Wanted: digital superheroes

Maurice op het Veld, Partner, KPMG Lighthouse Data & Analytics, KPMG in the Netherlands

Environment, social and governance (ESG) is, in many ways, the ‘new digital’ – a wave of change transforming the way companies operate on every level.  All senior executives play a role in this transformation. Chief Executive Officers set the tone from the top. Chief Financial Officers ensure compliance with regulation and guide their companies through the greening of the global financial system. Chief Sustainability Officers design and implement strategies to improve ESG performance.

Yet, strangely, the Chief Information Officer (CIO) often gets no more than a low-key supporting role in the team. This is a mistake. Information technology must be at the very center of sustainable business transformation – and here is why.

Firstly, data is required for ESG reporting which is now mandatory for many companies in the EU under the Corporate Sustainability Reporting Directive (CSRD). Companies simply cannot fulfil their regulated reporting obligations without a reliable flow of robust ESG performance data. The CIO is critical in fulfilling that obligation and ensuring compliance.

But, ESG data is much more than simply a reporting input. In fact, it is the very foundation on which sustainable business transformation must be built. As the time-honored saying goes, you cannot manage what you do not measure. ESG data provides the essential information required to steer sustainable change. From carbon emissions and water use to workers’ pay and diversity – companies need to understand their ESG impacts across the entire value chain in order to improve them. 

The CIO therefore is a key player in helping the company make better strategic decisions. It is simply not possible to hit ESG performance targets, devise a new energy or logistics strategy, improve the circularity of products or reduce ESG risks in the supply chain without smart digital data solutions in place. Such solutions cannot be delivered effectively in companies where the CIO is pushed into a supporting sustainability role.

Moreover, ESG data and analytics are needed to generate the insights that fuel sustainable innovation. Companies must have data in order to work out not only how to do things better, but also how to do better things. Simply put, without data there can be no progress.

So it is time for the CIO to step out of the shadows and into the sustainability spotlight. Even more so because the challenge is complex and there are no easy fixes. While some vendors may claim to have the one-size-fits-all solution to everything ESG, the reality is that the ESG data journey likely requires multiple technology solutions and an integration strategy. The CIO needs to be there as the captain of the IT ship steering the organization on the right course to satisfy both current and future ESG data needs.

Even though we have several decades of digital progress behind us, we are still only at the beginning of a journey of discovery about what digital technology can bring for ESG innovation. What is clear, however, is that today’s companies need world-class ESG IT systems built on well-thought-out frameworks integrated in the company’s systems and business processes and not just on data compiled from piecemeal solutions or spreadsheet workarounds. It falls to the CIO to ensure the right data is available to the right people at the right time.

So, if your CIO is still standing on the sidelines of your sustainable transformation, think again. Bring them to the front and center where they belong.

Improve your understanding of your company’s ESG strengths and weaknesses by taking KPMG’s ESG Health Check.