The technology sector has experienced phenomenal growth, with technology now permeating almost every aspect of our lives. As companies and stakeholders continue the debate about technology’s impact on society, we argue that four key principles – accountability, human-centric, holistic strategy and collaboration – will be key to the success of future sustainability efforts in the sector.
As digital technology becomes embedded across all other sectors and in almost every aspect of our lives, technology companies are facing increasing scrutiny by stakeholders about their impact on society and sustainable economy.
A key driver of mounting pressure on technology companies to improve their record on sustainability and think more critically about their social and environmental impact has been the sector’s growing dominance. In the last 15 years, the five largest publicly-traded companies have shifted from a relatively diverse set of businesses across industrial, retail, and oil and gas sectors to an entirely technology sector-dominated landscape. Apple, Alphabet (the parent company of Google), Microsoft, Amazon and Facebook are now the world’s largest companies by market capitalization, owning some of the most valuable global brands.
Technology has improved human lives in countless ways. In the sustainability field, the sector has driven the development of clean energy, eHealth, mobility, and blockchain technologies, among many contributions. Technology companies, who collectively consume approximately 7% of global electricity, have also been pioneers of energy efficiency solutions and the use of renewable energy, driving the demand and adoption by other companies and sectors alike.
However, relative to its size and outsized influence, the tech industry so far has mostly lacked the depth, maturity and long-term vision in its approach to sustainability. The industry has been absent from the list of companies recognized by experts for their sustainability leadership in the GlobeScan-SustainAbility Survey, with Tesla becoming the first technology company to be included in the list of top five global corporate sustainability leaders in 2017.
Sustainability Leaders 2007-2017
Despite their absence on the leaderboard, the sector as a whole is beginning to take steps towards taking greater responsibility for its societal impact. As technology companies continue the journey to define their ambition and goals, we argue that an effective approach should embrace the four key principles. While this is by no means an exhaustive list, these tenets should serve as a foundation for any technology company looking to maximize its positive impact on society and the economy.
Despite tech companies’ absence on the corporate sustainability leaderboard, the sector as a whole is beginning to take steps towards taking greater responsibility for its societal impact.
Increasing efforts around transparency, disclosure and accountability will be key to improving the sector’s record on sustainability.
Addressing complex questions around accountability will be core to increasing the technology sector’s positive impact on society. Technology corporations, especially internet companies, transcend national borders and continue to stretch the boundaries of privacy. The operations of internet giants often fall in the grey area of law that is outside of traditional limits of national and international jurisdiction. Recent antitrust cases such as the European Commission’s ruling to impose a record $2.7billion fine on Google for infringement of antitrust laws have demonstrated just how complex, and costly, the questions around governance and accountability can be.
Privacy and management of personal data will be the key areas where the sector will have to demonstrate, and lead efforts in, greater accountability. Technology companies already have access to vast amounts of customer data, such as personal and demographic information and behavioral data, and this is only likely to increase with the proliferation of the Internet of Things (IoT). Who will the companies be ultimately accountable to for how they access, store and use this data? What will be the necessary mechanisms in place to improve current practices? While there are no easy answers to these questions, increasing transparency and maintaining an ongoing dialogue with relevant stakeholders will be necessary steps to arrive at solutions.
Social media platforms will need to demonstrate greater efforts to address questions around responsibility for content and transparent advertising practices. The companies have long faced pressure to clamp down on extremist content, hate speech, fake news and other inappropriate content. They need to do more. In a strong signal from the market, Unilever has threatened to pull its advertising from Facebook and Google unless the companies introduced new measures to police extremist and illegal content. The European Commission will introduce new regulations if self-policing fails.
Improving transparency will be key to demonstrating greater accountability, and while the sector has made great strides in recent years, more remains to be done. Of 15 leading corporations analysed by Greenpeace only two received an “A” rating for transparency efforts. Many internet giants that rely on large amounts of electricity to power their data centers, such as Netflix, Amazon and Twitter, fail to disclose their energy sources.
Improving internal culture is another important step to increasing accountability. Technology companies’ record on workforce diversity and their disclosure around it remain poor. A recent report found that the ratio of male workers in the US technology sector has not changed from 2005 to 2015, remaining at 78%. The percentage of African American workers declined from 9% to 7.7%, while that of Hispanic workers remained unchanged at 7.5%. A number of US companies have also faced high-profile allegations of gender discrimination and sexual harassment, exposing internal culture that lacks of inclusion and transparency.
Technology companies must think about the impact of innovation on health & well-being, jobs and livelihoods, by addressing both concerns and opportunities.
Technology has impacted many aspects of the human condition – from our brains and bodies to our work, lifestyles and overall wellbeing. As the debate on whether it has transformed lives for better or worse grows intensifies, companies face escalating scrutiny to demonstrate how they are addressing the needs of, and impact on, human users in an increasingly thoughtful and proactive way.
Companies must focus on designing products and services to meet critical society needs, versus designing technology for technology’s sake.
In order to do this companies must focus on designing products and services to meet critical society needs, versus designing technology for technology’s sake. Designing products and services with a more complete understanding of the potential impact on human-lives and making those innovations more widely accessible, will enable technology companies to address the externalities posed by commercial endeavors.
Technological innovation has enabled radical new medical services, deeper insights into personal care and improved emergency relief services. And yet, several studies indicate indicate that tilting our heads forward to gaze into our phones is putting an average of 60 pounds of pressure on our necks, causing pain and misalignment in addition to eye strain. What then is the role of a phone company in addressing the various health concerns raised by the proliferation of their devices? Beyond our physical health, technology impacts our emotional and social health as well. For instance, the American Academy of Pediatrics has warned about the potential for negative effects of social media in young kids and teens.
One of the most media-frenzied debates surrounding technological innovation concerns the impact on jobs and future labor from automation and artificial intelligence (AI). Between 2000 and 2010, 5.6 million US manufacturing jobs were lost and it is estimated that up to 85% of them were automated, not outsourced. While estimates range, according to one study, 47% of US jobs could be automated within 20 years. Conversely, a handful of modern studies have noted that there’s often a positive relationship between new technology and increasing employment—in manufacturing firms, across all sectors, and specifically in firms that adopted computers.
Though the debates themselves rage on, the expectation that technology companies address these concerns is likely to grow as the collection of improved data allow us to better understand the real impacts of technological development and innovation.
The sector needs to look beyond energy, towards human rights and labour conditions in supply chains and the growing issue of e-waste, for a more complete approach towards sustainability.
Technology companies have made remarkable strides in addressing their extensive energy footprint including impressive 100% renewable energy commitments. In fact, Google is now one of the largest global purchasers of clean energy in the world.
However, energy consumption and the support of renewable energy resources are only one component of the sector’s environmental footprint. Though these concerns are far from new, there are still major gains yet to be made in the sphere of conflict minerals and human rights abuses in the IT sector’s supply chain, with data and transparency still a major barrier to improvements.
Without better visibility into their supply chains, technology companies will continue to fall short of the ability to track and correct challenges properly.
Without better visibility into their supply chains, technology companies will continue to fall short of the ability to track and correct challenges properly. Clear and measurable goals around diversity, decent work and labor conditions across the technology sector are still lacking and rarely do public disclosures from companies address the wider social and human rights implications of widespread technological adoption. While many technology companies choose not to report to industry standards such as GRI or SASB, greater efforts will need to be made to pilot and champion reporting formats that better meet the industry’s needs.
At the other end of the value chain, the creation of vast amounts of electronic waste continues to be a major issue that technology companies face. Dell became the first company to ban the export of e-waste to developing countries in 2009. However, the world still has an increasingly severe electronic waste problem – 41.8 million tonnes were created in 2014, 7% from personal devices such as laptops and phones. We risk exacerbating this problem as sensors, chips, and other electronic components are deployed across more products and as higher incomes allow more people to access these technologies. The success of internet companies is directly dependent on access to mobile phones, tablets and computers. Do they have a moral obligation to be part of the solution to tackling electronic waste?
Setting targets for a product’s impact from start to finish is one of the first steps in mitigating overall environmental impact beyond renewables and energy efficiency. Apple’s recently announced ambitious goal to close the loop by transitioning to use only recycled materials for production is a great aspirational goal for other companies to follow.
By approaching their sustainability strategies more holistically, technology companies can help future-proof their own businesses while addressing key societal challenges.
Actively participating in cross-sector collaborative initiatives, engaging in advocacy, and using its unique position to advance sustainability and the SDGs across a range of sectors will be paramount to future sustainability leadership.
Many technology companies have a reputation of mostly operating in isolation, often absent from major collaborative spaces. Active engagement in forums like the UN Global Compact, CE100, We Mean Business, while spearheading cross-sector initiatives of their own, will be increasingly expected.
For the technology sector, advocacy efforts will continue to focus on clean energy, privacy, human rights and government surveillance.
Advocacy is one of the most effective ways for companies to accelerate progress. For the technology sector, advocacy efforts will continue to focus on clean energy, privacy, human rights and government surveillance. The Renewable Energy Buyers Alliance, which unites energy buyers and advocates for policy measures needed to increase renewable energy availability and adoption in the US, is a great example of how companies like Facebook are catalysing transformational changes that positively impact the entire private sector.
More is needed. In the most recent edition of Clicking Green, only two out of 15 leading technology companies received an “A” ranking for advocacy. According to the report, while several leadership companies continue to blaze the trail by speaking out and setting ambitious renewable energy goals, many others are opting for safer status quo options, which threaten to jeopardize the progress by the industry.
The technology sector is uniquely positioned to advance sustainability and offer solutions applicable across a wide range of industries. High-speed Internet, mobile technologies, social media, cloud computing and many other technologies can offer powerful solutions for advancing the Sustainable Development Goals.
Companies Leading on Climate Solutions
The technology sector is also in a unique position to lead the efforts to address climate change. According to a recent GlobeScan-SustainAbility Survey, three out of eight companies mentioned as global leaders on climate solutions were technology companies. Driving the development and adoption of solutions presents a unique opportunity for technology companies to advance systemic progress on climate across all sectors of the economy.
Technological innovation will continue to be a major engine of societal progress. As the sector continues on the path of rapid growth, so will complex questions around its social and environmental impact. SustainAbility is actively working with technology companies, supporting them to define and deliver on their sustainability ambition. We invite you to share feedback on our proposed four principles and lessons you have learnt from your sustainability journey.