deloitte esg case study

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The Wall Street Journal Business

Apr 29, 2024

How Deloitte Is Driving ESG Efforts That Make a Real Impact

It’s more than profit, growth and job creation: deloitte tackles big societal issues together with salesforce..

In recent years, a new imperative has come into sharper focus for businesses: prioritizing environmental change, social issues and governance imperatives (or ESG). With stakeholders increasingly demanding that businesses be held accountable for doing their part on big societal issues, a demonstrated commitment to ESG concerns is fast becoming essential to long-term success.

​​“There is a growing awareness among business leaders that embedding ESG into the fabric of the organization is not just about doing good, it’s about good business,” says Deloitte Global CEO Punit Renjen. “The question is how do we demonstrate to stakeholders that our ESG efforts are actually making a difference?”

It’s a question that many businesses have been struggling to answer. To this point, much of the data for ESG metrics has come from environmental and operational systems and human resources that are not part of the core, traditional financial reporting systems. This means ESG issues cannot be reported with the same rigor as financial considerations.

This is what led Deloitte to collaborate with the World Economic Forum’s International Business Council and other professional services organizations for a solution. Together, they identified industry-agnostic ESG metrics that all companies can use to measure their impact. The metrics center around four pillars—people, planet, prosperity and principles of governance—and include ways to quantify everything from diversity reporting to water use to ethical behavior. Companies are encouraged to reflect these measures in their annual reporting.

“These metrics are actionable. They recognize that companies that hold themselves accountable to their stakeholders and increase transparency are well placed to be more resilient in the long term,” Renjen says. “They also represent a stepping stone to achieve a single set of globally consistent sustainability standards that investors and society can use to hold businesses to account.”

To this end, Deloitte has come out in strong support of the International Financial Reporting Standards (IFRS) Foundation’s new International Sustainability Standards Board, which will help to advance the transition to a global baseline of consistent, comparable sustainability information.

Where to Start: Hitting a Different Kind of Target

Not surprisingly, many companies are focusing their ESG efforts on addressing the climate crisis. And thanks to the Paris Agreement, they have measurable goals to work toward: reducing global carbon dioxide emissions and limiting global temperature increases as a way to prevent the most damaging effects of climate change.

According to Renjen, the best way for a company to start driving toward those goals is to look holistically at the climate implications of all their activities—at every link of the value chain, and even beyond, to consider what they might be funding or facilitating. As he explains, “For us, decarbonizing our own operations by focusing on business travel alone simply was not going to be enough.” In fact, Renjen says, the ability to replace much of business travel with virtual meetings was an important change to come out of the COVID-19 pandemic for Deloitte.

The more he and his leadership team examined the organization’s structures and processes through a sustainability lens, the more opportunities they found for improvement. In addition to things like sourcing renewable energy to power Deloitte facilities, investing in innovations that directly generate environmental benefits and adopting science-based targets to reduce emissions globally, it became clear that there was more that could be done around supply chain processes. “Our supply chain emissions from purchased goods and services were as significant as our pre-pandemic travel emissions,” Renjen says, “so now, we are working with our largest suppliers by emissions to ensure their decarbonization plans align with ours.”

This is the kind of self-reflection the Environmental Protection Agency (EPA) recommends for companies looking to improve their sustainability practices. The EPA says more meaningful changes come from coordinated efforts to increase operational efficiency and reduce waste. Additionally, companies that take a long-term approach, integrate sustainability across teams and functions, and emphasize the importance to their external partners will see improvement in ESG metrics and reduce their resource footprint.

“The question is how do we demonstrate to stakeholders that our ESG efforts are actually making a difference?” — Punit Renjen, Global CEO, Deloitte

Deloitte is striving to help companies through sharing findings like its annual Millennial and Gen Z survey, which this year focused on the environment, systemic racism, businesses’ societal impact and other salient topics. The study is not just a gauge of sentiments; it also aims to be a playbook to help businesses address those top concerns for what is now the largest working cohort.

Other studies, like “The Purpose Premium,” demonstrate the business value of striving to do good. According to the research, companies that seek to serve society and organize around a purpose reported new revenue streams (53%), faster growth (four times market value) and higher returns on equity (6.4%). Even better, 64% of companies with product sustainability programs were able to lower their logistics and supply chain costs. By sharing its learnings publicly and guiding clients, Deloitte is able to multiply its ESG efforts—and hopefully make an even greater impact.

A Learning Culture Promotes Climate Actions

There may be no more critical element of Deloitte’s ESG strategy than harnessing the power of its global workforce. “As a professional-services organization, Deloitte’s greatest asset is our more than 345,000 professionals around the world,” Renjen says.

For example, as part of the organization’s commitment to achieve net-zero emissions by 2030, known as World Climate , Deloitte is working to empower all of its people to make responsible climate choices. “Our aim is to make all of our 345,000 people agents of change. Building a culture of climate consciousness and action is one of the most effective ways for us to amplify our impact,” Renjen adds.

But he acknowledges that this will require a shift in employee mindset—and that starts with education. The World Climate learning program is currently reaching staff around the world, with tips on sustainable actions they can take in their own lives, as well as strategies they can offer Deloitte clients.

This program dovetails with Deloitte’s client-facing sustainability services. In addition to being incredibly well received by Deloitte employees, the initiative has impressed clients, who have begun reaching out for guidance on how to execute similar programs within their own organizations.

Connecting Technology and Sustainability

According to Renjen, the success of World Climate and Deloitte’s other ESG efforts will ultimately be determined by the impact it is able to deliver for the organization’s people, clients and communities—which is why ESG metrics are so important for businesses like Deloitte, “to be able to effectively measure and report on our progress to stakeholders,” he says.

With this in mind, Deloitte has teamed up with Salesforce to develop new solutions to accurately collect and monitor data and help companies track toward ESG goals. These tools help organizations analyze the collective whole to improve performance through automated calls to action, local challenges and faster dissemination of ESG best practices.

When noting ways that technology can help build a better world, Renjen highlights UpLink , a free and open digital platform that Deloitte designed and developed in collaboration with Salesforce and the World Economic Forum. The platform seeks to connect a wide range of high-impact entrepreneurs, activists and NGOs with experts, investors and partners, enabling new kinds of collaboration toward reaching the U.N.’s Sustainable Development Goals. The two organizations have also collaborated on Pathfinder, a program that has helped more than 120 job seekers from diverse backgrounds find new careers within the Salesforce ecosystem. The upskilling effort and increased access to professional opportunities is another way Deloitte is hoping to increase workplace inclusiveness.

Whether it’s a drive to create new opportunities and build a more diverse workforce or to contribute to a cleaner planet, Renjen and Deloitte are working to empower every business to do their part. While the problems facing the planet are too big for any one organization to solve, sharing tools and learnings, and working in collaboration, can magnify that effect. Deloitte makes the latter a priority, forging alliances to promote the greater good.

“Our purpose is to make an impact that matters for our people, clients and communities,” Renjen says. “Deloitte and Salesforce have common values around serving the communities in which we work. And together, we are doing well by doing good.”

To learn more about how Salesforce helps businesses harness the power of relationships to make positive change, visit ​​ salesforce.com/ceo .

Custom Content from WSJ is a unit of The Wall Street Journal Advertising Department. The Wall Street Journal news organization was not involved in the creation of this content.

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ESG Case Studies

The esg initiative at the wharton school, the environmental, social and governance initiative seeks to advance academic research on esg topics. , we drive innovative research in the field of esg to investigate when, where, and how esg factors impact business value., esg integration in finance, esg integration in strategy, esg and organizational change.

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About the Environmental, Social and Governance Initiative

The Environmental, Social and Governance Initiative conducts academically rigorous and practically relevant research with industry partners and across all Wharton departments that investigates when, where, and how ESG factors impact business value. Informed by research, we offer 30+ courses that MBA and undergraduate students can assemble into a major or concentration, over a dozen co-curricular experiences, and three Executive certificate programs. Led by Vice Dean Witold Henisz, the ESG Initiative advances Wharton’s best-in-class education of current and future leaders, enabling them to serve a world undergoing tremendous change.

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Impact Accounting: Raising ESG Reporting Standards

Sponsor content from Pure Storage.

by Charles Giancarlo

Environmental, social, and governance (ESG) frameworks began in 2004 as a concept from the United Nations to help investors assess a company’s global impact and drive corporate responsibility. In the 20 years since its introduction as a broad concept without strict guidelines, ESG has become politicized. Detractors argue that it introduces divisive social causes into corporate decision making.

Certainly, there are many areas for serious debate within the topics of social responsibility and corporate governance. However, anything done with greater efficiency is a general good. Reducing waste and pollution is positive for all concerned, and the reduction of uncontrolled costs to society is to be applauded.

Still, the ESG measurement landscape has become highly fragmented, marked by inconsistent standards and , making environmental reporting unreliable , often misleading, and difficult to interpret. Today, 75% of companies say they are unprepared for upcoming ESG audits, according to Reuters .

Confusing Calculations

Companies reporting ESG metrics must sift through many layers of supply and distribution chains over which they have little oversight and must deal with diverse methodologies, agencies, and reports. They must estimate the environmental impact of partners far out in their supply chains with which they have no direct business, leading to both scalability and accuracy issues, and to potential manipulation, as SEC settlements show. If unchecked, ESG compliance costs will rise sharply, risking report reliability, according to CNN .

The confusing comparisons of various ESG measurements’ environmental performance exemplify the challenge businesses and consumers face in evaluating products’ and companies’ environmental claims. “Greenwashing”—companies’ dishonest efforts to embellish their environmental credentials, engage in selective reporting, or use carbon credits with dubious effectiveness—has become a common problem.

No reasonable person would argue about whether companies should do better in addressing sustainability issues. Proponents say ESG has proved to be a compass for identifying companies that excel financially, demonstrating that prioritizing environmental sustainability, social responsibility, and governance is both good economics and good ethics.

However, disentangling ESG’s components into separate priorities would simplify and reduce needless complexity and disagreement. With the advancement of artificial intelligence, new energy and environmental challenges will also necessitate new dialogue among all stakeholders.

The Impact of Impact Accounting

So the question remains: How can organizations most efficiently and effectively reduce their corporate environmental impact with integrity and clarity?

Historically, market-based mechanisms and transparent corporate practices have driven global economic growth, expanding the middle class and enhancing living standards worldwide. Today’s environmental sustainability challenges stem from the absence of these market-based mechanisms in managing critical resources, pollution, and waste.

The good news is that the practices and tools exist to address this measurement gap through impact accounting . By using impact accounting standards, companies can:

• Use their existing cost accounting capabilities for externalities—the indirect costs (such as carbon dioxide or other pollution) that companies impose on society but that do not show up in their financial statements or products’ specifications;

• Use universal standardized measures for these indirect costs; and

• Employ standard audit practices and auditors to ensure fair, common, and supportable numbers and reports across companies and industries.

Impact accounting is transparent and scalable because it allows each organization to use the metrics its direct suppliers provide to its own accounts, and then to transform these inputs into metrics for their customers.

This is a far more efficient process than having every company analyze the many layers in its supply chain. It uses standardized metrics for each critical resource and integrates them into its financial reporting. And it allows companies to incorporate these costs into their product pricing and features. In so doing, impact accounting also creates a competitive market based on products’ environmental qualities, while fostering transparency through standard auditing oversight.

For public companies, impact accounting transforms the environmental landscape. It introduces a market-based mechanism that quantifies the environmental impact of production, packaging, and usage of products and services in monetary terms, creating a competitive market for the reduction of externalities, which in time will lead to a significant reduction of external costs to society.

Through impact accounting, each supplier can disclose to customers the true resource costs to manufacture and use their product, in addition to the product’s price. The practice expands traditional cost accounting to incorporate societal costs—addressing the gap where companies cover direct costs, like consumption of energy and materials, but not the environmental costs of emissions or waste disposal.

Integrating these costs into both product sales and corporate financial reporting allows companies to report profits alongside resource usage such as energy, water, precious metals, and even plastics, providing a true total cost of production and a true audited view of the environmental footprint to ensure fairness and comparability. Importantly, impact accounting is a scalable and efficient practice for businesses that aligns with increasing consumer demand for sustainable practices, marrying profitability with sustainability.

Leading Sustainable Change

Modern efficiency relies on accurate pricing and audited statements, fostering business trust. Impact accounting extends this trust by quantifying indirect costs, promoting efficiency, and allowing choices based on resource efficiency and product value. This approach is gaining traction among institutions like Pure Storage.

Adopting impact accounting and innovating to reduce the energy and carbon footprint of business takes society steps closer to a transparent, accountable, and sustainable future, which is beneficial for our collective well-being. Pure Storage is replacing outdated, energy-intensive hard disk drives with efficient flash storage, cutting energy use and power-related emissions by up to 85%, and setting the standard in environmental reporting in the data storage industry through impact accounting.

We call on technology leaders to help reduce the energy demands of data centers, which are projected to double to 4% of global electricity use in the next two years. Impact accounting will reduce the cost of and confusion in ESG reporting and benefit all customers, significantly strengthen our communities, and allow businesses to play a sizable role in leading us toward a more sustainable future.

Learn more about Pure Storage’s sustainable tech infrastructure and its impact on reducing energy consumption and minimizing e-waste.

Charles Giancarlo is the CEO of Pure Storage