Why digital transformation and non-financial reporting go hand in hand

Digital transformation and ESG are two prominent and high-priority topics in the business community globally. The first focuses on applying technology throughout the value chain to produce faster, smarter and more desirable business outcomes. The latter emphasizes the broader value a business is expected to create for its stakeholders from an environmental, social and governance perspective. These two goals can – and should – go hand-in-hand in today’s stakeholder economy.

To start, digital transformation is often inspired by a broader purpose that goes beyond an organization’s immediate commercial success. This is particularly true for the tech industry because of its power to bring profound and breakthrough changes to the way people live, work and play. It has perhaps been most evident and relevant during the global pandemic in the last three years, when digital workplace solutions, supported by the cloud, high-speed networks and smart devices, have kept us connected despite the physical distance or periods of isolation. Similarly, e-commerce boomed not only as a channel to market for business but also as the primary means to access essential goods at difficult times for many with physical vulnerabilities and limitations.

If technology is a privilege, it comes with a mission. For Lenovo, that mission is to help solve humanity’s greatest challenges. In scientific research like climate change or vaccine research, a tremendous amount of data is analysed to identify patterns and scenario analyses are run to draw meaningful inferences. This requires powerful high-performance computing.

Historically this has also come with a high level of energy consumption and environmental impact. In our experience of building some of the world’s most powerful high-performance computers, we combined a liquid cooling technology, Neptune™, with our High-Performance Computing cluster to help data centre customers become more energy efficient. This is the type of innovation that generates direct benefits, impact and value beyond immediate business outcomes.

Furthermore, we’ve found customers increasingly cite ESG as part of the criteria in selecting vendors of Information and Communications Technology (ICT) solutions. This is particularly true as the industry moves quickly from traditional IT, which features on-prem data centres and applications, to “New IT”. New IT architecture covers not only client devices and Internet of Thing endpoints but also:

Simply put, New IT enables data to be transmitted, stored, processed and analysed from anywhere at any time. Because of that, data security, user privacy and equitable access to the benefits of technology have become increasingly important to customers, regulators and other stakeholders.

These considerations have become important to customers’ standards in choosing IT solution vendors. On the one hand, IT infrastructure is expensive and complex to design, deploy, maintain, migrate, upgrade and replace. Customers want to get it right from the very beginning by filtering out those vendors that don’t have stringent ESG commitments. On the other hand, IT vendors that demonstrate strong ESG efforts tend to gain more trust, credibility and brand equity with their end users. Examples of these efforts are setting up a product diversity office and working with external experts to review a company’s products, such as having special computer keyboard features for visually-impaired users. It’s a way to demonstrate a company’s commitment to making its smart devices accessible to everyone, regardless of their physical attributes or abilities.

Digital transformation has already generated tangible and measurable results in promoting environmental sustainability and human well-being. New IT capabilities, such as edge computing, are being deployed in use cases that preserve biodiversity. For example, edge servers are convenient when observing animal behaviour patterns in hard-to-reach areas. When we partnered with the nature conservancy on the world’s most remote island, Robinson Crusoe Island, our edge computing capabilities supported the team’s requirements, helping them process six months’ worth of visual data within just one week.

More and more companies, including Lenovo, are building supply chain data management platforms and adopting full material disclosure and life cycle assessment to evaluate the environmental impact of their supply chains, from manufacturing to transportation and product use to product recycling. In manufacturing, big data and machine learning have enabled solutions to optimize production scheduling decisions and navigate a wide array of complex factors, including customer orders, batch sizes, line capacity and workers’ skill levels. As a result, plant productivity increases, the carbon footprint is reduced, and shopfloor employees’ well-being improves.

Working with partners toward Sustainable Development Goals is essential for large companies with a strong influence in their field. For example, Lenovo has set a vision to achieve net zero by 2050, and we’re working with SBTi to get our targets approved. We participated in United Nations Global Compact (UNGC) - Global Development Initiative (GDI) for SDG pilot programme to help mitigate marine plastic pollution and help the low-carbon economy transformation. But we know we can’t do this alone. We must work with our entire industry to make a real difference and lasting impact.

The more the digital transformation supported by New IT incorporates ESG factors, the more likely it is to be successful. The more ESG initiatives take advantage of what technology has to offer, the more efficient and effective they will be.

The ICT industry can contribute much more to the 17 United Nations Sustainable Development Goals (SDG), especially in helping build resilient infrastructure, promoting inclusive and sustainable industrialization and fostering innovation. It’s perfect timing to combine the two because we are still in the early stages of the New IT era. We have the opportunity to build ESG considerations into every element of New IT from the very beginning. With precisely this approach, we can build a smarter future for all.