ESG Credentials: Helping Businesses Blast Off for the Greater Good on Earth

Joe Baguley, CTO, EMEA, VMware, discusses the rise of environmental, social and governance metrics - and the urgent need to act and save the planet.

Space travel has moved from the realm of Hollywood to holiday, seemingly overnight. Yet it wasn’t the rockets and blasters that propelled Branson, Musk and the Blue Prism team into orbit, but business.

Like some of the brightest stars in the galaxy, they run organisations that shine brighter than others around them and this poses an intriguing idea regarding whether these businesses (and the individuals behind them) are predicated on tomorrow by pushing the boundaries of human endeavour today?

Every Business Needs to Act

As detractors to the 21st century space race have pointed out, it’s all very well looking down on Earth from thousands of miles above. Unless we make major changes to how we live now, there won’t be a planet to look down on. If we were in a spaceship, the red light would be flashing and a siren going off. Action is urgently required.

This has given rise to environmental, social and governance (ESG) metrics – a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Which is itself both the solution and the problem. Specifically because, when looking at investments or company expenditure, ESG has to be financially sustainable and profitable. No profit, no investment, no sustainability. It’s a self-perpetuating cycle where one element cannot exist without the other. But consumers have also changed.  Our attention has shifted to the companies behind our great products and services. There’s a growing movement towards working for and doing business with socially and environmentally conscious organisations that embrace ESG.

The situation is far bigger than a select group of companies. We’re faced with fundamental and systemic challenges to solve. And businesses must work with employees, customers, partners and stakeholders at every level to contribute to a greater good.

An Era of Sustainability-First

It’s something we’re seeing at every level. According to a study by London Business School and PwC, almost half of FTSE 100 companies have linked executive pay to ESG targets. In fact, all our executives have ESG goals and we have established an ESG office to report annually on our ESG activities. But, there are amazing projects happening worldwide on a smaller scale – Ecosia is a great example. Millions of companies are doing their bit and, when combined, are probably making a greater difference than Tesla.

We’re entering an era of ‘sustainability-first’ and technology is often the critical enabler of the solution. For WasteShark (a drone to clean the ocean) the link is clear and obvious. Less so when it comes to say a mobile phone, where sustainability is abstract and requires following a set of principles in how that product is developed. This is where ESG plays a major role but the challenge comes when the more profitable thing is the least sustainable.

Consumers are voting with their wallets and spending with brands they know are taking ESG seriously. Governments too are shaping behaviours with aspirational goals and targets for carbon reduction. The UK is leading here – becoming the first major economy to pass law to be carbon neutral by 2050, whilst New Zealand is legislating to make the banking sector’s environmental impact transparent. Even the oil companies and other pollutant posterboys are cleaning up their act. They have to, otherwise in 15 or 20 years’ time they will not exist – shunned by consumers, over-taxed by governments and replaced with clean technology.

The future success of business is entwined with each organisation doing its part to create a more sustainable, equitable and inclusive world. As an example, VMware has created 30 measurable goals to achieve by 2030, focused on sustainability, equity and trust. Since 2003, our software portfolio has helped customers avoid more than 1.5 billion metric tons of carbon emissions (by using less hardware more intelligently), and we’re collaborating with the US National Science Foundation (NSF) on the The Next Generation of Sustainable Digital Infrastructure. But continued success here relies on partner and customer involvement because no company – or individual – can do this alone.

A Guiding North Star

Though the sky may be hazy, technology is our guiding North Star. Of course, there has to be leadership and the ‘will’. Aside from solving problems at speed, it permeates through business operations – attracting (and keeping) the best talent, reducing travel and waste, intelligent and autonomous facilities management and more. Each may sound like a drop in an every rising ocean but combined, these incremental gains make a huge difference. Octopus Energy is a good example here – a company that not only broke into the cartel of the ‘big six’ firms, but did so on the basis of two historically unsolvable industry challenges – offering renewable energy and improving customer service.

But, for all it’s undoubted benefits, technology can’t make trees grow quicker or rebuild icebergs. We have to reach a stage where ESG makes companies more profitable to remove the juxtaposition of capitalism or sustainability. Only then will we reach a tipping point. I believe that what we have already started will manifest itself years from now and best-in-class ESG credentials will enable us all – and our planet – to go to infinity, and beyond.

By Joe Baguley, CTO, EMEA, VMware.

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