Sustainability continues to grow as a top priority for businesses. According to the Gartner Sustainability Survey, about 19% of CEOs and senior business executives use digital solutions for sustainability technologies in their organisations.
Cloud accounting software solutions are laying the foundation finance functions need to develop greener networks and significantly reduce power consumption (and their overall carbon footprint) through ESG and SDG strategies.
Consequently, organisations are now focussing on sustainable business operations powered by the capabilities of intelligent technologies such as AI, IoT, and the Cloud.
About 92% of C-level executives say they are already increasing their sustainability investments. As continued technological advancements and innovations are reshaping business models, digital infrastructure and services are also driving the engine of sustainability–thus the name digital sustainability.
The Intergovernmental Panel on Climate Change (IPCC) has expressed concerns over the unprecedented levels of carbon dioxides in the atmosphere. Also, to prevent irreversible climate change, they must be reduced by 45% by 2050. As a result, many businesses are progressively embracing long-term solutions like ESG (Environmental, Social and Governance) transformation and SDG (Sustainable Goal Development).
What are ESG and SDG strategies?
An amalgamated business approach, encompassing ESG and SDG, can help direct attention towards the organisation’s environmental footprint and align its corporate strategies with broader societal and environmental goals.
To support ESG considerations and accommodate SDG, technologies can offer a practical framework that can drive accountable and responsible business behaviour. The finance industry is keen to stay on track with its sustainability goals, and digitisation can offer valuable tools for this development.
Here’s a detailed picture that explores digital sustainability and ESG goals from a finance lens and how the industry is gearing up for green-digital finance.
What are financial ESG goals or strategies?
ESG approaches and methodologies in the financial sector can be institutionalised into the ESG financial ecosystem. Before finalising ESG goals, firms can assess the impact of the following areas:
The environmental aspect considers how the business processes should be designed to affect the environment in the least possible way. Some key parameters to consider are carbon footprint, use of clean technology, waste management, e-waste processing, and power use.
The social aspect focuses on the organisation’s willingness to contribute towards social good and how it wants to develop relationships with the employees, stakeholders, customers, and general public. Businesses usually focus on CSR (Corporate Social Responsibilities) activities to generate goodwill and a positive reputation.
Governance covers the organisational structure and management principles that will help develop a sustainable financial model. The underlying ethics and values should be well incorporated into the overall business model to weave in the sustainability mindset.
ESG strategies for CFOs to consider
This strategy is also referred to as ‘Exclusionary Screening’. When dealing with other companies, financial firms may exclude a list of organisations based on selective criteria related to any specific business goal.
This strategy is also known as ‘best-in-class screening’. Here, the business can choose to deal with top-performing companies based on selective performance measures.
To encourage sustainability among its partners or stakeholders, an organisation can also consider investing in its indexes, focusing on specific sustainability criteria. Besides, they can also promote sustainable practices among their customers by creating related products and services using the best technologies and rewarding them for their contributions towards environmental consciousness.
What are sustainable development goals?
The United Nations, Sustainable Development Goals or SDG is the shared blueprint that promotes peace and prosperity and can be considered an urgent call for action to achieve a better and more sustainable future for all.
The UN promotes 17 SDGs. Here are some goals that can be included in digital sustainability goals for finance functions:
- Affordable and clean energy
- Industry, innovation and infrastructure
- Decent work and economic growth
Digital sustainability in finance
There has been a universal shift towards mindful business practices owing to environmental consciousness.
Undoubtedly, digitalisation is a powerful catalyst that can accelerate different trends. It can improve the efficiency of current systems and deliver new solutions contributing to sustainability. The aim is to gear financial initiatives with a sustainable development goal.
A broad range of technological developments can help businesses with cheaper, faster, and more accurate data processing and analysis. It can also improve transparency and help identify the unintended consequences and key implications of different processes.
Some digitally sustainable initiatives that businesses can incorporate include:
- Conducting energy audits
- Using environmental sensors
- Rethinking data collection and storage solutions
- Adopting a green software approach
- Regularly assessing the impact of digital infrastructure
Benefits of digitally sustainable strategies in finance
Significant cost savings
The Cloud offers better data storage and management solutions, design planning, real-time decision-making, performance monitoring, and other essential aspects that can streamline operations and enhance efficiency. In addition, these technologies can offer significant cost savings by integrating different stages of the business chain, improving their quality and flexibility, and eliminating redundant operations and processes.
Better management of resources
Digitalisation fosters ecological innovations that can reduce environmental impacts and optimise resource use and management. For example, better mobility solutions, smart lighting, digitally-enabled customer-centred services, and efficient energy consumption lead to sustainable outcomes, ensuring the available resources have better utilisation.
Improved customer response
A 2021 study shows that more than a third of global consumers are willing to pay more for sustainable products and services. Increasing awareness towards environmental sustainability has resulted in a major shift in consumer attitude. Therefore, investing in sustainable strategies can help businesses amplify their brand image and improve their customer response.
With ever-increasing connectivity, technologies like Artificial Intelligence and Cloud computing are leading to a new convergence between the world of communications and the finance sector. Cloud-native systems are capable of centralising financial, operational and human resources data. This can help fintech businesses enhance their overall reach.
Boosted financial performance
Technologies can change the business landscape fast. Cloud software solutions that sync with the organisational goals and requirements can offer unwavering financial performance, actively incorporating sustainability strategies.
For instance, features like finance automation, advanced data analytics, high-level data integrity, and cross-functional collaboration provide potential improvements in digital sustainability and financial performance.
How can Cloud technology help achieve sustainability?
Technology is a superpower and can efficiently contribute to financial digital sustainability plans. Here’s how Cloud technology can help with sustainability in different ways:
Cloud technology is energy efficient as it can optimally utilise server energy, reducing staggering energy costs and e-wastes. Besides, it helps develop a highly connected centralised data sharing and analysis platform. For example, Green Data Centers can be considered efficient financial Cloud tech solutions.
Another critical aspect of Cloud technology is virtualisation. It can replace high carbon-emitting machines with their virtual equivalents, thus eliminating significant hardware and ensuring dematerialisation and supporting emissions reduction targets.
Develop sustainable value chains
Financial Cloud technology can also help develop sustainable and resilient value chains since it offers better insights and visibility into business operations and processes.
Moreover, it also provides the highest level of connectivity within the entire organisation. As a result, even massive amounts of unstructured data can be organised, shared, and analysed in real-time. Eventually, this capability aids in faster, more effective decision-making while reducing duplication efforts.
Track ESG performance
With Cloud-based apps and tools, it becomes easier to track and monitor ESG performance. These tools can offer KPIs, connect real-time data sources, and can help develop metrics for ESG assessments. As a result, it can help identify assets with environmental violations and climate risk exposures more efficiently.
Besides, Cloud tools can also help automate several business processes, eliminating manual and complex environmental reporting processes. These reports eventually help decision-makers offer detailed insights to other stakeholders and provide better experiences to end customers, thereby improving the organisation's stance in the market.
Achieve a sustainable finance function with Cloud tech
Cloud accounting technologies can help unlock new opportunities in the field of sustainability. While these advanced technology solutions may require a high initial investment, they can help enhance productivity and ensure the organisation’s commitment to sustainability.
CFOs and finance managers can help future-proof their businesses by taking bold steps towards a sustainable business model focussed on long-term value creation.
Advanced Financials is a world-class financial management software with powerful features that can support the digital sustainability goals of your business. Improve your business productivity and save significant time and energy with your desired business functionalities focussed on ESG and SDGs at your fingertips.
Learn more about the powerful features that sit within Advanced Financials, or book a free Cloud financial software demo to experience the rich capabilities of our financial management and accounting software.