More than 60% of firms prioritise ESG in digital transformation while more than 80% plan to increase their investments in sustainability, said BCG recently when releasing a survey of 850 companies worldwide.
Companies that are successful in their digital transformation are nearly twice as likely as other organisations to see ESG goals as a key focus of digital initiatives, Hamid Maher, a managing director & partner, Casablanca, BCG pointed out.
“One reason is that successful transformers shift from digital reengineering to innovation as they move past the nuts-and-bolts challenges of delivering a transformation and focus on how their new capabilities can help tackle broader opportunities in their company’s sustainability agenda,” he said.
How companies and sectors differ in prioritising ESG in digital transformation
- While one in four companies overall makes ESG the primary focus area of its digital transformation, the percentage in individual industries ranges from almost twice that (in medtech, biopharma, and automotive) to about one in ten (for telecommunications, software, fashion, and luxury).
- But even in the lagging industries, digital leaders put a high priority on ESG: 38% for telecommunications and 64% for software, for example.
- There are significant differences by industry as well as by region that the article covers. Regionally, for instance, social initiatives are the most-pursued priority in North America and Europe, where diversity, equity, and inclusion concerns run high, while governance initiatives rank first in Asia.
“Because climate change is so pervasive as an issue, one might intuitively assume that E dominates over S and G,” said said Rich Hutchinson, global leader of BCG’s Social Impact practice. “But company investments cover all three aspects of sustainability fairly equally, and our findings actually show that S and G are becoming higher priorities.”
Overall, 80%, 70%, and 69% of companies have digital initiatives that focus on social goals, governance considerations, and environmental programmes, respectively, he added.
In addition, there are five prerequisites critical to using digital technologies to move ESG initiatives forward, according to BCG. They are as follows :
- Sustainability and growth need to be thought about together.
- You cannot systematically reduce what you can’t measure.
- Dynamic environments mandate digital decision-making support.
- Risk tracking, monitoring, and mitigation is more important than ever.
- Access to platforms and ecosystems is key.