In Part 1 of this article, we provided you with the background and case for approaching ESG issues with an additional lens – the tech lens – to make it more of an integrated ESGT approach given the massive tech disruption we are living through. 

In this Part 2 we provide some use cases illustrating why T in ESGT makes sense and then offer an ESGT governance framework to future proof your organization in these highly unstable, challenging and yet incredibly exciting and hopeful times.

Andrea

Dante

This is Part 2 of a two-part series on exponential technologies and their implications for ESGT leadership. You can find Part 1 <a href="https://illuminem.com/illuminemvoices/esgt-exponential-technology-requires-exponential-responsibility-part-1-the-new-esgt-framework" target="_blank" rel="noopener">here</a>.
<h2>The risk and the reward of ESGT: use cases</h2>
<h3>Covid-19 and Covid-19 vaccinations in record time&nbsp;&nbsp;</h3>
What has happened over the past years since the COVID-19 Pandemic erupted is certainly unprecedented in modern times in terms of both the bad and the good. The bad is obvious &ndash; COVID-19 and its variants have caused, at this writing, millions of deaths, and sickness worldwide and new variants still pop up regularly around the world.
The good is obvious too but completely novel &ndash; the fact that scientists the world over, across borders and against national and international political headwinds, continued to share data and push boundaries to achieve not one, not two but almost a dozen covid vaccinations and treatments that have by all accounts had a major impact on preventing deaths and serious illness around the world. A dramatic example of this phenomenon comes from the almost exponential velocity and accuracy of the development of a variety of COVID-19 vaccines in a period of under one year from the discovery of the virus something the world had never seen before.
This is clearly an example where the &ldquo;T&rdquo; in ESGT clearly intersected with E and S issues &ndash; biological, social, labor, health, and safety - as well as G issues - how well a company, a school, a government governed the issue of pandemic management and prevention.&nbsp;
<h2>Congolese cobalt: where the E, the S, the G and the T meet</h2>
The New York Times produced an alarming investigative report on &ldquo;A Power Struggle Over Cobalt Rattles the Clean Energy Revolution&rdquo; on November 20, 2021. In essence, it is the story of the rich mineral land and mining operations, specifically for cobalt, that exists within Congo specifically for lithium battery production. Cobalt is a critical ingredient in the green revolution because it is essential for lithium battery production which in turn is a key component of the electric car revolution, specifically for the likes of Tesla and the exponentially growing competition in the electrical vehicle market worldwide. The paradox of this story is that there is geopolitical big power competition with serious social and economic consequences locally over a key ingredient in the green technology revolution involving the environmentally destructive mining of local lands.
This story has all manner of ESGT issues, risks and even opportunities intersecting within the storyline, illustrating the deep interconnection between the environmental, social, governance and technological issues, risks and opportunities of our times:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Environmental: the ravaging of land, biodiversity, and homes in a cobalt mining rich zone of Congo by both private/public and national/international interests</li>
<li style="font-weight: 400;" aria-level="1">Social: the exploitation and maltreatment of poor local populations - of their homes, health, safety, work opportunity</li>
<li style="font-weight: 400;" aria-level="1">Governance: governance issues exist at several key levels in this story:</li>
<ul>
<li style="font-weight: 400;" aria-level="2">local, national, international, and geopolitical governmental levels, especially the fierce China/US rivalry to secure rare earth minerals worldwide in which the Chinese are way ahead (see chart in the article)</li>
<li style="font-weight: 400;" aria-level="2">company level - corporate governance level for the Chinese, American and other companies competing locally to access/control the rights</li>
<li style="font-weight: 400;" aria-level="2">supply chain level to secure reliable, resilient cobalt supply for the likes of Tesla and other auto manufacturers worldwide.</li>
</ul>
<li style="font-weight: 400;" aria-level="1">Technology: In its insatiable and exponentially growing demand for cobalt (among other minerals) to create batteries for electric vehicles (which are supposed to help with carbon reduction), companies like Tesla contribute to the above concerns and issues and in turn have a responsibility to develop not only responsible tech governance but also responsible ESGT governance for their products and services.</li>
</ul>
Once again, we see the inextricable interconnection of environmental, social, governance and technology issues in a serious global climate story which will require all actors - whether at the governmental, business, or social levels - to think holistically about ESGT strategies, governance and resilience for the benefit of their key respective stakeholders.
<h2>Future-proofing business: building strategic and resilient ESGT leadership and governance</h2>
There is no business model that does not include an array of technological and digital transformation issues, risks, and opportunities. Indeed, we believe everything is interconnected - one way or another - by technology - existing, developing, and yet to be developed. We also believe deeply that almost all (if not all) of the new technologies that are being developed at the speed of light have the opportunity to be great, good, bad, or deeply ugly and dangerous.&nbsp;
What is the x-factor that explains the difference between the various potential impacts of technology? Human intelligence, ethical leadership, and thoughtful governance. Indeed, how early and how often moral, ethical, judicious, socially conscious filters and governors are applied to technological exploration, invention, discovery, development, or application is the critical determinant of whether such tech will be neutral, beneficial, or dangerous to humanity and even life on earth.&nbsp;
It is incumbent on leaders everywhere to exercise responsible leadership at the intersection of ESG and technology. To be able to do so, leaders must integrate all relevant technology issues, risks, and opportunities into the earliest part of any discovery, invention, or R&amp;D effort and throughout its development, operationalization and sale of products and services relating to such technologies. It also means developing an overarching strategic and business planning effort that takes into account all ESGT issues, risks and opportunities relevant to the particular business and which includes all of the right people sitting at the strategy formulation table - not just the financial leaders, but the ethicists, the risk, the legal and the governance experts and others as needed by the particular business (chief medical officers in a pharma company, aviation safety experts in an aircraft manufacturing company, AI ethicists in a software company, and so on.).&nbsp;
Figure 1 below provides a big-picture illustration of how leaders must develop organizational strategy to include not only the traditional financial and operational details that always go into strategy formulation but the ESGT ones we have been talking about in this Article as well.
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://illuminem.b-cdn.net/articlebody/0d04a07439ab4725374e1cd3ca758d5514fae17e.png?" alt="ESGT-integrated organizational strategy" />
So how do companies and other organizations start their ESGT governance and strategic journey? We leave you with some food for thought on what resilient leadership (both management and oversight) looks like (adapted from the &ldquo;10 Commandments of Resilient Leaders&rdquo; from Andrea&rsquo;s book Gloom to Boom):
<ol>
<li style="font-weight: 400;" aria-level="1">Resilient leaders - in business, in society and in government - integrate ESGT issues, risks and opportunities into their organization's strategy.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders empower and support a cross-functional team of ESGT experts to run an ESGT Value Chain approach to spotting, analyzing, mitigating and/or deploying all relevant ESGT issues, risks, and opportunities.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders &ldquo;walk the talk&rdquo; supporting ESGT matters not only verbally but substantively - by driving tone from the top as well as concrete resources and budgets.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders aspire to become at least &ldquo;Responsible Leaders&rdquo; and at best &ldquo;Enlightened Leaders&rdquo; (as these concepts are developed in Gloom to Boom and briefly explained in the Figure below)</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders focus on building and institutionalizing a culture of integrity where stakeholders including employees speak up without fear of retaliation, managers &ldquo;listen up&rdquo; and executives and the board &ldquo;act&rdquo; accordingly.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders are attuned to and savvy about the world around them and how it affects their organization&rsquo;s existing and future planned footprint - they understand and can translate how the &ldquo;Megatrends of our Turbulent Times&rdquo; (see above).</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders understand and cater to their most important stakeholders - not just their perceived top stakeholders (shareholders for business, e.g.).</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders allow for mistakes to be made and through their speak up/listen up culture they learn lessons and undertake continuous improvement, innovation and sustainability.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders look at the long-term horizon while minding the short-term as well.</li>
<li style="font-weight: 400;" aria-level="1">Resilient leaders welcome ESGT oversight - whether from a board of directors, governors or trustees or other governmental entity.</li>
</ol>
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://illuminem.b-cdn.net/articlebody/923ae0a81465b2993bbb0bcb58c4f8c68a26e765.png?" alt="ESGT Leadership Typology" />
Thus, the topic of responsible ESGT leadership and governance in an age of exponential, rapid-fire technological change is complicated, multifaceted, fraught, and potentially a losing battle. But this does not mean leaders in business, government and society should not do their utmost to protect people, assets, and the planet - early and often. Indeed, we should all double and triple down on building strategic ESGT governance and strategic resilience and sustainability including focusing on technological solutions to some of the exponential technological challenges of our time.&nbsp;
John Le Carre&rsquo;s hero Smiley is told in &ldquo;Smiley&rsquo;s People&rdquo; by a colleague as he is in hot pursuit of an evil enemy to: &ldquo;Go home, George. Get yourself a bit of love and wait for Armageddon&rdquo;. We do not think it is time to go home yet but we are in an 11th hour situation to rein in the cowboy wild west culture that has dominated technology governance (or the lack thereof) for the past few decades. We cannot afford to wait for a technological Armageddon. We still have time to defuse the potential out of control exponential technology bombs by developing responsible, deeply knowledgeable, and canny, ESGT-savvy, and resilient leaders.&nbsp;
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This article was adapted and updated from Chapter 15 of "<a href="https://www.routledge.com/Sustainability-Technology-and-Finance-Rethinking-How-Markets-Integrate/Bril-Kell-Rasche/p/book/9781032200545" target="_blank" rel="noopener">Sustainability, Technology, and Finance</a>". illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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ESGT: Exponential technology requires exponential responsibility (Part 2: Use cases and future proofing)

This is Part 1 of a two-part series in which the authors make the case that leaders everywhere must practice elevated, exponential responsibility in this era of exponential technological disruption. 

In this part, we provide you with the background and case for approaching ESG issues with an additional lens – the tech lens – to make it more of an integrated ESGT approach given the massive tech disruption we are living through. 


This is Part 1 of a two-part series on exponential technologies and their implications for ESGT leadership. You can find Part 2 <a href="https://illuminem.com/illuminemvoices/esgt-exponential-technology-requires-exponential-responsibility-part-2-use-cases-and-future-proofing" target="_blank" rel="noopener">here</a>.
<h2>Introduction</h2>
In an era of exponential technological change and disruption, leaders everywhere must up their game and engage in exponential responsibility. How do they do that? By embracing a holistic environmental, social, governance and technological (ESGT) approach to intangible risk and opportunity management, by incorporating such considerations into strategic planning and product and service R&amp;D and by exponentially turning up the volume on technology governance in all its nuances and incarnations.
The digital transformation agenda preoccupying corporate boards and senior executives has become an all-consuming pillar of leading large, global enterprises. This is as true in the private sector as it is in the government domain and, although less so, also in civil society. The pressure to keep up with the proverbial technological Jones' has led companies to digitize (and digitalize) all facets of their business models. Partly motivated by a quest for efficiency, partly (albeit insufficiently) motivated by an unyielding quest to improve cyber resilience, all, in the private sector at least, are motivated by a drive to improve the bottom line.&nbsp;
Additionally, digital natives are entering the workplace in force, populating large tech companies or creating exciting new business models and innovations that outpace and defy many of the old business ways. This new workforce is also demanding, among other things, that far greater attention be paid to all things environmental, social and governance (ESG).&nbsp;
Add to all this the recent explosion of large language artificial intelligence/generative AI onto the scene, first via Open AI&rsquo;s release of the ChatGPT series in late 2022, swiftly followed by a host of competitors &ndash; large and small, private and public, known and unknown. We have ourselves a true demarcation line between yesterday and tomorrow &ndash; between what will become the obsolete ways of doing business and organizing society and governance and the new, yet undiscovered, ones.&nbsp;
All bets are off on holding on to the old, traditional and, frankly, tired ways of organizing and integrating strategy, risk management, product development and the like.&nbsp;
<h2>The challenge with the 'T'</h2>
The challenge, however, as revealed by many lessons on the perils of making digital transformation an outcome rather than a journey, is that responsibly harnessing technology requires, more than ever before, an evolved governance framework akin to the ESG frameworks that have become de rigueur in corporate management circles. In short, the T of technology is missing in today&rsquo;s ESG frameworks, however fleeting they may be in enterprise governance and management practice.
This 2-part article addresses how the &ldquo;T&rdquo; in ESGT needs to be folded into the overall ESG governance conversation and implementation at all kinds of businesses - from the most established, traditional multinationals and small to medium size enterprises (SMEs) to the newest startups including pure tech plays. T is not a separate, siloed endeavor that is narrowly related to risk management or digital transformation as it often is in bigger, more established businesses.&nbsp;
Nor should T be the be-all, end-all of a newer, pure tech company or start-up. Indeed, the T is an essential and intricate part of the management and governance of all things intangible or ESGT, whether in the context of an established multinational, an SME, or a startup. In fact, T is part of every organization's reality regardless of purpose - for profit, nonprofit, educational, governmental, or intergovernmental, among others.&nbsp;
Akin to established companies&rsquo; 'discovery' of all things digital and the sudden need for tech governance within their virtual walls, many of the purely digital or technology-focused new businesses popping up everywhere must also open their lens to incorporate relevant ESG considerations into their tech-heavy focus.&nbsp;
In Part 1 of this series, we discuss the unique context of our times that makes this ESGT discussion not only possible but necessary as well as what ESGT actually is and how to embed it into strategy. In Part 2 of this Article, we share examples of ESGT use cases and provide our thoughts on how leaders can future-proof ESGT governance.
<h2>Context, Context, Context</h2>
<h3>Framing the ESGT Approach</h3>
The COVID-19 pandemic exacerbated the tension to responsibly harness technology as a cornerstone of the digital transformation agenda while at the same time accelerating the world&rsquo;s technological adoption and dependency by more than a decade in a single year, raising the stakes. From ensuring household, business and government continuity, the reliance on technology during the pandemic has been one of the few global differentiators as few global systems did not strain under the weight of a global &ldquo;work-from-home experiment&rdquo;.&nbsp;
The inherently distributed nature of professional nomadic knowledge workers who were once told that working outside of corporate firewalls would produce cyber vulnerabilities, were the most adaptive people when COVID-19 shifted the world to an unending virtual reality. This virtual reality has not only blown apart the physical construct of center city offices, but it has also emboldened an itinerant knowledge worker class to never return to a 9 to 5 office job again.&nbsp;&nbsp;
A more foundational vulnerability has also been exposed, which is that the provision of even basic services, whether in the public or private sphere, was also revealed to be nearly impossible without technology at their core. How this is governed, including many points of tension such as privacy versus security, censorship resistance, and digital copyright protections, among so many others, is a critical governance frontier.
<h3>Tangled in Webs - From Web 1 to Web 3 &amp; Generative AI</h3>
As technology and software clash with all facets of society and the global economy, the need for enduring approaches to governance anchored in first principles is crucial.&nbsp; The creative destruction cycle that drives the global economy forward has little respect for incumbency - especially not for too long. In the same way as the internet dethroned the traditional print media stalwarts, other industries are now under wholesale reinvention and assault from emerging technologies - including the very form of the corporation. Think about what ChatGPT and its siblings and rapidly multiplying successors are doing to our economy, society, politics, regulatory regimes and beyond.
When the world was tangled in web 1.0 the democratization of information and the reduction of friction in communication and knowledge sharing trumped the risk of misinformation and disinformation emerging as threats to truth and democracy.&nbsp;
The next generation of the internet tangled the world into a web 2.0 of online commerce, which over the course of several decades posed challenges to traditional industries, from retail to global supply chains.&nbsp;
The emergence of web 3.0, an internet where the exchange of value undergoes the same reduction in friction and instantaneity in banking, is first consuming financial services, but the art of what is now possible is much bigger - and scarier to its opponents. The building blocks of this internet of value are no longer an abstraction, because of the maiden decade of public blockchains, which are proving to be a foundational layer of technology, rivalled only by the internet itself.&nbsp;&nbsp;
Add to this massive equation is the rise of Generative AI and its already myriad incarnations, opportunities, and risks. We can no longer just talk about an integrated ESG strategy. We must talk about (and walk) ESG plus T. Omitting tech from this equation is like separating or omitting the connective tissue, the neural system from the body.&nbsp;&nbsp;
<h2>Adding the T to ESG - ESGT</h2>
We believe that business leaders who identify and integrate their specific technology issues, risks, and opportunities into a larger ESG/ESGT strategy framework need to approach this process both deliberately and systematically.
To begin with, it is critically important to do a deliberate and systematic audit of the key ESGT issues, risks and opportunities that relate to your specific business, footprint, employee/third-party population, assets, business plan and strategic objectives, to achieve your own typology or taxonomy of relevant issues. While it is always advisable to use existing frameworks to help with such a review process, none of the existing frameworks does justice to the identification of technology issues, risks, and opportunities that we think should be integrated into such an exercise. Hence our advocacy of an ESG+T approach.
You should create your own typology or taxonomy of relevant E, S, G and T issues, risks and opportunities that become part of the planning, risk management, crisis scenarios, research and development and value creation or protection of your organization. The Table below shows a sampling of ESGT issues, risks and opportunities that can serve as a jumping-off point for the creation of a customized taxonomy or typology for a company.
<img src="https://illuminem.b-cdn.net/articlebody/e6e90eb70a8fb9ab1b0717ca952c0b66d15bce89.png?" alt="a sampling of ESGT issues" />
Source: A.&nbsp;Bonime-Blanc. Gloom to Boom: How Leaders Transform Risk into Resilience and Value. Routledge 2020.
In Part 2 of this series, we will provide several use cases and an approach to future-proofing ESGT governance to take into account both the massive risks and astronomical opportunities of the unprecedented tech disruption we are living through.
This article was adapted and updated from Chapter 15 of "<a href="https://www.routledge.com/Sustainability-Technology-and-Finance-Rethinking-How-Markets-Integrate/Bril-Kell-Rasche/p/book/9781032200545" target="_blank" rel="noopener">Sustainability, Technology, and Finance</a>". illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

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