How Digitization Helps Businesses Meet ESG Criteria

How Digitization Helps Businesses Meet ESG Criteria


Digitization Helps Businesses Meet ESG Criteria

The current economic, public health, and social justice turmoil facing the entire world has intensified the need for prioritizing environmental, social, and governance (ESG) matters. Recent statistics reveal ESG funds set aside for U.S. investors increased to $20.6 billion in 2019, nearly four times that of 2018. In Europe, ESG funds attracted inflows of $132 billion in 2019. ESG initiatives are no longer about adding an excellent name to a business. It focuses on strategies that can help companies bring actual change and make a difference on the ground. The goal of ESG is to ensure companies and businesses treat environmental and social issues as critical elements of strategic planning and positioning. This article looks into how digitization helps businesses meet ESG criteria.

What Is the Criteria for ESG?

ESG criteria refers to a set of standards in a company to guide socially conscious investors in screening potential investments. The environmental criteria provides insights into how a company performs as a caretaker of nature. Social criteria considers how a company manages its relationship with staff, customers, suppliers, and communities. The governance criteria focuses on a company's leadership, internal controls, shareholder rights, and other management tenets.   There are three categories of ESG criteria typically integrated into investment decision-making. These include:  
  • E: "E" covers energy efficiencies, waste management, water usage, carbon footprints, greenhouse gas emissions, and other related elements.
  • S: The "S" focuses on labor standards, wages and benefits, racial justice, pay equity, workplace and board diversity, and related elements.
  • G: "G" captures the governing of the E and S categories. It focuses on key governance issues, including corporate board composition and structure, executive compensation, bribery and corruption, oversight, and compliance.

How Does Digitization Help Businesses Meet ESG Criteria?

In recent years, digital transformation has become a basic need for companies regardless of niche. Investing in technological solutions improves processes and performance while capturing the attention of an increasingly demanding public with regard to sustainability. Digitization tools like those provided by Aegex technology can help companies move beyond compliance to tell their ESG story with data-driven insights. The following are some benefits of digitization for ESG.

Improved Production Chain and Decision-Making

With the right technological solutions for automation and data analysis, businesses can enhance the entire production chain, gain improved agility in the execution of processes, and maintain quality to meet ESG criteria. Digitization also enhances data availability, which helps organizations maximize decision-making and strategy formulation to focus on sustainability.

Customization Processes

Apart from helping with timely decision-making, digital tools also allow companies to customize processes to provide the public with innovative products without having to compromise sustainability practices. In a nutshell, digitizing processes enables businesses to increase their production without disrespecting or compromising ESG standards. Ideally, with digitization, companies can develop new customized services or products without generating added costs that can burden the environment or the consumer.

Improved Accountability

In the current phase of ESG adoption in business processes, companies need comprehensive data to help them modify business practices and build accountability. With digitization, companies can clearly define key metrics in ESG reporting, including targeting, managing, measuring, and reporting sustainability performance. This helps businesses improve accountability and transparency in reporting ESG performance.

Achieve ESG Goals With Aegex Digitization Tools

In the process of digital transformation, technology has become a critical ally for companies looking to adapt to the norms and demands of the public regarding sustainability. The digitization tools provided by Aegex connect directly with the essential objectives of ESG. This includes taking care of the environment, expanding social responsibility, and adopting better governance practices. Contact us today to learn more.