Put Some Vendor ESG In Your RFP
I’ve noticed a lot of enterprise vendor marketing around ESG efforts lately – those steps a large global company might take to strengthen their Environmental, Sustainability and Corporate Governance stance. As an industry analyst, I primarily wonder about two things with all these big ESG vendor announcements.
First, is a public-facing ESG announcement more about marketing perception and “thought” leadership, being seen as a more responsible IT vendor and supplier, or is there actual new accountable value being presented to the buying market? Does ESG “news” set up stronger competitive differentiation or is it just playing me-too green-washing?
I’ve read recently that enterprise ESG management efforts tend to focus on how much an organization’s ESG baby steps are impacting corporate profitability, not on how much better or more socially responsible a company can or should be in the larger world. In other words, corporations mainly manage their social responsibilities to limit their impact on profitability. This is not surprising nor even unexpected. What is surprising is that there is often no active management to actually improve or maximize ESG impact or value, despite having adopted ESG initiatives. And subsequently, ESG impacts receive little internal valuation with regard to inherent profit seeking, which leads to my next question.
Second, how should we actually measure ESG efforts or compare them between vendors? How should buyers and prospects weigh and value each potential supplier’s ESG? I’ve heard of some RFP/RFQ’s these days asking some checkbox questions about a prospective supplier’s corporate standards and practices including global ESG initiatives. However, I suspect that most vendors can check most of those boxes without really accomplishing much in practice.
Believe me, I know there are plenty of industry standards with shiny vendor certifications available (e.g. ISO-nnnn). But meeting a standard is kind of like saying “we can also check off the minimums required”. I’d rather be able to hold up two competing organizations and readily evaluate which is being more effective, more “ESG” if you will. And when it comes to indirect values like making a positive environmental impact and fostering longer-term sustainability (i.e. earth life support), I truly doubt the entrenched and directly rewarding short-term corporate focus on efficient resource extraction, revenue growth, and maximal profit ever gives any percentage back to the larger, longer-term community (i.e. us, life on this planet).
And yes, I’ve sat through many ESG presentations (any keynote this year that didn’t feature a shiny ESG story?) and they are all each “really a win-win situation.” And I may be a critical bastard, but that’s mostly bullshit. If there was any real effort spent, it had to come out of margin. And for that, there had to not just be a belief that good behavior will come around as a karmic reward, but bright lines drawn between today’s selfish actions and tomorrow’s global comeuppances. And too many people don’t acknowledge the lines visible today.
I don’t know if we should ask for more governmental regulation, but rules are generally made for people who wouldn’t otherwise behave better. I’d like people to open their eyes and behave better because they see the larger picture (and corporations are people too, right?). Currently, I don’t believe corporate ESG initiatives are going to be at all effective.
Or maybe they can, but it might be up to us, the global consumers. Within the IT industry as a global strategy, if we all put some real ESG weight into our RFP’s, we could have an immediate and significant impact (e.g. materials sourcing, carbon neutrality, zero emissions, e-cycle v.s. e-waste). This burden (i.e. fate of the planet and all) belongs to all of us – how much do we really value supplier ESG, are we willing to put our buying power behind it, and how do we judge which supplier is the better ESG steward?