Profitability: The Elephant in the Room in ESG Discussions
Written by: Michael Linehan
Those involved in Responsible Computing share a vision to work towards a sustainable and fairer future, prioritizing people, the planet, participation, and prosperity. Such a vision requires lofty goals. To realize those, they must be SMART; Specific, Measurable, Achievable, Realistic, and Time-Framed. In this piece, I'd like to focus on two key areas: Achievable and Realistic. To meet these requirements, we must be thinking in terms of profit.
Profit has become a dirty word, deemed the roadblock to focusing on doing what is best for society, which happens when an organization positions itself on pure profit to the exclusion of adding value. For example, when people use vulture funds to buy potential family homes and neglect to rent the property for years, they drive rent prices higher, all in the name of profit alone.
On the flip side, industries like healthcare, open access, productivity software, and supply chains prove that profit and people are not zero-sum games. When there is a focus on both, they feed off each other, raising the collective benefit to organizations and their consumers.
A recent example was how digital transformation paved the way for remote work during the COVID-19 pandemic. In the years leading up to the pandemic, organizations like Microsoft switched their business models to focus on a larger net of small transactions, moving their offerings from high-ticket hardware products to cloud-based service offerings such as Office 365. Following his appointment as CEO, Satya Nadella took Microsoft from a market capitalization of €300 billion to $2 trillion in a few short years.
The service-based offerings he implemented, such as Microsoft Teams, democratized video conference software, which was traditionally very expensive, and allowed for remote working to become seamless. Not only did this increase the organization's profitability, but it was a crucial piece of software to enable so many people to remain employed during the pandemic, lowering the burden on governments to offer subsidies to those out of work. As a result, many industries kept moving, and though most countries experienced massive inflation, it was a drop in the ocean compared to what could have happened.
Additionally, a typical social media trend during the switch to hybrid and remote work during the pandemic was the observation that the planet was healing. Carbon emissions from road traffic were down, and certain species of wildlife roamed streets across the world as if humans never even existed. It was a sight to behold.
Families found themselves with more quality time to spend together. MS Teams for example, enabled corporate executives to take their kids to the park while they worked from mobile devices, gaining a greater separation between deep work and correspondence. Prospective and new parents found themselves able to stay in the workforce for longer rather than sacrificing their careers.
This is but one example where a focus on profitability, resulted in digital transformation that simultaneously improved the results for people, participation, planet, and prosperity.
The market has changed in the demands of organizations. We are more aware of the planet we want future generations to inhabit. We must carefully choose where we spend our money, which companies we work for, and which technologies we use, rather than shirking our sense of personal responsibility.
The market ultimately decides what society values. It is easy to cast a vote in a ballot box, though it is another matter of choosing where we spend our precious resources. So long as we, the people, are responsible for the technologies we demand from organizations, profit becomes an enabler of ESG goals, not a choice between the two.