From my conversations with clients, ESG is a subject very much on TMT leaders’ minds right now. It’s going to be a dominant issue for businesses across sectors this year, especially as the climate emergency demands concerted action from all parties to move to a net zero world.
It was no surprise, therefore, that our most recent ‘Future of’ event on this topic attracted a lot of interest and high attendance. That’s always good to see!
I was delighted to be joined by Sue Daley, Director in Technology & Innovation at trade body techUK, Russ Shaw, CBE, founder of Tech London Advocates, and John McCalla-Leacy, KPMG Partner and Head of ESG, for a wide-ranging discussion.
Leading by example
We began by considering perhaps the key question of the day – how can TMT leverage its resources to innovate and be a role model in the climate change agenda? One of the consensus points was that in many respects it boils down to leading by example. It’s about embedding ESG considerations in everything you do, both internally and, crucially, externally as well – across your supply chain (where in fact the great majority of your carbon footprint resides), with your partners and your clients. John McCalla-Leacy spoke of the ‘ripple effect’ that you can set in motion through your actions and the need to be very ‘intentional’ in thinking about the environmental and carbon impacts of every product, service, platform and solution your business provides.
There are some big questions out there for TMT businesses, especially around energy usage. Moving to renewable energy sources – for example to power data centres which consume such huge amounts of energy – is critical. It has been good to see the very visible commitments in this respect from most of Big Tech and the cloud computing giants. Some areas such as the mining of cryptocurrencies remain problematic. But John pointed out that it’s possible to move from the issues to responses, with encouraging developments in the form of experimenting with hydro power to generate the energy needed and initiatives such as the Crypto Climate Accord which is supported by KPMG and is seeking to find energy solutions for the crypto and blockchain industry.
One of the key points – which came through multiple times in our discussion – is the need for collaboration. No one entity and no one technology is the ‘silver bullet’. As John put it, “We need to convene and share as never before to find joint solutions.”
Data is crucial
Then there is another fundamental consideration: data. You can’t manage your carbon footprint down if you don’t have accurate and timely data on which to base decisions. This is something that TMT organisations should be in a strong position over - after all, data is the lifeblood of most tech-based companies. But, as Russ Shaw observed, it can still be a challenge working out where to start, especially for tech start-ups who are juggling so many balls simultaneously.
“We need to rethink how we measure and use data,” Russ said. “Sometimes it can be a case of starting simply: is the business more sustainable today than it was a year ago? Are we moving the needle in the right direction? Use the data to tell you that. It’s also essential that organisational culture is rooted in sustainability. It’s got to be embedded in the mindset.”
If some technologies consume a lot of energy, it’s also true that many technologies have exciting potential to help businesses and communities become more energy-efficient and eliminate waste by working more smartly. Many of these may come together in smart cities – an agenda that we need to keep driving forward around the world.
Sue Daley expanded on new tech developments, emphasising once again that the real potential is in the convergence of multiple technologies together, rather than one knock-out solution. Key technologies include cloud computing and digital transformation to replace legacy systems and devices; intelligent automation and RPA for enhanced efficiencies; edge computing and IoT for real-time data on how and where energy is being used; blockchain in areas such as carbon markets to increase trust (with China being in the vanguard of this); and ‘digital twins’ to de-risk the deployment of new green infrastructure. Slightly further out, there is quantum computing too – for example to model carbon capture calculations, as well as to potentially provide us with answers to questions we don’t even have yet!
Like Russ, Sue also stressed the importance of data. This is key because it’s the starting point for AI. As Sue observed, “AI in itself is not magic. It’s based on the data it’s given. So the first step has to be getting the right data, the right data quality, ingested into the decision making algorithms.”
Inclusivity and ethics
This notion of inputs leads us on to other key issues, namely inclusivity (part of the S in ESG) and also ethics (part of the G). For technology to really work for good, it has to have inclusivity designed in right at the outset. John cited the example of a report from the US Department of Homeland Security in addition to other reports which observed that even the best algorithms struggle to recognise black or female faces. That’s just one instance of many where technology does not seem to fully embrace the diversity of us all. As John said, “Given the scale of the challenges before us such as climate change, we’ll need all of the best minds and the best talent to find solutions. We simply can’t afford for technology to shut certain demographics or characteristics out, intentionally or not.”
Then there is ethics. As Sue reflected, many people have real concerns about technology making decisions about us or on our behalf. Building trust is simply essential. Here in the UK, the government recently published its ten year National AI Strategy vision and a white paper is expected in the coming months on regulation and the ‘rules of the road’. As with inclusivity, it’s about baking in ‘ethics by design’, Sue said. “We have a strong digital ethics community in the UK. I hope discussions and developments this year will help to continue developing public confidence about the use and deployment of AI. We need to keep human values at the core.”