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The importance of ESG for Tech

  • Tim Zanni, Leadership |

Phenomenon like COVID-19 and climate change events remind us that we are not masters of our planet, but rather its stewards. Today marks the 50th anniversary of the first Earth Day. On that day fifty years ago, 20 million Americans (10 percent of the US population at the time) protested environmental ignorance in the streets and across college campuses and demanded action. Earth Day, every April 22nd, is now the planet’s largest civic event.

Corporations, though, have the resources to accomplish many more things above and beyond individuals, and consequently bear the responsibility to do so. Business leaders, for their part, are starting to respond. In August 2019, a new Statement on the Purpose of a Corporation was signed by 181 CEOs. The new Statement outlines a modern standard for corporate responsibility; one that benefits all stakeholders and not just shareholders.

This new interpretation of corporate responsibility is also at the forefront of public consciousness. Investors, customers, employees, and regulators are increasingly analyzing environmental, social, and governance (ESG) performance to assess corporate citizenship and estimate future risk exposure. And during the post-COVID-19 recovery and new reality, ESG performance will likely take on even greater significance.

However, there is an absence of uniform corporate metrics across the ESG categories. This makes for a difficult comparison between companies and sectors. To address this, the World Economic Forum, in collaboration with KPMG and the other Big Four accounting firms, has prepared a proposal for common ESG metrics and disclosures that has been endorsed by many of the world’s largest companies.

Now consider technology companies, which wield tremendous resources and hold unprecedented influence in our daily lives. As such, they are in prime position to be leaders on ESG issues this Earth Day and during this challenging time. Indeed, many technology companies have heeded the call to directly combat the COVID-19 virus or mitigate its social and business impacts.

Yet, across the tech industry there is still much room for improvement in integrating ESG into business practices. In KPMG’s upcoming report The ESG imperative for technology companies, over 800 global technology company executives revealed the following:

  • Only 26 percent have significantly incorporated ESG into their strategic planning
  • Just 34 percent say that climate change is having a high impact on their investment/funding decisions
  • 86 percent believe the technology industry requires more regulation and standards in the area of sustainability

The worldwide impact of COVID-19 is a galvanizing event, one we feel will carry over to industry adoption of ESG. We are a truly global community and must work together to solve tomorrow’s challenges. Technology companies have the opportunity to set the standard and harness their resources and influence into a set of perpetually improving ESG practices. These improved environmental, social, and governance practices would ultimately benefit everyone, everywhere.

To support this effort, KPMG's Sustainability Services professionals can help companies navigate the complex and evolving policy, regulatory, and business landscapes to better understand the risks and opportunities related to climate change and sustainability.

View the full ESG report.