We are at a crucial moment in the history of our societies and economies in which the decisions we make as business leaders not only affect our financial results, but also the future of our planet and the well-being of future generations. Set within this context, discussions about ESG (Environmental, Social, and Governance) continue to generate debate and even outright controversy.

There are those who criticize ESG, considering it an unnecessary burden that generates expenses that do not provide a return. Even worse, some argue that it is no more than a passing fad. Others use labels like greenwashing and social washing to discredit the real impact of these practices. Certainly, it’s true that not all companies have implemented them as genuinely as they could, yet when wielded properly, ESG has proven to be an important and transformative tool.

It is from this perspective of genuine transformation in service to the planet that companies must invest in ESG. In doing so, such companies position themselves as industry leaders who are better prepared for the challenges of the future.

An investment not a cost

One of the most repeated myths is that ESG is an unnecessary expense. The reality though is that investing in ESG criteria is not a cost, but a long-term investment that protects us from financial, regulatory and reputational risks, allowing us to operate more efficiently and competitively.

Such views are demonstrated by a recent Harvard Business Review study which found that companies adopting ESG policies can reduce their operating costs by up to 16% while improving their long-term competitiveness. This is a clearly logical finding. After all, when a company optimizes its energy consumption, minimizes its waste or invests in responsible labor practices, it not only improves its public image, it also correspondingly becomes a more efficient operation.

The ideas of contemporary economists such as Joseph Stiglitz remind us that companies cannot operate in a vacuum. Social and environmental value is inseparable from financial value. In an increasingly regulated and environmentally conscious world, companies that do not align themselves with sustainable practices will face greater risks and scrutiny. According to McKinsey, companies with high ESG ratings are 30% less likely to face regulatory conflicts. This is not just a PR game. It is a smart and necessary business approach.

Technology as the key driver

To take this even further, if we focus on technology and digital transformation, ESG becomes more than just a commitment: it becomes a revolution.

Emerging technologies such as artificial intelligence (AI), Big Data, blockchain and cloud computing are transforming the way companies implement and manage their ESG practices. These advances not only allow for better operational efficiency, they provide a level of transparency and traceability that was previously unthinkable. By the same token, technologies such as Big Data and machine learning allow us to analyze large volumes of data and find patterns that help improve energy efficiency and reduce emissions.

The technology sector therefore has an unparalleled responsibility and opportunity to lead the fight against climate change. Green data centers and cloud-based solutions enable companies to operate more efficiently and sustainably. Microsoft, for example, has committed to being carbon neutral by 2030. These are the initiatives that show that it is possible to balance economic growth with sustainability.

According to the technology market intelligence firm IDC, companies that migrate to the cloud can reduce their energy consumption and CO2 emissions by up to 84% compared to traditional data centers. Technology then is more than just one tool among many within our arsenal, but the key to environmental efficiency in the digital economy.

The most exciting thing about all this is that we are seeing a convergence between ESG and digital transformation. Companies that leverage emerging technologies to advance their ESG commitments will be at the forefront of change. Technologies such as digital twins, which allow the performance of factories and cities to be simulated and optimized, are just one example of how technology can be a key agent of sustainability.

This is not something far off in an imaginary future. ESG is a force now within the present, and those of us in the technology sector are the leading drivers of this change.

Ultimately, investment in ESG is not a luxury. It is not optional. It is an important responsibility, an opportunity to be taken and, above all, it is the only way to build a future that is sustainable both for our companies and for society at large. And technology is the engine that drives this change.

** This note was originally published by the Spanish media outlet Corresponsables.

Read the original note in Spanish.