Counting things: using IoT to enhance ESG performance

In recent years, the importance of environmental, social and governance (ESG) ratings and companies’ sustainability initiatives has climbed the corporate agenda. It can be a competitive differentiator. Achieving a good ESG rating can be assisted by the latest Internet of Things (IoT) tools and solutions.

Boston Consulting Group has identified Nordic companies as the most responsible in the world in terms of their overall social impact. It’s something I’ve always liked and admired about the region since I have worked here: business leaders are passionate and environmentally conscious, and industry stakeholders, whether company shareholders, employees or customers, often tend to evaluate companies on their social awareness and environmental impact.

Some Nordic companies have set very ambitious plans for zero carbon and zero waste within shorter timeframes than others, something that’s difficult to do in sectors like oil & gas, forestry and manufacturing.

How does IoT help with ESG performance?

IoT connectivity has made it possible to monitor all kinds of things we couldn’t before. Today, IoT gives us the ability to, for example, monitor distant fish farms remotely, using sensor networks to measure values like pH and temperature of the water. It means fish farm management can be automated and make aquaculture operations more efficient and sustainable.

You can use IoT solutions in the supply chain to deliver real-time carbon footprint monitoring and in-transit visibility. This kind of data can give exporters, importers, distributors and manufacturers a greater understanding of the impact of their supply-chain activities at any given moment. IoT tools give a level of granularity that lets companies monitor the carbon footprint of their logistics supply chain in ways previously not possible and contribute to ESG measurement in whole new ways.

Smart buildings continue to evolve, moving from now-standard automated solutions like smart HVAC and lighting towards demand-based agile living and working environments for residents and businesses. Using sensors, smart building IoT systems can build up detailed maps of energy and space utilization in properties, and analytics tools can provide insights based on this data. This makes buildings smarter, more dynamic environments that can respond to demand, rather than merely giving real-time status information updates. This again contributes positively towards ESG scores.

In retail, IoT solutions underpinned by artificial intelligence (AI) are helping retailers power next-generation sustainability programs that have the potential to transform the entire value chain. From reducing energy use and a smaller carbon footprint to optimizing supply chains, responsible sourcing and waste reduction, retail is a sector that is driving ESG performance results from IoT tools.

According to World Economic Forum (WEF) analysis, 84% of IoT deployments are currently addressing, or have the potential to address, UN Sustainable Development Goals (SDGs), which can help companies in their push for better ESG performance. IoT can be the enabler for more sustainable business and a better ESG rating in all kinds of industries: if it can be monitored, it can be measured; and if it can be measured, it can be improved.

Commitment to sustainability in the Nordic region

Research by Nordea in the Nordic region found that 68% of Finnish corporations report that they have integrated sustainability into their business models. Norway reports 33% and Denmark 39% respectively. It shows the region’s commitment to achieving good ESG ratings and the overall benefits for everyone, not just corporations.

Furthermore, Boston Consulting Group found that 65% of Nordic companies rank in the top 20% of companies for ESG performance. This was markedly higher than the next-highest region, Europe, which scored only 41%. North America has just 9% of companies rated in the top band for ESG performance. It’s something the Nordic region should be proud of, a commitment to improving society as a whole and a communal approach to achieving that from both citizens and companies. We have built sustainability concerns into our company cultures and core business practices.

Sustainability is for today and tomorrow

Customers are helping steer companies towards sustainable initiatives and commitments. Millennials, for example, are effectively forcing sustainability onto companies: 70% of millennial consumers now say they will stay with a company if that company has a sustainability plan. Digital solutions like IoT can help enterprises create products and services that are more tailored to the demands of individual customers, giving that customer the chance to choose sustainability over the brand.

Orange has demonstrated its commitment to the future, building digital equality and environmental responsibility into our Engage 2025 strategic plan. We also have a dedication to tackling climate change: we recently signed up to a GSMA-led initiative that aims to develop a mobile industry climate action roadmap in line with the Paris Climate Change Agreement. Our goal is to achieve carbon neutrality by 2040.

According to a recent report, UBS forecasts that we will see an “increased focus on ESG considerations after COVID-19, with particular demand for greater corporate transparency and stakeholder accountability.” Ethical, social and governance issues are no longer just a checkbox requirement for annual reports; they are business fundamentals. IoT monitoring can help companies understand their true impact on the environment to deliver a lasting impact on brand reputation and a positive impact on companies’ bottom lines.

Learn more about our Engage 2025 strategic plan and how we are helping businesses increase efficiency and innovation now and in the future.

Simon Ranyard
Simon Ranyard

Simon Ranyard is Managing Director for the Nordic Region at Orange Business Services and is based in Stockholm, Sweden. With 20 years' experience in ICT in sales functions, Simon is driving a revenue growth plan by focusing on the innovative services that Orange can bring to its customers and on continuously improving the way we work with them.

In his spare time, Simon is a keen cricket fan and enjoys supporting youth development in the game.