Why Your Company Needs 4IR Technologies to Cut Through ESG Culture Wars

Darlene Damm is a contributor at Grit Daily. She is the Vice President of Community and Impact at Singularity Group, where she focuses on helping people understand how exponential technologies are creating abundance in the global grand challenge areas.

Over the last few months you may have heard the term ESG, or Environmental and Social Governance, in the news. While the topic has become politicized, there are steps companies can take today to cut through the noise and help their investors, customers, and employees better understand the positive difference they are making in the world. This is important given how much Millennials, GenZ value social impact and purpose.

What Is ESG?

In the 2000s, investors developed a set of criteria to determine how well companies they invested in treated people and the planet. Examples of criteria could range from tracking a company’s carbon emissions to how well it cared for its staff to whether they had policies in place to prevent corruption. Over the years, in addition to investors, employees, and customers have also started paying attention to ESG ratings to make decisions about where they want to work or to determine from whom they want to buy products and services.

What Are the Challenges with ESG?

Over the last few years, critics have pointed out a number of challenges with ESG and with corporate social impact in general.  

First, some companies “greenwash.” This means that the company’s core business might be engaging in practices that are very damaging to people or the environment, but they will take a few small, good actions, such as encouraging recycling or donating to a nonprofit. While the purpose of ESG criteria is to document and quantify the real contributions and risks made by a company, often, this information is difficult to find and can be overridden by a large marketing campaign around the small but less meaningful actions.

Second, some believe the ESG does not take a holistic view of companies and is thus outdated. For example, a fossil fuel company can be rated higher than an electric car company, because companies are compared to one another within their industries, and ESG ratings often focus on emissions produced by the individual company rather than its end users. 

Third, there are differing views on social impact. For example, an investor might choose to invest in a wind or solar energy company. While this is good for the environment and will create jobs for those working in wind and solar energy companies, if you work in a coal mine, it might cause you to lose your job or send your community into economic ruin.

How Can 4IR Technology Solve the ESG Challenge?

One of the reasons we are facing these ESG challenges is that companies are still tracking and reporting their data as if we lived in the 1900s. Currently, most companies have a team of staff or hire consultants to track their data and then publish it in a long annual report. Others engage a third party to certify their data. The challenge is, very few people bother to read these reports, and many people unfamiliar with social impact have never heard of the certification companies or processes.  

On the other hand, 4IR technology can dramatically modernize how companies track and share this information. 4IR technology – technology that is part of the Fourth Industrial Revolution, includes digital and connected companies, products, and services that use computers, software, artificial intelligence, sensors, robotics, advanced manufacturing, digital twins, biological manufacturing, and more. Given that these companies are constantly collecting data and are connected to the Internet, they offer companies the ability to share unlimited amounts of their social impact data in real-time with the world. 

For example, what is preventing connected electric car companies from using their metadata to share the following on social media: 

• “We have X hundred thousand vehicles on the road right now.“
• “Our vehicles are keeping X tons of carbon out of the atmosphere.“
• “Our vehicles have lowered pollution levels by X percent…“
• “Our assistive driving technology has prevented X accidents today.“

They could go even further:

• “Our vehicles have helped X million people get to a doctor’s office or hospital.”
• “Our vehicles have helped X million people get to work.”
• “Our vehicles have helped X million children get to school.”

They could even allow their customers to share their own data.

Or consider a hospital. A hospital could be sharing:

• “We have served X patients today.”
• “We have performed X life-saving operations.”
• “We have repaired X broken bones.”
• “We have performed X heart bypass surgeries.”
• “We have removed X tumors.”

Or a school could share:

• “We served X students today.”
• “X percent of our students turned in their homework today.”
• “X percent of our students achieved an A on their geometry test.”

As companies and organizations digitize, they will increasingly have access to this data in real-time. We are already seeing some early examples of this type of thinking. For example, California ISO, which manages California’s energy grid, reports in real-time how much renewable energy is being used at any given moment. Groups like World Data Lab track poverty and other UN Sustainable Development Goals in near real-time around the world. Alternatively, citizen scientists can address greenwashing by also tracking negative actions of companies. For example, by placing air or water sensors in environmentally sensitive areas or accessing satellite data and hooking it up to the Internet.

By making impact data consistently available and accessible to anyone, anytime, anywhere, companies can better communicate to investors, employees, and customers their actual accomplishments. In fact, many companies are doing a lot of good but are simply not tracking their data and sharing it, curtailing their ability to attract the best talent and to sell to purpose-driven customers.   

Finally, while there will always be different definitions of social impact, if companies share their raw data, people will be able to make up their own minds about what most matters to them. For example, perhaps a coal miner might lose their job due to a more competitive wind energy company arriving on the scene, but if the wind energy company is sharing in real time the new jobs they have created or how they helped reduce children’s asthma, perhaps employees might change their minds about what is best for them. If we bury the info deep in reports, no one really has the chance to learn and decide. 

Ultimately, companies have the technologies available to them today to better connect with their investors, employees, and customers. For companies that choose to do so, it is a huge advantage to embrace new technologies that allow them to share and communicate this data.