Page 11 - EngineerIT July 2022

INTERNET OF THINGS

IoT providing business leaders

with much-needed assurance

in ESG initiatives

Solutions powered by the Internet of Things can fundamentally drive environmental,
social and governance criteria

nvironmental, social and governance (ESG) metrics can be effectively used to measure
and define the impact an organisation has, the trust it engenders, and the value it
Etakes beyond the shareholder and into the ecosystem. It has evolved to become far
more than a simple box-ticking exercise. Today it is a yardstick against which a company’s
commitment to sustained outcomes is measured, and how investors respond to a company
and its potential. According to Statista, ESG integration has become the most common
approach to investing and, according to Bloomberg, saw $120 billion in funding in 2021.
This is why, says Sphamandla Dlamini, chairperson of the IoT Industry Council of South
Africa (IOTIC), companies should leverage technology to achieve ESG goals and gain a stable
foothold in a challenging economic environment.
The reality is that reporting on ESG is complex, demanding and detail-driven. It expects
companies to provide comprehensive data and insights into every aspect of each criterion
across environmental, social and governance, and to prove each point meticulously.
“Using an Internet of Things (IoT) solution will eliminate the risk of oversight, reduce Sphamandla Dlamini, chairperson of the IoT
the administrative burden associated with data collection and fast-track the delivery of Industry Council of South Africa (IOTIC)
insights to decision makers,” adds Dlamini. “Most executives believe that ESG will impact
their ability to raise funds in the market – and they’re right. Companies can’t just adopt the by undertaking a comprehensive study of
term and hope for the best, they have to dig into the information and deliver quantifiable the organisation’s value chain to develop
insights to attract investment.” a strategy that aligns with non-financial
There are risks involved in how companies measure this so-called triple bottom line – performance areas and ensures there is
the company’s commitment to social and environmental impact alongside profit. These credibility built into ESG-related efforts.
risks are: retrofitting ESG into existing corporate strategy; not investing in the right data and “While there are many schools of
analytics; missing the depth of ESG reporting with poor metrics, and not focusing on thought concerning the approach,
the credibility of ESG measurement criteria. measurability and
“One clear way to minimise the risk of retrofitting ESG to the Most executives credibility of ESG-
existing strategy, a route that will almost certainly limit results, is to believe that ESG will impact their related efforts, there
make sustainability intrinsic to the strategy development process,” ability to raise funds in the market are still high levels
says Dlamini. “This approach makes the data and information – and they’re right! of uncertainty in
harvested by the technology both relevant and rich.” international and local
However, it is important to manage how the business approaches both communities,” concludes
ESG and IoT. There is a risk that overusing these terms in sales will diminish their value Dlamini. “It will be a while before there
and the tangibility of the meaningful outcomes that they can deliver. Instead, companies are any generally accepted standards
should move away from acronym-heavy metrics and focus on the How – how technologies but the truth is, technology is critical to
transform business management while embedding social equity in the process. not only removing the admin burden
“It is time to start talking about smart operations that help decision makers make but in ensuring that data collection is
sound decisions about day-to-day functions and approaches,” says Dlamini. “In a digital transparent, ethical, aligned and relevant.”
world, operational transparency should be the first step that an organisation takes towards Technology, particularly IoT-driven
running a sustainable business. The second is to decide on the targets and transformation technology, can play a significant role
roadmap it is to pursue under its ESG mandate.” in helping organisations make positive
This mandate and roadmap should become the foundation of the business, not done contributions to society. With IoT
in isolation but as part of a holistic approach to business as a whole. It covers the targets, embedded systems and sensor-driven
the value chain, the transformation roadmap, and the unique circumstances of the data, companies can put ESG right in the
business, and should be embedded into every part of the business. This can be achieved heart of the business. n

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