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Recent technological advancements for ESG

With ESG gaining momentum with each passing day, companies have become quite thoughtful and proactive in their performance on ESG parameters. The investor demand, present regulations, awareness, and the need for urgent action have pushed companies to understand their responsibility for climate change, social well-being, and good governance. The company management is trying to innovate mechanisms to accommodate ESG within its system to ease the process and facilitate better implementation, And what better way to accommodate than through the help of technology? Technology has the power to negate human-made errors. With technological advancement swaying every area, ESG could not have been out of its radar. In fact, there are many firms and companies now that are exclusively dedicated to ESG integration helping companies with ESG assessment and ESG reporting through their specifically developed software. Let’s have a look at certain mediums through which interesting developments have been made in ESG via the use of technology.


A key issue that the sustainability industry is facing is the absence of a universal standardized framework on ESG. The presence of a plethora of variables, benchmarks, and data points leaves the organizations baffled about what to measure and how to track and they end up misreporting. It is a challenge for companies to attain high standards of ESG measurements and compliance. Blockchain helps to achieve this accuracy making the company's ESG data reliable and trustworthy for investors and regulatory bodies. Blockchain technology enables ESG tracking for a company by automating the collection of multiple data points relevant to its ESG performance and target. For example, if a company wants to track the social parameter of the health & safety of workers across its supply chain, blockchain shall collect the health & safety data from all its vendors & suppliers and integrate the data measuring the relevant metric. The information collected is immutable which can further enhance transparency. This technology can thus be said to be a boon which has blessed the ESG world.

Internet of Things (IoT)

IoT is a technology in the direction of blockchain that helps to improve the data quality, and data accuracy and thereby enhance ESG performance. It is a global platform which helps the sensors and devices to send and receive data over the Internet, making data collection and ESG reporting way easier and with utmost precision.

Green software

For platforms that provide green solutions to their customers, it is necessary that these platforms are also green. Because the technology sector is said to consume 4% of the total worldwide electricity and accounts for 1.4% of total CO2 emissions. Thus, software does emit high amounts of GHGs into the atmosphere. This is where the idea of ‘green software’ and green software engineering was born where climate science, the electricity market and software development is studied in consonance with each other. A high level of energy efficiency per unit of work and a minimal level of environmental impact can be expected from sustainable software. Thus the creation of eco-friendly software by companies and tech platforms is highly encouraged to bring true value to sustainability.

According to a study by the University of Washington, green software has the potential of reducing energy consumption by half which can make a substantial difference.

Natural Language Processing (NLP)

NLP technique is an important technological advancement that can help to rule out the ESG ratings bias and aid in objective decision-making. There exist a lot of third-party platforms that provide ESG ratings and many times these ratings widely differ from platform to platform basis the distinguished factors taken into consideration thus leaving the recipients confused. Strengthening the NLP technique can greatly assist in solving the confusion as it shall give clarity to the stakeholders on a company’s performance on ESG and its ESG policies by streamlining the relevant news, controversy, social media posts and litigation matters about the company. NLP converts million of such pieces of information about the company into a consolidated metric dashboard.

Carbon capture and storage technology (CCS)

A lot of efforts are already being made to decarbonize industries. However, how about a technology that helps to capture and store the emitted carbon? As great as this idea sounds, you would be surprised to know that this technique exists in the form of CCS. This technology captures carbon at the source, compresses it and paves its way to permanent storage. Many industries, especially the plastic and cement industry have started using CCS to their benefit by further using the captured carbon to manufacture their products. For instance, plastic companies use captured carbon to create polyurethane plastic.

Direct air capture technology (DAC)

As the name suggests, DAC technology directly extracts CO2 from the atmosphere by using certain chemical reactions and stores it in deep underground geological formations permanently. Some of the captured carbon can be utilized to produce synthetic fuel which could still be a better alternative to jet fuel. This technology is said to be cost-intensive which is why there exist only 18 such plants worldwide. However, according to research by Stanford University, the cost will see a remarkable drop in the future with improvements in the current technology.

Artificial Intelligence (AI)

Everything is powered by AI today. ESG software providers use AI in data collection, data analysis, and ESG reporting in accordance with the selected ESG framework. AI helps to precisely provide qualitative and quantitative ESG metrics to companies providing them with an insight into their ESG performance carving a way to make improvements where needed.

Sustainable Robo-advice

A lot of technology platforms use ESG focussed Robo advice that in an automated manner advises investors on sustainable investing. These robots make use of machine learning algorithms that help them to provide guidance as sustainability experts.

Technology can thus accelerate net zero transitions in ways beyond the human imagination. It feels impossible to tackle ESG concerns without technology. Thus it is time now to embrace technology with open arms for a much better ESG implementation.

You can now become an ESG technology expert and bring pathbreaking technology on board by enrolling on our highly acclaimed Directors’ Institute’- World Council of Directors course and CPD Accredited ESG Expert Certification.

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