ESG (Environmental, Social, and Governance) and ITAD

ESG (Environmental, Social, and Governance) and ITAD

The ever-increasing importance of ESG ratings is leading more global organisations to partner with reputable, sustainable ITAD vendors.

Environmental, Social, and Corporate Governance (ESG) has become widely recognised by organisations around the world. Those that abide by sustainable and socially responsible principles stand to benefit through better ESG rankings, so it is more important than ever that organisations take initiative and become proactive towards sustainability.

One of the most effective ways to achieve higher ESG rankings is to have an ITAD policy in place and to consult with an ITAD vendor. This post will explain how ITAD can benefit your organisation’s ESG initiatives.

What is ITAD?

ITAD is an abbreviation for Information Technology Asset Disposition (or more commonly: IT Asset Disposition). In brief, ITAD can be described as the system of processes and practices related to recycling, disposal, refurbishment, and/or repairs for end-of-life IT assets. Moreover, the processes involved in ITAD such as Hard Drive Disposal and Data Destruction should be performed in a sustainable, environmentally friendly manner.

While some of the practices involved in ITAD can be provided within an organisation, e.g. ITAD policy and IT asset inventories, organisations have increasingly begun to consult ITAD vendors that specialise in secure and efficient ITAD services. An ITAD Company such as Rapid IT can provide an organisation with a complete range of services that bolster data security, compliance, and efforts toward sustainable corporate social responsibility (CSR) goals, to name a few benefits.

ESG (Environmental, Social, and Governance) Explained

Executives within a modern organisation are surely well familiar with CSR and its importance; sustainability and environmental impact factors have been increasingly prominent in CSR since the late 90s.

The term “Environmental, Social, and Corporate Governance” (hereafter ESG) was an extension of sustainability in CSR and was first used as a term in 2004 by financial institutions at the behest of the United Nations. It gained prominence in 2015 with the UN’s Sustainable Development Goals (SDGs) and has since become a widely used term in business as well as in the public sphere.

ESG is an approach used by organisations around the world which goes beyond corporate profit-seeking and seeks to qualify less tangible aspects of business operations, including social commitments, meeting specific environmental and sustainability goals, and corporate governance vis-à-vis diversity, equity, and inclusion.

Why Having a Good ESG Rating Matters

Financial institutions and asset management firms measure the ESG performance of firms around the world and assign a corresponding ESG rating based on the organisation’s compliance and commitments to sustainability.

Rating agencies may differ in their metrics and factors considered, but it is important to note that prominent ESG ratings such as the Dow Jones Sustainability World Index and Bloomberg’s ESG dataset contain comprehensive data on tens of thousands of organisations which is becoming increasingly sought after by institutional investors (and to a lesser extent, retail investors).

A good ESG rating is important simply because so many institutional investors now consider environmental sustainability (as well as social and corporate governance) as important as profitability. Thus, a poor ESG rating may make a publicly-traded corporation less attractive regardless of stock performance. Conversely, an excellent ESG rating may attract investors even if stock performance may be less than desirable.

How ITAD Companies Can Help Improve ESG Ratings

There are many methods by which an ITAD company can help an organisation improve their ESG ratings. Naturally, the focus will be mostly on the E, environmental sustainability, rather than the other two.

Since ITAD is concerned with the disposition of redundant IT assets, a form of electronic waste (e-waste), reducing e-waste and diverting it from landfills altogether will have significant impacts on sustainability and, in turn, improve the ESG performance of the organisation.

Rapid IT does exactly that. Our commitment to a Zero-Landfill Policy and Certified Recycling solutions ensure that no needless e-waste is discarded in landfills and is instead recycled or remarketed. Any hard drives, laptops, mobile phones, or other devices that can be refurbished are remarketed for sale through the Store, thereby contributing to a Circular Economy model.

The ESG Benefits of ITAD Services

Some of the benefits that ITAD services can provide to ESG performance include:

ESG reporting: when corporations have a clear and concise idea of how many redundant assets are being recycled or remarketed rather than discarded, it allows for some quantifiable reporting on sustainability issues related to ITAD efforts. Better reporting gives executives the ability to take calculated action in the future to improve sustainability efforts within the organisation.

Clean environment: the positive externality of reducing e-waste disposal that is perhaps most evident is the reduction in environmental impact. E-waste pollutes ground soil, air, and water, so less e-waste helps to clean up our environment.

Socially responsible investing: organisations that retain ITAD vendors to help meet sustainability goals through e-waste reduction, improved recycling, and refurbishment of redundant IT assets may attract more attention from investors.

Legitimacy: many individuals, often rightly, accuse corporations of ‘greenwashing’ through their supposedly sustainable initiatives. Retaining professional, auditable ITAD services from a leading team of experts such as Rapid IT will give your organisation real, tangible results that are legitimate and not greenwashed.

ITAD is Essential for Improving ESG Initiatives

Even before ESG was commonly used, accountants have had to deal with intangible assets such as goodwill. Most ESG metrics are qualified and difficult or impossible to quantify, but ITAD services help to make environmental sustainability for redundant IT assets a quantifiable metric for ESG reporting purposes.

Moreover, nearly every business in every sector and industry deals with redundant IT assets; marginal benefits vary greatly amongst industries, but all will benefit in some way from sustainable IT asset disposition.

Work with Rapid IT and Boost Your ESG Performance

Rapid IT is a global leader in IT asset disposition, providing services such as Data Centre Services and Data Centre Decommissioning, as well as environmentally responsible hard drive destruction and secure data destruction. Our processes help keep organisations compliant and sustainable, and can thereby improve your ESG performance.