‘The Next Big Leap’ Towards ESG Maturity in Tech Sector
Over the past decade, ESG—Environmental, Social and Governance—factors have become an increasingly important paradigm across the corporate world. In January 2021, at the World Economic Forum in Davos, more than 60 corporations together accounting for a market capitalization of over USD 4 Trillion, pledged to adhere to a new set of ESG reporting norms. During the COP26 United Nations Climate Change Conference in November 2021, discussions on achieving net-zero global emissions by 2050 are expected to fructify, with commitments expected not only from governments but from the private sector as well.
The Tech industry is well-positioned to play a significant role in shaping the path forward on ESG; not only for itself but also for its clients by actively supporting their journey towards ESG goals. Our comprehensive media study of 4,000+ media articles on ESG from this sector over the last four years shows that the volume of ESG-related articles has nearly doubled. ESG has become a top priority today with scrutiny by clients, investors, and employees. Large clients for Tech, such as FedEx, Microsoft and Unilever, now require explicit commitments from their partners on ESG disclosures while ESG commitments have become a key differentiator in large deal bids in many Tech RFPs in the last year. Investors, similarly, are a big driver of ESG discussions and actions. Investment companies pledging to incorporate ESG considerations have grown 48x over the past 14 years, with a 14x growth in AUM pledged to USD 103 Trillion in 2020. ESG principles have also become a huge competitive advantage in retaining and attracting talent. According to our analysis, 67% of millennials expect employers across industries to have purpose and their jobs to have societal impact.
A comprehensive and mature ESG strategy can unlock significant value. The focus of this joint report with NASSCOM sensitizes the technology sector on the material ESG topics for the industry. The report lays out nine material topics across environmental, social, and governance that technology companies can use to formulate their respective ESG strategies. The report also lays out a five-point maturity framework that will enable CXOs to analyze their current position and provide actionable steps to dynamically evolve in this fast-evolving topic.