As societal approaches to Environmental, Social, Governance (ESG) risk management continue to evolve, companies are figuring out the best way forward in making their business ESG compliant. Companies and individuals are no longer solely focusing on maximising profit but rather are also considering value alignment in conducting business. To successfully navigate this particularly transformative period, companies need to develop a strong understanding of emerging policies and regulations on ESG, along with innovative tools that can assist in reaching ESG goals faster.
In this article, we take a brief look at relevant ESG policies, and the value of code optimisation in reaching environmental goals in ESG.
ESG: A quick look into the concept and overarching policies
We start by looking at some key concepts and policies.
ESG, what is it really?
ESG stands for Environmental, Social, and Governance, and is used as a framework to measure an organisation’s societal impact and sustainability. ESG metrics are also often becoming integral to capturing non-financial risks of organisations, and investment decision-making.
ESG principles, policies and regulations
The ESG landscape is shaped by a range of principles, standards and regulatory requirements. ESG principles have significant gravity across the globe and across various governing bodies.
For instance, Principles for Responsible Investment (PRI), an investor initiative in partnership with the United Nations Environment Programme (UNEP) Finance Initiative and UN Global Compact, has published six principles for responsible investment practice, incorporating ESG priorities.
The EU has adopted the Non-Financial Reporting Directive (NFRD) and the Sustainable Finance Disclosure Regulation (SFDR) which set out guidelines for organisations on the disclosure of non-financial/sustainability-related data and information.
In the UK, the Financial Conduct Authority (FCA) has published its strategy on achieving ESG priorities in the financial sector.
Code optimisation for ESG
Monitoring and minimising environmental factors with code optimisation
A key pillar of ESG is environmental factors, including those related to climate change. The UK government has published guidelines for mandatory climate-related financial disclosures for selected companies. For instance, companies and Limited Liability Partnerships (LLPs) within a defined scope are required to disclose “how climate change is addressed in corporate governance; the impacts on strategy; how climate-related risks and opportunities are managed; and the performance measures and targets applied in managing these issues”.
A University of Massachusetts Amherst study estimates that training a single Natural Language Processing (NLP) model can generate close to 300,000 kg of carbon emissions. According to an MIT Technology Review article, this is “nearly five times the lifetime emissions of the average American car (and that includes the manufacture of the car itself)”. These are startling numbers, and given that the financial sector deals with large volumes of data and software, monitoring and minimising factors such as carbon emissions and energy consumption are critical.
In this context, code optimisation is a game-changer of ESG. Optimising code bases and lowering code inefficiencies not only reduces energy consumption and CO2 emissions of systems but also delivers faster operation times, enhancing service delivery and boosting client satisfaction.
TurinTech and Artemis AI
TurinTech is committed to pioneering the intersection of ESG regulation compliance and code optimisation. Artemis AI, TurinTech’s cutting-edge automated code optimisation platform is designed to echo ESG goals of the financial sector, optimising code to boost efficiency, and lower energy consumption.
In our previous blog Meet Artemis, your AI code optimiser for peak performance and sustainability, we have outlined in detail the myriad of benefits code optimisation brings, in terms of sustainability, as well as other factors such as developer and hardware efficiency.
By simplifying and automating the code optimisation process, TurinTech enables companies to stay compliant with the continually changing ESG regulatory environment while enjoying a range of benefits offered by optimised code.
Final Thoughts
The importance of meeting ESG objectives has never been more pronounced. As companies in the financial sector navigate the rapidly evolving ESG requirements, it may be worthwhile to consider optimised code as an essential part of the sustainability equation.
