A stark line divides C-suites and consumers when it comes to sustainability, according to IBM, and it’s only getting wider.
The company’s Institute for Business Value (IBV) released “The ESG Conundrum,” a study analyzing 2,500 enterprise executives and over 20,000 consumers, revealing a gaping disparity between the two demographics when it came to views around ESG goals and results. The main culprit for the dichotomy: distrust.
According to the study, consumer trust in corporate sustainability has dropped by over half — from 48% in 2021 to 20% in 2023. IBM deems the decline in part caused by a lack of overall progress, with the survey finding that despite 95% of organizations having developed ESG propositions, only 10% are making “significant progress toward their goals.”
From the C-suite perspective, insufficient data presents the largest roadblock — even above regulations and standards. And executives say it mars their capability to assess which plans can improve both ESG outcomes and ROI.
IBM GM of Telco, Media, Entertainment, and Distribution Stephen Rose explained to Silverlinings that gaining consumer trust will chiefly demand a focus on system-enabled, data-driven transparency.
“Firms have been talking about those things in nebulous or overly vague ways, and so it's very difficult as a consumer — whether you be a B2B consumer or a B2C consumer — to actually touch through and make a direct connection between the G, the transparency, and the [company’s] intent,” Rose reasoned.
"We put a lot of emphasis on the E and the S because I think it makes us feel good, and we instinctively and inherently know that's the right thing to be doing. But we need to take the practical steps around the G to get that trust underpinned," said Rose.
"I think some leaders have tried to treat this as a separate exercise” he added. “That's the wrong method. It needs to be: How are [diversity, equity and inclusion] and ESG inherent to everything that we do?”
Put the G back in ESG with transparency
Setting up trust through transparency means technological investments across key areas of data, cloud, network, AI, and automation, according to Rose. “Original systems weren't set up for ESG reporting. That transparency wasn't available. You didn't have the right data, you didn't have the right information architecture, you didn't have the right management and monitoring systems that sufficiently cared about those things,” he explained.
And If they did, it was centered around how much energy they were burning as an opex concern rather than a CO2 concern. Now, businesses need to build management systems and data architectures that begin to deliver the information executives claim to be lacking. “And not just in your own systems, but all the way through your ecosystem as well,” Rose added.
This means moving from the stagnancy of infrastructure built on vertical stacks, Rose noted. “We are now moving to horizontal stacks. If you design your architecture in a smart way, you actually get the DEI and ESG benefits off the back of that,” and the evolving network to support that relies on the four mechanisms of data, network, AI, and automation, he said. “There has to be constant orchestration and optimization between these four dimensions.”
Rose explained that “when you move to a horizontal stack, you completely change the way in which you're able to dynamically operate all of the resources on the network. That is monumental for the way ESG concerns can be directly addressed.”
With a distributed multi-cloud approach, on-prem, public, and edge-located clouds will allow for “great opportunities to actually move and interrogate the opportunity to run workloads where they're not only just the most efficient but they're also the most ESG-serving.” And furthermore, “infused AI at the edge or at various different levels of the architecture means that you can do hyper-local processing in ways that we weren't before,” reducing the number of cycles and therefore ESG concerns.
The company is hosting its IBM Think 2023 event this week, and Rose said ESG will be an “absolutely central” focus. With key investments in products and acquisitions of firms to address the transparency element, the company will focus on helping “enterprise customers and CSPs to better understand what is the baseline and how can they actually then measure the incremental gains on the ESG activities that they implement," he noted.
Rose said ESG is inherent in their automation multi-cloud products “because you are performing the work and adjusting time bases exactly where it needs to be done."
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