Technology companies have ESG issues have historically been seen more than in other sectors, but in the last 24 months, climate-related regulations and the rapid shift to greater accountability have exposed many technology companies.
Issues such as energy consumption, workforce diversity, human capital, security, data privacy and misuse of platforms are just some of the growing ESG challenges facing tech companies.
In addition to tech companies coming up against regulations from the SEC and the European Union’s Corporate Sustainability Reporting Directive (CSRD), recent moves on greenwashing can also cause reputational damage.
Tech companies are putting themselves at risk if they continue to exhibit disconnected ESG and business strategies.
How big is the problem?
The most common topics mentioned by US tech companies in their financial reports include public health (ranked 1st, hanging on to Covid-19), security (coming second) and privacy (third). Climate change and risk management (33), GHG emissions (43), human rights (53) and biodiversity (81) have the lowest priority and appear further down the list.
GHG emissions for European companies are among the 20 most focused ESG topics, ranked 12Th In order of sequence. But as this is a highly regulated environmental topic, it does not imply a systematic approach to ESG. Climate change and risk management (22) and human rights (23) are relatively high priorities, while compliance management (35) and biodiversity (72) are further down the table.