The Role of IoT in ESG

Andy Slote - Director of Customer Success for ObjectSpectrum

June 1, 2023

Environmental, Social, and Corporate Governance (ESG) is a hot topic lately, trending in discussions about the changing world, including how we attempt to manage the negative aspects and influence future outcomes. For many ESG efforts, the Internet of Things (IoT) can be essential.

The meaning of ESG varies slightly from one perspective to another, but most descriptions talk about similar high-level goals. The Environmental component is about reducing negative environmental impact and future risk. Social refers to generating value for all organizational stakeholders, including employees, customers, suppliers, investors, etc. Finally, defining the roles, responsibilities, and expectations to execute these objectives is what Corporate Governance is all about.

How companies create strategies that translate into value will vary greatly depending on their industry. So, we can end up dealing with an expansive concept to tackle – one where the role of technology varies widely.

With the Environmental element, you often hear about sustainability, sustainable practices, or other related concepts. defines sustainable as “pertaining to a system that maintains its viability by using techniques that allow for continual reuse.” The US EPA describes an approach to sustainability as “To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations.” But what that means for companies is subject to their interpretation and is business dependent. For example, companies with sizeable environmental impacts, like mining or agriculture, typically have more opportunities than services-only firms.

Capturing data for an environmental program is an area where IoT can play a critical role. For example, tracking water use from the source to the end user requires sensors at different points in the supply chain. Network connections get the data ingested, translated, and turned into useful information. A detailed analysis can result from the proper IoT devices, data management, and visualization. As corrective measures are implemented, the same view of the data shows the progress and helps define the impact.

An example of an IoT project to create value for employees (Social) is indoor air quality monitoring. Sensing the Particulate Matter (PM) levels and Volatile Organic Compounds in office environments makes work areas safer and healthier. Carbon Dioxide rarely rises to the point where it seriously impacts health, but slightly higher than recommended concentrations can cause decreases in productivity. Adding more fresh air with existing ventilation or installing new equipment to clean the air improves the employee environment.

A Governance strategy requires data, and IoT can contribute significantly here, too. Being able to readily capture necessary information will provide visuals showing progress toward objectives. Even if you don’t have clear-cut ESG objectives, these efforts benefit the company and its stakeholders (and the planet), and there’s a role for IoT in telling the story.

The most sophisticated projects use machine learning for automation, making your IoT endeavors less costly. Ideally, with a quality design and implementation, solutions run with little human intervention. In addition, with the right technology partner, effectively integrating IoT applications with other systems like ERP will make your deployments more impactful and essential to the company’s ESG mission.