Platformization of ESG and Risk: Solving the dichotomy between business strategy, sustainability risk and economic value creation
By Chandan Chowdhury, Anirban Bhattacharya
Harvard Business Review
Harvard Business Review
Citation
Chowdhury, Chandan., Bhattacharya, Anirban. (2024). Platformization of ESG and Risk: Solving the dichotomy between business strategy, sustainability risk and economic value creation Harvard Business Review .
Copyright
Harvard Business Review, 2024
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Abstract
Dilemma:
Businesses today face increased pressure from regulatory bodies, consumers, political activism, and global supply chain dependencies to embrace ESG frameworks in their business strategy and daily operations. However, the dilemma arises out of a perceived dichotomy between ESG strategy and outcomes versus business strategy and goals. Converting ESG strategy into a well-executed roadmap that aligns with the overall business strategy, delivering clear economic value remains a fundamental challenge, due to the dichotomy between strategy, risk, causality, and sustainability with data acting as the centrifugal force.
Solution:
Leaders should boldly innovate and fearlessly experiment with embedding sustainability in their corporate goals by leveraging strategy simulation through a data-driven and AI-enabled platform that unlocks risks, calculates value, and highlights key interdependencies across functions in a safe environment.
This platformization of high-fidelity risk and strategy simulation will help organizations unlock value through a net new business model that weaves sustainability in the flow of work and helps the business make more ethical choices, bring better consumer experience, and make the planet a better place to live while taking care of shareholders’ interests.
Benefits:
Platform-led modeling will drive faster, better, and more data-led, inclusive decisions for leaders at scale.
In addition to leaders, when mid-managers and executives witness the power of platform-led models with AI and ML functions built into the decision-making processes, it leads to the democratization of the hitherto elite “strategy functions and processes”, leading to an increasingly more sustainable business.
The heatmaps and causals emanating from platform-led modeling and simulation lead to clarity and greater transparency around the green value creation process, attracting investors' interest.
Platform and data-led strategy simulation will be the new normal for enabling sustainability and addressing the current dichotomy between climate action and profitability.
Businesses today face increased pressure from regulatory bodies, consumers, political activism, and global supply chain dependencies to embrace ESG frameworks in their business strategy and daily operations. However, the dilemma arises out of a perceived dichotomy between ESG strategy and outcomes versus business strategy and goals. Converting ESG strategy into a well-executed roadmap that aligns with the overall business strategy, delivering clear economic value remains a fundamental challenge, due to the dichotomy between strategy, risk, causality, and sustainability with data acting as the centrifugal force.
Solution:
Leaders should boldly innovate and fearlessly experiment with embedding sustainability in their corporate goals by leveraging strategy simulation through a data-driven and AI-enabled platform that unlocks risks, calculates value, and highlights key interdependencies across functions in a safe environment.
This platformization of high-fidelity risk and strategy simulation will help organizations unlock value through a net new business model that weaves sustainability in the flow of work and helps the business make more ethical choices, bring better consumer experience, and make the planet a better place to live while taking care of shareholders’ interests.
Benefits:
Platform-led modeling will drive faster, better, and more data-led, inclusive decisions for leaders at scale.
In addition to leaders, when mid-managers and executives witness the power of platform-led models with AI and ML functions built into the decision-making processes, it leads to the democratization of the hitherto elite “strategy functions and processes”, leading to an increasingly more sustainable business.
The heatmaps and causals emanating from platform-led modeling and simulation lead to clarity and greater transparency around the green value creation process, attracting investors' interest.
Platform and data-led strategy simulation will be the new normal for enabling sustainability and addressing the current dichotomy between climate action and profitability.