon-neutral organizations, and things will surely evolve as we learn more about how to successfully reduce emissions with new technology.
The journey to carbon neutrality is a marathon, not a sprint. Leaders that understand this will make decisions and establish teams that are committed to implementing long-term sustainable practices. The goal should be to always develop, learn and implement updated strategies continuously.