\n<\/p>\n
Cory Searcy is a professor and the vice-provost and dean of the Yeates School of Graduate Studies at Toronto Metropolitan University. <\/em>Muhammad Asif is an associate professor of management sciences at Plymouth State University.<\/em><\/p>\n In the United States, it\u2019s easy to find prominent politicians condemning business for using ESG to impose what they call a radical left-wing<\/a> ideological agenda<\/a> on Americans. Recently, some state governments have moved beyond rhetoric to explicitly limit ESG-based investing.<\/p>\n While often politically motivated, these criticisms have arisen from the fact that ESG (environmental, social and governance) criteria don\u2019t have an agreed-upon performance standard, which can lead to debatable decisions<\/a> in ESG rankings, measurement and reporting. ESG disclosure does not eliminate honest mistakes or even egregious cases of corporate fraud<\/a>. It can also suffer from low-quality, out-of-date and unaudited data. These limitations can severely undermine ESG\u2019s role in improving transparency and accountability, and leave it exposed to partisan political attacks that sometimes ring true.<\/p>\n While serious, however, the limitations in applying ESG factors can be overcome. As our research<\/a> has shown, emerging technologies such as blockchain, digital twins, satellite imaging and cloud computing, to name but a few examples, can play a critical role in measuring and reporting on ESG. Many of these technologies are already being used, and there is room for new applications.<\/p>\n Blockchain \u2013 a decentralized, unalterable digital ledger \u2013 offers countless possibilities for improving ESG disclosure. Fishcoin<\/a>, for example, uses blockchain to incentivize data sharing and improve traceability in the seafood industry. Repsol<\/a>, a Spanish energy company, uses blockchain to improve product certification in its supply chain. Blockchain has also been widely used to support financial transactions<\/a>, emissions certificate trading<\/a> and contract management<\/a>, which are some of the foundations of implementing ESG.<\/p>\n Advances in blockchain have been so rapid that regulators are still trying to catch up. Recently, the US\u2013EU joint technology trade council<\/a> began working on tracking and curbing carbon emissions<\/a> with the help of blockchain and other technologies. The British Standards Institution (BSI) also recognizes blockchain-based carbon emissions tracking<\/a>.<\/p>\n Digital twins are a virtual representation of real-world physical objects or processes, and they are already being used in agriculture<\/a>, mining<\/a> and other sectors. Applications vary, but digital twins can enable and can be used to streamline supply chains, optimize networks and respond to disruptions. A rapidly growing number of organizations believes that digital twins can catalyze transformation<\/a> and help them achieve their sustainability agendas.<\/p>\n Satellite imaging offers a number of useful applications<\/a> to ESG. Satellites already measure biodiversity<\/a>, changes in water reservoir levels<\/a>, water quality<\/a>, air quality<\/a> and land usage<\/a>. They can even be used to identify supply chain hotspots for issues such as poor working conditions<\/a>. Moreover, AI-assisted satellites can synthesize environmental data<\/a> and convert it into environmental insights.<\/p>\n Cloud computing and analytics are also important ESG tools, particularly for their potential in automating data collection, standardizing data, reporting metrics and enabling greater transparency within and between organizations. A PwC survey<\/a> of Fortune 1000 companies found that most C-suite leaders are committed to using the cloud for ESG: 60% are either using or planning to use it to augment ESG reporting, while 59% use or plan to use the cloud to refine their ESG strategies.<\/p>\n