IBM Institute for Business Value | Research Insights

The ESGdata conundrumHow IBM can help
With deep industry expertise, ecosystem partnerships, and provenmethods, IBM Consulting Sustainability Services guides and advises clientson their journey to becoming a more sustainable enterprise. Throughco-creation and sustainability strategic advisory services, we lead withethical innovation and impact across all five business imperatives, fromstrategy and implementation to managed services.
IBM’s end-to-end capabilities embed sustainability into an organization’s
operations and culture across key practice areas: ESG reporting and finance,
climate risk assessment and adaptation, decarbonization and clean energy
transition, responsible computing and green IT, and circular supply chains.
IBM solutions such as Envizi and Environmental Intelligence Suite (EIS)
increase transparency and reduce the cost, time, and burden of reportingwith a single system of record so clients can focus on delivering ESG
strategic outcomes. For more information please visit https://www.ibm.
com/sustainability
2Key
takeaways

ESG data can benefit
your bottom line.

Unlock the value.
Our research reveals that mature ESG datacapabilities can create business value.

Follow the path to profit.
New surveying suggests that ESG data and capability
leaders are 43% more likely to outperform their peers
on profitability.

Implementation lags.
While 95% of companies have operational ESG goals,
only 10% have made significant progress towardmeeting them.

Consumer skepticism is skyrocketing—especially about sustainability.
Only 2 in 10 say they trust the statements companies
make about environmental sustainability—down from
5 in 10 just two years ago.

1

2

Uncertainty asopportunity
A strategic approachto the use of ESG
data in business
operations candeliver higher
revenue and improved
profitability.

ESG: It’s all about the data.
Some think ESG is necessary to manage 21st century risks, while others say it merely
obstructs business and adds costs. However, the companies we surveyed saw effective
use of ESG data as a way to accelerate profitability and growth.
The IBM Institute for Business Value (IBV) analyzed the results of two in-depth
surveys. In the first, we surveyed more than 20,000 consumers across 34 countries
about their attitudes toward sustainability and social responsibility, and how these
beliefs influence shopping, investing, and career decisions.
For the second, we surveyed 2,500 executives across 22 industries, delving into theirorganizations’ ESG strategy, approach, and operationalization; what benefits they
expect from ESG initiatives; and how they weigh ESG against other businessobjectives. (See Study methodology, page 26.)
The companies we surveyed told us that operationalizing ESG data and profitability
don’t have to be at odds. Top-performing companies don’t make trade-offs between
sustainability, social responsibility, good governance, and shareholder value; they
achieve all these outcomes at once.
When that data is viewed as a vehicle for enhancing operations and driving businessvalue, it generates insights that create opportunities and boost performance (see “ESG
is more than you think,” page 5).

3Transparent data can open the door to new markets,business models, partnerships, and investments.
In a tight labor market, transparency on ESG data
can also help attract and retain top talent. It creates
opportunities with sustainability-focused partners
and fosters deeper engagement with certain
consumers.1
Our research found that consumer commitment tosustainable development has intensified, even as
economic challenges hamstring purchasing power.
While more than half (51%) of our consumer
respondents say cost of living increases have madeenvironmentally sustainable and socially responsible
decisions more difficult in the last 12 months, roughly
6 in 10 say at least half of their purchases werebranded environmentally sustainable or socially
responsible in the same timeframe. What’s more,nearly half have paid a price premium for environmentally sustainable or socially responsible products inthe last year.
And some companies are tapping into these opportunities, converting ESG efforts into tangible businessvalue. They’re seeing higher revenue, improved profitability, deeper customer engagement—this list goeson—by approaching ESG as a transparency play thatcreates strategic business opportunities.
These findings build on recent IBV research, which
outlined how sustainability can drive transformation
for the enterprise. However, that research also showeda striking imbalance between ambition and action,with organizations struggling to operationalize
sustainability.2

meeting immediate compliance demands. To deliver
better business results, business leaders need to see
ESG transparency through a new lens.
And the need for change is urgent: consumers are
increasingly skeptical of ESG claims. Only 20% ofconsumers say they trust the statements companies
make about environmental sustainability, down fromhalf just two years ago (see Figure 1).3
What’s causing this decline? A lack of progress is partly
to blame. Our survey found that, while 95% of organizations have developed operational ESG propositions,only 10% have made significant progress toward theirgoals. Executives name inadequate data as thegreatest obstacle—even more of a hurdle thanregulatory barriers and inconsistent standards.
This might be why about 6 in 10 executives say they
make tradeoffs between financial and ESG objectives.
Without the ability to access, analyze, and understand
ESG data, they can’t accurately predict which plans
will both improve outcomes and deliver high ROI.
Without data transparency, sustainable development
remains out of reach.
FIGURE 1

A time of distrust
Consumer trust in corporate sustainability
statements has plummeted.
50%

40%

Our new research reveals that ESG—the capability fortransparent reporting of environmental, social andgovernance performance—plays a critical role inenabling sustainability action. ESG data and insights
can help leaders activate tangible performance
improvements, especially in the environmental
domain (see Celestica embeds sustainability acrossoperations, page 6).
With a clear line of sight into core operations, leaders
can optimize ESG performance while reducing costs.
But only a few companies have reached this level.
Rather than strategically harnessing ESG data—using it
as a tool for identifying opportunities to innovate andimprove—many organizations are narrowly focused on

30%

20%

10%

In just 2 years,
trust has dropped bymore than half

0%

2021

48%

2023

20%

Source: 2023 Consumer survey Q26.4: I trust statements companies
make about environmental sustainability (yes or no); 2021
Consumer survey Q16.1: I trust statements companies make about
environmental sustainability (Extent you disagree/agree, 1-5,

4

4&5=agree).

Perspective

ESG is more than
you thinkIn this paper, we’re focused on ESG as a transparency-enabler: a capability
that validates a company’s ESG commitments. When executives have easy
access to ESG data, they can improve business performance and unlock newvalue. They can convert insights into business results by embedding relevant
data in operations to improve performance or by engaging with customers
and stakeholders to drive transformational growth. Of course, how this isdone will vary significantly between organizations and domains—with theenvironmental sphere offering many noteworthy opportunities.

5

Case study

Celestica embeds
sustainability
across operations

Celestica is a leader in design, manufacturing, hardware platform, and supply chain
solutions. For the global manufacturing industry, ESG reporting can be complicated andcumbersome, given the extensive portfolio of international sites requiring monitoring
and auditing. Global data for many of Celestica’s facilities was gathered and captured in
spreadsheets, where calculations had to be done manually.
Software has helped streamline the process. Celestica can now compile and transform
data into usable outputs and help eliminate errors from manual data entry. Automationof complex calculations and reporting produces finance-grade, auditable data.
This data and analytics capability will also allow Celestica to embed sustainability
across the organization. As noted by Jessica Peixoto, Sustainability Manager, Celestica
Inc.: “This governance model will trickle down into each team, tying sustainability into
all aspects of the business.”

6

The businesscase for ESG
76% of executives
say ESG is central
to their businessstrategy.

Sustainability and ESG initiatives face heavy headwinds—from inflation
to geopolitical upheaval. Some question whether good intentions will
wither in the face of a looming global recession. But our survey showsthat enterprises are doubling down.
Roughly three in four (76%) executives we surveyed now view ESG as central to theirbusiness strategy and more than 7 in 10 (72%) approach it as a revenue enabler rather
than cost center. And while most ESG efforts focus on compliance and risk
management, many now expect to see improved profitability (45%) and improved
innovation (35%).
Consumer commitment remains steadfast as well. Roughly two-thirds of consumers
say environmental sustainability (68%) and social responsibility (65%) are very or
extremely important to them. And more than 7 in 10 agree that they would be more
willing to apply for a job with a company they consider environmentally sustainable orsocially responsible.
More than 40% even say they would be willing to accept a lower salary to work for an
employer that is environmentally sustainable or socially responsible—and nearly one
in four of those who changed jobs in the last 12 months say they did just that. Overall,
the salary cut people say they would be willing to accept is close to 20%.

7

But individuals can’t always assess how companies perform on the factors they caremost about. While a broad set of ESG measures matter to consumers, roughly two in
three executives say they must make trade-offs between different operational ESG
objectives. Companies tend to focus on a narrower set of issues, often falling victim tocarbon tunnel-vision (see Figure 2).
To deliver on consumer expectations, executives need to think more broadly about
ESG. They must prioritize transparency, break down barriers to ESG data—and funnel
key insights back into the organization.

FIGURE 2

The transparency mismatch
ESG reporting rarely addresses all the issues
consumers care about.

Most important ESG information for consumers

Most reported metrics by organizations

Health and safety

73%

1

50%

Percent of women in workforce

Child labor and forced compulsory labor

70%

2

46%

Scope 1 GHG emissions, absolute

Human rights

69%

3

45%

Percent of women in leadership (C-suite)

Air pollution

68%

4

41%

Scope 2 GHG emissions, absolute

Water consumption and treatment

66%

5

38%

Scope 1 GHG emissions intensity

Source: Consumer survey Q19: Importance of the following
sustainability information to you when making decisions to engage
with an organization (1-5, 4&5= very important); Executive survey
Q15: ESG metrics organization is currently using.

8

Three big
roadblocks
Organizations face big barriers to operationalizing ESG.

ESG goals aremeaningless if they
aren’t tied to real
performance data.

Almost three in four (72%) of our business respondents agree that ESG
needs to be a higher priority in their organization. Yet, getting there
requires a major mindset shift—and a commitment to overcoming thebarriers holding efforts back (see Figure 3).

FIGURE 3

Double threat
Data and regulations are the top business challenges
ESG efforts face.

41%

Inadequate
data

39%

37%

37%

Regulatory
barriers

Customer
resistance

Inconsistent
standards

01

Source: Q24: What are your organization’s biggest challenges inadvancing its ESG agenda?

9Here are the three top obstacles organizations must address to deliver
more value with ESG:

1. Bad intel
Data is the lifeblood of ESG. It provides visibility into an organization’s operations,
letting leaders see where the business is reaching the bar—and where performancehas fallen behind. ESG goals for the future lose their significance if they aren’t tied tocurrent performance data. And without the right information, it’s impossible for
executives to assess the company’s impact, identify improvement opportunities,
or showcase successes.
Whether they’re assessing the carbon footprint of operations, labor practices acrossthe supply chain, or compensation practices, leaders need reliable, real-worldinformation to set achievable targets—and measure meaningful progress (see Large
European chemicals company uses an analytics platform to advance ESG goals, page12). Yet, most of our executive survey respondents say their organizations struggle tomanage, manipulate, and map data (see Figure 4).

FIGURE 4

Operational opacity
Executives say a host of data difficulties hold ESG
efforts back.

01

73%

Lots ofmanual data

70%

70%

69%

Difficulty
consolidating ormanipulating data

Poortransparency indata calculations

Difficulty inmapping data
across brands
and geographies

Source: Q36: Extent to which the organization’s ESG reporting andperformance efforts are held back by following challenges.

102. Too many standards

3. Lack of stakeholder visibility

The ESG reporting environment is littered withacronyms. From the International Sustainability
Standards Board (ISSB) and the Global Reporting
Initiative (GRI) to the Task Force on Climate-Related
Financial Disclosures (TFCD) and the EU’s Corporate
Sustainability Reporting Directive (CSRD), it’s difficult
to keep up with the ever-expanding list of ESG
disclosure standards, frameworks, and requirements.
In fact, there are more than 600 reporting provisions
globally, each offering its own interpretation ofsustainability and social responsibility—and how
companies can prove they are meeting the bar.

The executives we surveyed say they’re beingpressured from business partners, board members,
investors, and creditors to provide greater transparency around ESG initiatives. There is growing
frustration that ESG goals are not connected tocredible action plans and clearer signs of progress.

This proliferation is creating confusion. When
companies report on a variety of KPIs that assess
ESG performance from different angles, it becomes
harder for leaders to execute. Executives say that
regulatory barriers and inconsistent standards are
two of the top challenges holding ESG efforts back.

– Roughly 4 in 10 say they have enough data to makeenvironmentally sustainable purchasing (41%) or
employment (37%) decisions.

Our survey shows that consumers are also
demanding more:– Only one in three say they have sufficient ESG
information to make sustainable investing
decisions.

– 36% say they have sufficient information formaking socially responsible investment decisions.
– 38% have enough information to make socially
responsible employment decisions.
This offers some insight into the drop-off in trust.

Stakeholders are frustrated thatESG goals are not connected tocredible action plans.

While most organizations have laid out aspirational
ESG plans, few are succeeding where the rubber hits
the road. Our survey revealed that almost all (95%)
organizations have developed operational ESG
propositions, but only 41% have made progressagainst them. Just 1 in 10 say their progress has
been significant.

11

Case study

Large European
chemicals company
uses an analytics
platform toadvance ESG goals

A large European specialty chemicals company was struggling with fragmented andcomplex data of the product portfolio due to data silos and manual processing ofsustainability and emissions information. In addition, the company lacked accurate andverified data, efficient data management, and a consistent methodology for calculating
and allocating carbon emissions. This significantly hampered ESG reporting efforts andthe ability to manage progress.
Turning the challenge into opportunity, the company is creating an advanced analytics
platform for transparent sustainability data management across value chains. The
platform provides a single point of truth for sustainability analysis data, creates greatertransparency, and provides faster insights from automation and analytics. Throughthese insights, the company can not only meet reporting requirements, but also takeinformed action for tangible improvements.
Looking forward, the company is looking to tap the platform to drive deeper sustainability transformation. It plans to focus on planning, forecasting, and managing ESG
KPIs and building informed scenarios for how to advance the company’s top sustainability goals.

12Four pillarsof success
ESG data andcapability leaders
are 43% more likely
to outperform on
profitability—and
52% more likely to
say ESG efforts
have a huge impact
on profitability.

ESG is more than compliance and reporting. Business leaders thatelevate its role and can handle the data can drive engagement,
inspire innovation, improve operations—and unify ecosystem
partners around shared strategic goals.
To do this, organizations should funnel data in two directions. Looking internally,embedding ESG data into operations to drive performance improvements. For
example, integrating emissions data into core operational or enterprise asset
management systems can help leaders reduce the company’s carbon footprint.
Sharing transparent insights with others can help organizations strengthen
relationships as well. It can build trust with customers, employees, and partners,
create new market opportunities, and support innovation and engagement. For
example, transparency about labor conditions across the enterprise and supply
chain can engage discerning consumers and talent pools.
Similarly, showcasing trustworthy successes in gender parity and diversity canbe a boon. Recent IBM Institute for Business Value research found that organizations identified as gender equity leaders report a 19% higher rate of revenue
growth than others.4

13Meanwhile, clarity on corporate governance canattract responsible investment funds or impact
investors. By opening the door to these opportunities,
the ESG capability can become a platform andcatalyst for driving transformational growth andproducing better outcomes (see Figure 5).5

IBV research has identified a cohort of organizations
with higher maturity in four key areas that enable
them to convert ESG to business value:

To understand how ESG—framed within wider
sustainability efforts— can facilitate enterprise-wide
improvement, it’s useful to look to those businesses
that are making progress in practice. Their leadershipoffers a roadmap that companies across sectors
can follow.

– Digital tech: Enterprise architecture for ESG and
the availability of ESG data in a clear dashboard– Data and ecosystems: The sourcing andmanagement of relevant ESG data across theorganization and the partner ecosystem– Process and business integration: Embedding ESG
metrics across functions– Skills and decision-making: Adoption of newpractices and availability of relevant ESG andsustainability skills

FIGURE 5

Extracting business value from ESG data
Insights can drive both performance improvements
and transformational growth.

Performance improvements

Transformational growth

Ecosystem
Supply chain(Sterling/
Blockchain)

Business
partners

Innovation
Engagement

Operations
Operations

AssetsReportingCompliance

Reportingframeworks

Regulatorycompliance

Metrics
ESG platform

Employees

Core functions

Value creation and impact

14

Customerengagement
New products
and services
Data governance

Data management
Stakeholders

Openinnovation

ESG objectives

Risk
management

Employeeengagement

New markets

ESG platform
Access tofinance

Value creation and impact

New businessmodelsWe found that organizations with greater maturity inthese four ESG capabilities financially outperformtheir peers. They have an annual rate of revenue
growth more than 10% higher than laggards andgenerate 5% higher shareholder return.
ESG data and capability leaders are 43% more likely
to outperform their peers on profitability—and 52%
more likely to attribute a very great impact of their
ESG efforts on profitability. More of them point to
ESG as a driver of better risk management (+90%),
greater access to finance (+85%), and a 21% greater
improvement on their weighted cost of capital (seeFigure 6). They also say ESG has a bigger impact on
customer engagement (+70%), ability to attract
talent (+83%), and innovation (+72%).
In terms of ESG outcomes, the group distinguishes
itself on a broad set of goals: they report higher
reductions in greenhouse gas emissions, are 34%
more likely to outperform on corporate social responsibility, and are 51% more likely to outperform on
diversity than their peers.

So how do they do it? Let’s explore the four pillars that
underpin a successful, mature ESG operating model.

Data and ecosystems
With the right data framework in place, companies
can assess current ESG goals, credibly estimate the
ROI of ESG initiatives, and manage compliance—even
when reporting requirements shift. Having a clear lineof sight into core operations is a lot more valuable
than simply checking off compliance boxes. Takeenergy consumption as an example. With clear dataon when, where, and why the business is using
energy, leaders can optimize consumption andreduce costs without disrupting essential businessactivity.
ESG data and capability leaders are more than twice
as likely than laggards to have made significant
progress on establishing enterprise-wide data
governance for ESG and putting in place an enterprise-wide data warehouse. In addition, they’re 66%
more likely to have made significant progress increating an enterprise-wide system of record for ESG.

FIGURE 6

The amplifier effectBusiness leaders say operational ESG has agreater impact on performance metrics.

Customerengagement

70%

Risk
management

90%

Access tofinance

85%

more

more

more

ESG-generated uplift
56%
33%

59%
31%

50%
27%

High ESG maturity
Low ESG maturity
Source: Q23: Extent ESG generated improvements
over the past 3 years.

15

These capabilities facilitate a shift in the nature androle of ESG data, positioning it as a central resourcefor business value. Moving from past averages toreal-time actuals—from reactive analysis to proactivemodelling—enables greater transparency and canboost performance across the organization and theecosystem.
Leading organizations are actively collaborating with
their partners on ESG. Shared data governance andcommon definitions let these companies source ESG
data more successfully from their partners.

In addition, as many as 60% of leading organizations
have integrated their ESG efforts with their partner
ecosystem.
To follow in the footsteps of ESG data and capability
leaders, organizations must stop solely extracting
and channeling data for reporting purposes and start
viewing ESG data as part of a platform-enabled loop.
This circular approach provides the foundation forcontinued performance improvement and transformation. It makes ESG data and metrics part of the
feedback loop that triggers adaptation and guides
change. And it facilitates engagement with ecosystem
partners on sustainability action (see Figure 7).

FIGURE 7

A platform-enabled feedback loop
Sharing data transparently triggers
transformation and guides change.

Current focus of
ESG discussion

Untapped
opportunity
Data shared between
business units within theenterprise for integration

Businessunit

Businessunit

Data sharedwith stakeholders
and partners(e.g., reporting)Stakeholders& partners

16

Data shared bystakeholders andpartners forextended insights

Data shared between
stakeholders and partners
for ecosystem collaborationand open innovation

Stakeholders& partners

Digital tech
Leading organizations are far more likely than others
to have made substantial progress in advancing theirtechnology for ESG transparency. They’ve made moresignificant strides in furthering the overall enterprisearchitecture and integrating their ESG data into adashboard—and they’re 54% more likely to havedeveloped a digital strategy that enables their ESG
efforts.
Leaders have also embraced the opportunities for
scaling, accelerating, and augmenting ESG withexponential digital technologies. For example,
leaders are 58% more likely than laggards to havedeveloped the hybrid cloud capabilities for ESG, 33%
more likely to have made significant progress with AI
for ESG, and more than twice as likely to haveprogressed significantly with the use of advanced
analytics for ESG. They are also 79% more likely tohave made progress in the use of automation for ESG.

When asked which technologies are most importantfor ESG, executives highlight the role of advanced
analytics in delivering ESG insights, and automation inboosting the efficiency, accuracy, and scaled impactof ESG efforts (see Figure 8). For example, automating
manual data processes can make it faster andcheaper for companies to achieve transparency.
Applying advanced analytics can also pinpoint
improvement opportunities and support modellingthat informs more sustainable decisions.
These technologies don’t operate in isolation but
complement each other in driving improved
performance. If executives look through a particulartechnology lens, rather than focus on how they cancreate the greatest impact, immense potential is left
on the table. Interactions among several technologies—and with other organizational capabilities—
enable and drive the improvements needed formoving the needle on ESG and sustainability.6

FIGURE 8

Exponential tech elevates ESG
Innovations work in concert to boost
performance.

Most important technologies enabling ESG

64%

57%

49%

46%

43%

Advanced analytics

Automation

Internet of Things

AI

Hybrid cloud

Source: Q32: Most important technologies in advancing theorganization’s ESG.

17

Moreover, sustainability is a team sport. Tapping
insights across the ecosystem is essential to making
meaningful performance improvements—andthat requires an open technology architecture.
Interoperability and open standards aren’t justbuzzwords. They’re crucial for digital technology toprovide the greatest lift for ESG transparency andsustainability improvements.

Process and business integration
To drive real improvement, ESG data and metrics
should be embedded into core operations, processes,
functions, and workflows. Such integration is key toweaving sustainability into day-to-day tasks andactivities.7
ESG data and capability leaders are far more likely tohave ESG metrics incorporated into their innovationand digital transformation efforts and integrated into
finance functions. The latter echoes recent IBV
research highlighting the important role of finance insupporting an organization’s sustainability efforts.8
Across all organizations, the integration of ESG
metrics into core functions is limited, mostly focusedon risk management (44%), brand strategy (40%),and customer service/engagement (39%). Only 20%
are integrating ESG metrics into supply chain
operations; 26% into procurement and sourcing; andjust 11% into real estate and facilities management.
This offers a window into huge, missed opportunities.
Companies pursuing value-driven sustainability must
look for change opportunities that will create a ripple
effect. Their view should cut across traditional
functional silos and processes—unlocking opportunities for rapid improvement at scale.

18

Skills and decision-making
ESG data and insights need to filter through theorganization to inform real-time decision-making.
And the decision rights on sustainable action need tobe distributed across the organization rather thancentralized at the top.
Change starts at the task level. For example, someorganizations use internal carbon pricing as amechanism to help justify investments that may havean impact on carbon emissions, a practice that is, atleast to some extent, being adopted by 24% of theorganizations surveyed. Furthermore, as noted in ourlatest CEO study, some companies tie executive andnon-executive compensation to meeting ESG
targets.9
Using ESG data and metrics to inform daily decisions
can have an exponential impact on performance. But
for employees to actively use ESG data to advancesustainability, they need to be both empowered andenabled. People also need sustainability skills totranslate ESG data into sustainable action.
Executives we surveyed say more than 30% of theworkforce require sustainability skills today. And as
the demand continues to grow, defining pathways fordeveloping, accessing, and retaining relevant sustainability skills becomes critical. More than half (56%) of
executives cite high attrition of employees withsustainability skills as holding back their sustainability efforts.

ESG-enabled sustainability
must be facilitated from the
top down—with each executive
understanding their role.
While the shift toward ESG-enabled sustainability is driven by people—from thebottom up—it must be facilitated from the top down through appropriate governance.
This requires collaboration and commitment across the organization’s leadership,with each executive understanding their role.
In the context of ESG, the Chief Sustainability Officer (CSO) acts as the source ofcontinuity across the different areas of responsibility, working with different C-level
colleagues as appropriate (Figure 9). While the CSO role is often in flux, focusing on
different priorities at different organizations, many are moving into an orchestrating
position. Whatever goals the company aims to achieve, the CSO will be critical inpushing sustainability forward.

FIGURE 9

Many parts to play
Ownership of ESG cuts across the C-suite.

1st

2nd

3rd

ESG strategy

CEO

CSO

COO

ESG targets

COO

CEO

CSO/CIO

ESG budgeting

CFO

COO

CSO

ESG performance

CSO

CCO

CMO

ESG reporting

CSO

CIO

CCO

Responsible
C-level executive

most cited

most cited

most cited

Note: CSO = Chief Sustainability Officer, CIO = Chief Information Officer, CCO = Chief Compliance
Officer, CEO = Chief Executive Officer, COO = Chief Operating Officer, CMO = Chief Marketing Officer.
Source: Q31: C-suite responsible for the following ESG areas.

19

20

People makethe difference
Operational ESG
success is definedby the choices
employees andpartners makeevery day.

What will it take to move the needle on ESG transparency andsustainability performance? And how can leaders build on thosesuccesses to boost the bottom line?
It starts with changing human behavior. It is through thousands—or millions—of
daily actions that an organization’s sustainability strategy is brought to life. No CEO
statement or glossy report can make the same impact, regardless of how informed,
reliable, and compliant it may be.
Not all operational ESG decisions are tied to functions and rank. Many are tied to the
choices individual employees and partners make every day—choices that are
influenced by the information they have at hand.
As much as ESG data needs to be delivered by enterprise operations for reliable
reporting, it needs to flow back throughout the organization for improved
performance. Employees should be trained to access and understand ESG dataand empowered to adjust their daily decisions based on their insights.
And this only becomes more important as environmental and social issues grow moreurgent. According to the World Economic Forum, most of the risks business leaders
expect to face in both the short- and long-term fall under the ESG umbrella.10
From pollution and resource consumption to social displacement and diversity pay,organizations need to be ready—and able—to prove they’re doing what they say.
Businesses that build the right ESG capabilities will be prepared to update theirpractices to meet shifting expectations and report on the metrics that matter most.
With the right information—and transparency about progress—businesses can bepart of the solution to the world’s most pressing problems. Executives can stopmaking tradeoffs between ESG and profitability and start finding ways to drive
sustainable growth.

21

Action guide
Driving sustainability through ESG transparency is ajourney of continuous improvement. Organizations
with more mature capabilities should not view theirposition as an end-state but rather as a platform for
amplifying business value. Here’s how enterprises canimprove their situations and better prepare for themarketplace of tomorrow.

01

02

03

Start moving.

Be transparent.

Be direct.

– Clarify your ESG objectives andwhat you are trying to achieve.
Align your ESG efforts to yourbusiness strategy and goals.

– Source and migrate data fromacross your enterprise into a single
system of record for ESG.

– Report on what is relevant froma materiality point of view, as
well as what is required, without
obfuscation.

– Map data needs against ESG
requirements. Determine what
information you need and forwhat purpose.
– Identify immediate andpragmatic opportunities to makeprogress.

22– Create a data platform andintegrated ESG dashboard forshared visibility and performance
management.
– Share performance without
cherry-picking results. Be clear
about data sources, quality, andcalculations underpinning ESG
KPIs.

– Specify an action plan andinterim goals for meeting ESG
targets. Be honest about where
the organization needs toimprove.
– Activate the use of ESG dataand insights for improved
performance across theenterprise and ecosystems.
For example, use pricing,budgeting, and incentive
mechanisms based onsustainability metrics and data.

Action guide

04

05

06

Scale, automate, andaugment with abandon.

Orchestrate theecosystem.

Capitalize
on trust.

– Create APIs from enterprisesystems to accelerate ongoingdata delivery to the ESG
platform.

– Align with ecosystem partners on
ESG definitions and standards.

– Define, build, and manageorganizational capabilities andskills for ESG reporting andperformance.

– Automate ESG processes andreporting capabilities to keep
data current.
– Tap AI for enhanced insights into
performance, predictive
analysis, and scenario
development.

– Don’t wait for others to lead.
Proactively establish ESG data
governance principles withstakeholders.
– Share ESG data and KPIs withecosystem partners andstakeholders for collaborationand co-creation.

– Make change management andstakeholder engagement an
integral part of your ESG journey.
– Use your enhanced ESG posture
to build trust with consumers andemployees, unlock new market
opportunities, and grow revenue
through partnerships.

23Aboutthe authors

Arun Biswas
Managing Partner, Strategic Sales
and Sustainability Consulting, APAC,
IBM Consulting
arunb@sg.ibm.com
linkedin.com/in/arun-biswas

Elisabeth Goos
Partner, Market Leader Sustainability Services,
EMEA and DACH, IBM Consulting
elisabeth.goos@ibm.com
linkedin.com/in/elisabeth-goos-7022a136/

Jacob Dencik, Ph.D.
Chief Economist and Global Sustainability
Research Leader,
IBM Institute for Business Valuelinkedin.com/in/jacob-dencik-126861/
jacob.dencik@be.ibm.com

24

Arun specializes in technology-enabled enterprisetransformation. He helps clients accelerate theirdigital transformation and sustainability journeys using
the power of emerging technologies, such as AI, IoT,
Blockchain, and Hybrid Cloud. He acts as a trusted
advisor to the C-suite and helps them achieve revenue
and profit growth with a net-positive impact on people
and the planet. He is based in Singapore and is currently
part of IBM Consulting’s Asia-Pacific and Global
Leadership Team.

Elisabeth leads IBM’s sustainability services business in
EMEA and DACH. With a global consulting and corporate
sustainability strategy and innovation background, shehelps our clients accelerate their digital transformationand sustainability journeys. She acts as a trusted advisor
to the C-suite and works across the whole business tocomply, optimize, and transform, balancing profit growth
and revenue with net-positive impact on people and theplanet. She is based in Germany.

Jacob is responsible for leading the IBV’s research on
topics related to technology and implications on the
global economy. He has extensive experience advising
companies around the world on their global
operations. He has also advised governments as anexpert and economist on competitiveness, foreign
direct investment (FDI), sector/cluster analysis, andinnovation. Jacob holds a Ph.D. in public policy andeconomics from Bath University in the UK.

About Research Insights
Research Insights are fact-based strategic
insights for business executives on critical
public- and private-sector issues. They arebased on findings from analysis of our own
primary research studies. For more information,
contact the IBM Institute for Business Value at
iibv@us.ibm.com.

The right partner fora changing world
At IBM, we collaborate with our clients, bringing
together business insight, advanced research, andtechnology to give them a distinct advantage intoday’s rapidly changing environment.

IBM Institute for Business Value

Related Reports

For two decades, the IBM Institute for Business
Value has served as the thought leadership thinktank for IBM. What inspires us is producing
research-backed, technology-informed strategic
insights that help leaders make smarter businessdecisions.

The 2021 CEO Study

From our unique position at the intersection ofbusiness, technology, and society, we survey,
interview, and engage with thousands ofexecutives, consumers, and experts each year,
synthesizing their perspectives into credible,
inspiring, and actionable insights.

“Sustainability as a transformation catalyst:
Trailblazers turn aspiration into action.” IBM Institutefor Business Value. January 2022. https://ibm.co/sustainability-transformation

To stay connected and informed, sign up toreceive IBV’s email newsletter at ibm.com/ibv.
You can also follow @IBMIBV on Twitter or find
us on LinkedIn at https://ibm.co/ibv-linkedin.

“The 2021 CEO Study: Find your essential.” IBM
Institute for Business Value. February 2021. https://ibm.co/c-suite-study-ceo
Sustainability as a transformation catalyst

The sustainability imperative“The sustainability imperative: The integral role offinance—quantified.” IBM Institute for Business
Value. February 2023. https://ibm.co/sustainability-initiatives-finance25

Study methodology

Notes and sources

The IBM Institute for Business Value (IBV) analyzed
the results of two in-depth surveys. In the first, wesurveyed more than 20,000 consumers across 34
countries about their attitudes toward sustainability
and social responsibility, and how these beliefs
influence shopping, investing, and career decisions.

1

Bastit, Bruno, Terry Ellis, Paul Munday, Bruce Thompson,
Dennis Sugrue, Esther Whielden, and Jennifer Laidlaw.
“Key sustainability trends that will drive decision-making
in 2023.” S&P Global. January 26, 2023. https://www.
spglobal.com/esg/insights/featured/special-editorial/
key-sustainability-trends-that-will-drive-decision-making-in-2023

We also went directly to business leaders, surveying
2,500 executives across 22 industries, delving into
their organizations’ ESG strategy, approach, andoperationalization; what benefits they expect from
ESG initiatives; and how they weigh ESG against otherbusiness objectives.

2

Balta, Wayne, Manish Chawla, Jacob Dencik, and Spencer
Lin. “Sustainability as a transformation catalyst:
Trailblazers turn aspiration into action.” IBM Institute for
Business Value. January 2022. https://ibm.co/sustainability-transformation

3

In the 2023 survey, respondents were asked to answer
categorically if they trust the environmental statements
made by companies. In 2021, the respondents were asked
to answer on a scale (1-5) whether they disagreed oragreed with the statement that they trust the environmental statements made by companies (4 being
somewhat agree and 5 strongly agree). We have compared
the % of respondents answering 4 or 5 in 2021 with the %giving a categorical affirmative answer in 2023.

4

Chambliss, Kelly, Kitty Cheney Reed, Carolyn Childers,
Carla Grant-Pickens, Lindsay Kaplan, Nickie LaMoreaux,
Salima Lin, Lula Mohanty, Paul Papas, and Joanne Wright.
“Women in leadership: Why perception outpaces thepipeline—and what to do about it.” IBM Institute for
Business Value. March 2023. https://ibm.co/
women-leadership-2023

5

Balta, Wayne, Manish Chawla, Jacob Dencik, and Spencer
Lin. “Sustainability as a transformation catalyst:
Trailblazers turn aspiration into action.” IBM Institute for
Business Value. January 2022. https://ibm.co/sustainability-transformation

6

Ibid.

7

Ibid

8

Proothi, Monica, Adam Thompson, Annette LaPrade, andSpencer Lin. “The sustainability imperative: The integralrole of finance—quantified.” IBM Institute for Business
Value. February 2023. https://ibm.co/sustainability-initiatives-finance

9“The 2022 CEO Study. Own your impact: Pathways totransformational sustainability.” IBM Institute for
Business Value. May 2022. https://ibm.
co/c-suite-study-ceo

In addition to descriptive statistical analysis, we
segmented the organizations surveyed based on theirmaturity in key ESG capabilities: Data, ecosystems,
digital technology, processes and businessintegration, and people and skills. This yielded three
distinct groups.
– One group stands out in their maturity on all key
capabilities.
– A second group have yet to make significant
progress on any of the key capabilities but are
placing a relative focus on advancing processes
and people.
– The third group lags the leaders on all capabilities
but is relatively more focused on the data andtechnology levers. This group is also extending the
ESG data capabilities into ecosystems, albeit far
less than the leader group.
By comparing the performance and practices of thehigher maturity organizations against the othergroups we were able to identify the capabilities andactivities that distinguishes this group. These findings
were just to ascertain the key pillars of progress forgenerating business value from ESG.

10 “The Global Risks Report 2023.” World Economic Forum.
January 2023. https://www.weforum.org/reports/globalrisks-report-2023/digest/26© Copyright IBM Corporation 2023
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