Why ESG & digital transformation should be inseparable? (Part III) | 3045

An ethical investment portfolio must take a joint perspective on ESG and Digital Transformation integration for business decisions. Successful companies greatly benefit from carrying out ESG and DT change processes together. Those who carefully choose the right path and the best suited IT partner stay ahead and win.

  1. Why is choosing a reliable IT partner crucial?
  2. AKFI’s framework to integrate DT with ESG
  3. So what is missing in the puzzle?
  4. Case study: Ford has learnt a lesson
  5. ESG & DT should be inseparable

This completes the Future Processing and AKFI-created three-part blog series on ESG.

Our examination of the particulars of ESG and DT has led us to the following conclusion:

Even if they weren’t successful to begin with, we may learn from what previous companies did to succeed. Finally, we choose an IT partner with whom we will collaborate to create and deliver the intended business results after evaluating our existing transformation state.

Why is picking a trustworthy IT partner so important?

Before taking the first important step towards DT and ESG transformations, there are several preparations we must do. The ‘as is’ position of the firm should be the primary focus of every decision-maker. Employee mentality, problems and barriers that need to be solved, and possibilities that may be taken advantage of should all be included.

The success of digital transformation and ESG reforms may be attributed to the selection of a skilled, experienced, and completely dependable IT partner. A group of specialists will:

actionable ESG and DT strategies should be developed in light of the primary risks and sustainability studies that are required by stakeholders, investors, corporate leaders, and boards of directors;

important possible risks—both internal and external—are evaluated;

choose the best plan of action for both processes and linked modifications;

include all current specifications and rules;

support at various implementation phases and beyond.

The greatest IT partner is also one who actively participates in the workflow of the business, asks as many questions as necessary, investigates several possible risk areas, pays close attention to employee feedback, and has a track record of developing customised solutions.

Framework developed by AKFI to combine DT and ESG

AKFI created a special framework called EDGESTM as a worldwide industry consortium that collaborates with businesses to create actionable DT and ESG plans to safeguard stakeholders from catastrophic risks.




Taking a cue from Peter Druker’s well-known maxim:

This is the EDGES methodology’s main purpose.

The foundation is laid for dashboards and tools that follow the parallel paths of ESG sustainability and digital transformation. As managers and directors are under growing demand from stakeholders to disclose their Digital Transformation and environmental, social, and governance (ESG) initiatives, AKFI has developed EDGES as a solution for journey planning.

Currently, businesses report separately on their financial outcomes, ESG, and occasionally, digital transformation. The puzzle-putting work is now up to management, stakeholders, and financial experts.

The difficulty may be compared to a big bag of puzzle parts, some of which are unnecessary and others of which are missing. As the jigsaw puzzle is put together, everyone is playing catch-up!

What therefore is lacking from the puzzle?

To start, reporting on the digitization of IT and the use of AI and IoT by enterprises, if done at all, often amounts to little more than a press release. The “D” area is this.

As a result, the three additional crucial transformation components of economic, social, and governance are absent from digital transformation.

the external economic influence on the profitability and economic growth of communities (cities, regions, and nations), as well as the internal economic impact on processes.

the social duty to promote cultural change and staff reskilling.

Everything as a Service (XaaS) is the result of the disruption in business models.

Ford has learned a lesson from this case.

The automotive sector offers several case studies and illustrations of how ESG and digital transformation may be combined. Electric vehicle development, or eVs for short, is a defining feature of the disruption of the automotive industry. The list featured both established automakers like Volkswagen, Ford, GM, and Toyota as well as recent entrants like Tesla and BYD. These companies will jointly invest more than $100 billion over the coming years. Ford has a head start on the electric car transition.

The transition to electric vehicles started early at Ford. In 1914, Henry Ford started developing a low-cost electric car. A century ago, Ford was making headlines for its efforts to spearhead the development of electric automobiles. Time management has to learn the hard way how to mix DT and ESG risks in electric vehicles. Let’s examine the complete series of happenings.

THEN: A failure of Ford’s Smart Mobility Digital Transformation

All of it started in 2014, when Mark Fields, Ford Motor Corporation’s president and CEO at the time, revealed the corporation’s lofty goals to become a “personal mobility” company. Mr. Fields decided to create brand-new digitally enabled automobiles and intelligent mobility solutions in a brand-new category dubbed Ford Smart Mobility prioritises innovation over all other aspects of its strategy. It was intended to represent the beginning of Ford’s transition into a firm that focuses on both products and mobility.

Starting with the planning phase, a lot went wrong. Ford began by segregating its workers, stakeholders, and culture of digital transformation. The new business was located thousands of kilometres from Ford’s corporate headquarters.

Ford was investing countless millions of dollars on the new eV sustainability initiative, but other areas of the business were struggling with quality. Mark Fields was compelled to quit as a result, and Ford’s stock value crashed.

Ford has now incorporated DT and ESG.

The new leadership and board of directors of Ford made the decision to go farther and weigh all of the dangers associated with fusing sustainability and digital transformation. They included ESG and DT into a wide strategy plan for the company’s future in order to have a holistic view.

The first Ford Integrated Sustainability and Financial Report was released in this manner, marking the beginning of the company’s dual path towards sustainability and digital transformation.

While Henry Ford’s initial automobiles marked the beginning of Ford’s electric vehicle adventure, many other firms have experienced similar eV teething issues. There are several instances of how high-level sustainability objectives can be accomplished when digital transformation technology replaces the fuel (petrol) engine.

If DT and ESG were properly integrated from the beginning of the planning process, many of these risks might be avoided.

ESG and DT must work together.

ESG and DT practises necessitate close examination while strategizing, making investments, and reporting. Those who wish to succeed in the digital age must consider all business risks in order to run sustainable operations.

A carefully considered Companies may take advantage of sustainable digital journeys that are tailored to their needs thanks to digital transformation. They need both a strong business case and a thorough digital strategy. This can only be determined by impartial industry cooperation. Engagement of a reliable IT partner aids in avoiding future roadblocks. The chances for value creation and innovation are abundant amid the various risks that businesses must manage.

The issue still stands: When are you prepared to begin integrating ESG and digital transformation into your business?


The Actionable Knowledge Foundational Institute, a non-profit international industrial collaboration, is directed by Manuel Vexler as executive director. It acts as a forum for progressive businesses starting ESG and digital transformation efforts. Working groups of members combine ESG and digital transformation skills to create workable ideas. When the solutions are put into practise, stakeholders are protected against catastrophic risks, which has a significant positive impact on their financial situation.

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