5-19. Technology Adoption Case Studies Watched by ESG Rating Agencies

Due to the expansion of ESG (Environmental, Social, Governance) investing, the use of technology in the EHS (Environmental, Health, Safety) field has become a key focus. ESG rating agencies are placing increasing importance on how companies leverage the latest technologies to reduce environmental impact, improve workplace safety, and strengthen governance. This article introduces examples of technology use that receive high marks in ESG evaluations and outlines a path for companies to follow.

1. Technology Use in the Environmental Sector

In the environmental sector, the use of IoT sensors for real-time monitoring of energy consumption and emissions is becoming widespread. This enables data-driven improvements in energy efficiency and greenhouse gas reduction, which helps a company earn a higher ESG rating. Furthermore, rating agencies are paying close attention to the use of satellite data to monitor deforestation and water usage, as it provides a way to visualize the environmental impact across the entire supply chain.

2. Digitalization in Workplace Safety and Health Management

Real-time management of worker health and movements using wearable devices is a measure that directly contributes to the prevention of workplace accidents. Systems that detect changes in heart rate or body temperature to prevent heatstroke, as well as devices with fall detection, contribute to fostering a strong safety culture. These initiatives are a part of human capital management and are often viewed favorably by investors.

3. Technology that Strengthens Governance

Using blockchain technology to ensure supply chain transparency reduces the risk of compliance violations and fraud. Managing the traceability of chemical substances and the history of waste disposal with blockchain makes it easy for third parties to verify the information. This leads to a high rating from ESG agencies for being a company that fulfills its accountability. Additionally, using a cloud-based EHS management system to integrate data and provide quick reports to senior management via a dashboard is another example of strengthening governance.

4. The Relationship Between ESG Ratings and Technology Adoption

ESG rating agencies view a company's use of technology not merely as a way to improve efficiency but as a means of enhancing sustainability and transparency. Companies that use data obtained through technology to report on frameworks like GRI, SASB, and ISSB are more likely to gain the trust of investors.

Conclusion

The use of technology that ESG rating agencies pay attention to is focused on three areas: visualizing environmental data, strengthening workplace safety, and ensuring governance transparency. Strategically implementing technologies like IoT, AI, and blockchain to achieve data-driven sustainable management will lead to increased corporate value and a high rating from investors.