Why ESG and IT Finance go hand in hand

Companies looking to boost their ESG credentials should harness the power of their IT Finance function. Let’s find out more.

Environmental, social and governance – or ESG – is big business. Investors, employees, customers, regulators and just about every other stakeholder you can name have an interest in a company’s sustainability, inclusivity and corporate processes.

Focusing on the E in ESG, companies are desperate to display their eco-friendly credentials. It’s good for business as well as the planet. But, when you consider which teams can play the biggest part in reducing an organization’s carbon emissions, IT Finance might not be your first choice. In this article, we’ll examine why IT Finance should play a much larger part in helping companies lower their CO2 output. We’ll also introduce the concept of carbon accounting and how it can help businesses hit their sustainability goals. Let’s get started.

The impact of IT decisions on sustainability

In many companies, the Finance function will take charge of sustainability, as it’s essentially a numbers game. There’s pressure from investors and stakeholders to report on environmental results – including carbon footprint – so Finance tends to take charge or if your business is more forward-thinking, you might even have a dedicated Sustainability champion to drive this.

However, much of what they report will relate to the IT function. For example, a company’s datacenter will often be the biggest direct contributor to its carbon footprint (aside from manufacturing and logistics). A company's decisions - such as moving business apps to the cloud or keeping an on-premise site - could dramatically affect its CO2 output.

The problem that decision-makers typically find is that they don’t have enough information on how much CO2 a company generates and where in the business it happens. They’ll have a high-level overview of the carbon footprint, perhaps split by function if they’re fortunate. But without more transparency and more detailed information, it’s too hard to work out where or how to reduce emissions.

But things are changing.

Introducing carbon accounting

The concept of carbon accounting has been around for a while but has come to prominence in the last 2-3 years as more organizations have sustainability goals and need to formulate strategies to hit them. Carbon accounting is the process of putting an exact number on the amount of CO2 a company produces as part of its business activities, directly or indirectly. When you have that number, you better understand your environmental impact and set goals to reduce it. Carbon accounting can play a significant role in satisfying the E part of ESG.

However, for carbon accounting processes to give you that accurate picture, you need detailed information on your CO2 output. A high-level overview just won’t cut it.

How IT Finance delivers sustainability goals

For carbon accounting to work, you need a picture of your CO2 output in the same way you have a picture of your costs. When you have a detailed account of your emissions, you can assess the impact of your decisions on your sustainability as well as your costs. You have a holistic view of your choices from financial, risk, value and ESG perspectives.

However, to achieve this, companies need to get their IT Finance team involved earlier in the decision-making process. If you’re choosing whether to go with Project A and Project B for your datacenter, carbon footprint will be part of that decision, alongside cost, risk and impact. You need the correct information to guide you to the right decision. If you fail to consider your carbon footprint, you could end up going with a more cost-effective choice, but one that generates much more CO2 and damages you from an ESG standpoint. You can only get that level of detail from your IT Finance team, so include them in the conversations as early as possible. You cannot simply bring them in at the end.

Ready to get started?

ESG has never been more critical to a business. It’s essential to satisfy investors and regulators. It helps you attract better employees. Also, customers place a high value on ESG credentials, with a 2021 PwC survey finding that 80% of consumers are more likely to buy from companies that stand up for environmental issues. If you’re in an industry with emission certificate trading, ESG could benefit you financially.

However, without full transparency into your CO2 emissions, you’ll never harness ESG’s true potential. Invest in the right technology to give your IT finance team the holistic view they need. You’ll soon reap the rewards.

Can carbon accounting help save the world?

Download our eBook to learn all about what carbon accounting is, why you need it in your business and how to do it right.

The Serviceware solution

At Serviceware, we deliver a detailed view of your company’s carbon footprint using the same model that delivers end-to-end transparency into your costs. We show you the whole story, starting at the source layer, where carbon emissions are produced and transported along the entire value chain. You can then see exactly where in the business your carbon footprint lives – and make decisions to reduce it.

The Serviceware platform enables you to perform ‘What if?’ simulations so you can see the impact of your decisions on your carbon footprint. For example, if you move from a datacenter to the cloud, or change from a multinational software vendor to a local provider, you can see in real-time how it would affect you from an ESG standpoint.

Finally, Serviceware gives you a holistic view of your business, combining CO2 and carbon decisions with financial impact, risk and value of outcome.

This unique solution is designed for the challenges of today and the future. If you genuinely want to reduce your organization’s impact on the environment rather than just report numbers, Serviceware is the right solution for you. Learn more today.

Sam Wilson

Written by Sam Wilson

Sam Wilson is Head of International at Serviceware SE, a leading enterprise management software company. Serviceware provide solutions to digitalize and automate service processes, enabling companies to improve service quality and efficiently manage service costs. Sam has 10+ years of international experience in enterprise IT and IT financial management and has helped many global organizations realize value through their IT investments over the years.

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