Guest Column | October 6, 2022

The Increasing Impact Of ESG Initiatives On The SMB Channel

By Frank Vitagliano, Global Technology Distribution Council

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Many organizations are looking for new and creative ways to be more efficient and sensible with their resources. The mantra of “doing more with less as a corporate responsibility” is gaining traction and ensuring that businesses work in the best interest of all their stakeholders, including investors, employees, customers, and community members, has become a priority.

Environmental, Social, and Governance (ESG) initiatives are the new norm in today’s connected world. These global efforts are not mere political statements – but quickly becoming essential business strategies since companies benefit from both a financial and operational perspective. In other words, the goals for ESG extend far beyond corporate leaders' core beliefs and ideologies.

Many of today’s initiatives and programs are helping organizations reduce expenses, generate additional sales and higher margins, and attract new investors and talent. Each of those benefits has the potential to elevate the value of the business in the eyes of stockholders, community members, and employees. ESG is not merely a series of different compliance requirements that may vary by region, country, and state but a new way to look at internal and external operations and evaluate their effects on people, the environment, and the bottom line. How do these initiatives affect the SMB and MSPs/VARs who support that segment of the business community?

Environmental Sustainability

The piece of ESG programs that often gets the greatest attention from the general public involves resource conservation and alternative energies. As highlighted in the recently released GTDC report, The IT Industry Embraces Environmental Sustainability, these societal expectations (and government directives) can be viewed as both a responsibility and an opportunity for technology companies. Distributors, vendors, and IT service providers are already leading the way in these areas by reducing emissions, energy consumption, and other resources while empowering the business community with similar capabilities.

Efficiency always has been a core value proposition of technology. Many of the current and proposed environmental sustainability objectives rely on process efficiency and innovative new solutions to automate and control various operations. For example, the IT channel can play a key role in delivering, implementing, and supporting more advanced lighting and HVAC (Heating, Ventilation, and Air Conditioning) management systems for large facilities. Minimizing energy consumption in warehouses and offices can significantly reduce a client’s carbon footprint, and the cost savings from those improvements can fund other environmental sustainability and IT-related initiatives.   

Customer demand is another key factor driving these investments. Nearly three out of four (74%) organizations say that ESG is a ‘very important’ factor in organizational value today, according to IDC’s 2021 Environmental, Social, and Governance (ESG) Business Services Buyer Value Survey. Technology companies that fail to recognize and grasp these opportunities open the door for new or existing competitors willing to take on these challenges. Based on industry research, the market for environmental sustainability-related technologies, solutions, and support is still in its infancy with strong growth projections.

As drivers in innovation, most IT distributors are already adopting and following best practices from peers and vendors, including the extensive use of energy and resource-saving processes and solutions. Those organizations have a long history of empowering the vendor and partner communities. With ESG initiatives, they can provide guidance, education, and other insight and distribute new products, services, and programs to help businesses meet those standards. Most global distributors are already helping in that regard, offering charging systems and a growing catalog of other “green technologies” to support their channel partners' environmental sustainability efforts. Europe has a large head start over North America in those activities, but that gap will surely close as ESG programs gain traction.

Social Conditions Under The Spotlight   

Other activities that fall under the ESG banner include the organization’s commitment to diversity, health and safety, and community involvement and support. While publicly traded companies have disclosed their advances in those areas over the past few years, smaller businesses are increasingly being asked (if not required) to share that type of information.  

People hold organizations to higher standards today, from diversity and work policies to delivering safe products and services and contributing to responsible charities. Those demands will surely rise in the coming years. Prospective employees want to know more about working conditions and hiring/promotions policies. Potential investors and government officials are increasingly looking to companies to share details of safety and diversity programs and commitments to their respective communities. One goal of ESG reporting is to ensure that companies disclose all their possible liabilities and address each area of concern to minimize their risk profile.     

Scrutinizing Controls And Policies

The final piece of ESG highlights a corporation’s decision making processes and organizational structure (governance). Everyone wants to know that the companies they invest in, work for, and buy from follow prescribed ethical standards. From boardroom ethics and general management policies to auditing and compliance measures, current and prospective stakeholders expect businesses to adhere to sound business principles and controls. For example, organizations must be committed to accuracy and transparency with accounting procedures and investor relations.

Poor governance policies expose companies to unnecessary risks. While few businesses would intentionally perform or promote illegal or questionable practices, without proper protections in place, the potential liabilities can threaten shareholder value, jobs, and the organization itself. Companies must assure stakeholders that the management team has established safeguards in place and effectively evaluates the impact of all of its plans and actions.  

ESG Is The Future

Tech companies understand the need and value of these evolving corporate governance programs. ESG initiatives are driving new solutions to improve efficiency, and the IT industry is in a position to benefit greatly from those global efforts. These programs drive new opportunities for the technology community, from internal adoption that strengthens the business operations of distributors, vendors, and ITSPs to the products and services that help others achieve conservation and compliance objectives.

ESG can be an empowerment tool for innovative IT companies. With consumers and investors driving demand for these programs and prospective employees watching closely, the value of solutions that help organizations manage and report on the status of these plans is rising rapidly. The IT industry is perfectly positioned to not only embrace these global initiatives but to advance the opportunities for businesses of all sizes (especially SMBs).

About The Author

Frank was named the chief executive officer of the Global Technology Distribution Council in April 2019. He focuses on strengthening partnerships between members and vendors by addressing industrywide issues and opportunities related to the essential role of distribution in the IT channel. GTDC members drive more than $150 billion in annual worldwide sales of products, services, and solutions through diverse business channels.

About The GTDC

The Global Technology Distribution Council is the industry consortium representing the world’s leading tech distributors. GTDC members drive an estimated $150 billion in annual worldwide sales of products, services, and solutions through diverse business channels. GTDC conferences support the development and expansion of strategic supply chain partnerships that continually address the fast-changing marketplace needs of vendors, end customers, and distributors. GTDC members include AB S.A (WSE: ABPL), Almo Corporation, Arrow Electronics (NYSE: ARW), CMS Distribution, Computer Gross Italia (MI: SES), D&H Distributing, ELKO, Exertis, Esprinet (PRT.MI), Exclusive Networks, Infinigate, Ingram Micro, Intcomex, Logicom (CSE:LOG), Siewert & Kau, SiS Technologies (HKSE: 0529), SYNNEX (NYSE: SNX), Tarsus, Tech Data, TESSCO Technologies, Inc. (NASDAQ: TESS), TIM AG and Westcon-Comstor.