Turning ESG into Brand Advantage: A Guide for SaaS Leaders

As a SaaS Leader you're no stranger to innovation, efficiency, and scalability – but there’s another area where those same principles can create a real competitive edge: Environmental, Social, and Governance (ESG).

While tech has its challenges around energy use and emissions, SaaS businesses are uniquely positioned to lead the charge.

From reducing waste through cloud-based solutions to building trust through transparency, ESG isn’t just good ethics, it’s smart brand strategy. Here’s why it’s an opportunity SaaS brands can’t afford to overlook.

Do more with less

SaaS covers a myriad of offerings, but if we look at some of the big players like Google, Microsoft, and Salesforce, to name a few, ESG and sustainability are now integrated into their DNA.

It’s easy to see why major players are getting serious about ESG impact, given that the ICT sector accounts for 2-3% of global emissions.

For instance, Data Centres alone, eat up around 200 terawatt-hours of electricity annually, representing 1% of global electricity consumption.

To tackle this challenge, Google’s policy on carbon pledges that by 2030 all its data centres will run on carbon-free energy. Google also offers tools to help users do more with less, building trust and resilience for customers, while saving money and energy.

Then there is Microsoft with its 4 broad ESG commitments: Carbon negative, zero waste, water positive, and protect and preserve ecosystems.

Salesforce’s plan for sustainability is equally ambitious, aiming for a net zero cloud, as part of its ‘Sustainable AI’ Policy.

Now all this may seem totally out of reach to smaller SaaS players, yet even small sustainability moves can add up to big impacts for your customers and wider stakeholders, and of course for your own business. 

Keeping the customer (and your employees) satisfied

Any great business not only keeps the customer satisfied but actually predicts what next year’s customers may want too.

In terms of sustainability, it isn’t hard to predict: With the greatest ever transfer of wealth happening as we speak, Millennials, people born between 1981 and 1996, are estimated to inherit $46 trillion.

Similarly, Gen Z, born in 1997 or later, are estimated to inherit $15 trillion over the next two decades.

This means businesses must pivot to offer what younger generations want: sustainable products and services where the why is as important as the what.

Furthermore, millennial and Gen Z employees are seeking meaningful work where they can have an impact (or at the very least see an impact) from their company.

This requires a deep understanding of their motivations, needs, and how you can better support them to do their best work and make their mark.

Building Brand Trust

Companies that are vocal about their sustainability impact and commitment to ESG themes are perceived as more trustworthy by customers, investors, and regulators.

To get started on communicating your ESG and Impact journey, the Corporate Governance Institute suggests companies update stakeholders regularly on company performance, strategy, and changes by using clear, honest communication to build credibility and manage stakeholder expectations.

Engaging in Corporate Social Responsibility (CSR) and ESG initiatives that align with the values and expectations of your key stakeholders also ‘demonstrates a commitment to societal welfare beyond profit.’ 

This starts with creating a sustainable and resilient business model that focuses on the needs and expectations of all stakeholders, not just shareholders.

To do this you need to do an ESG materiality assessment (see Cubico's example below). This process will help generate ideas around creating new policies and programs.

For instance, co-creating a Diversity, Equity & Inclusion Policy with your team can help you attract and retain the best employees, while positioning you as a leader on social impact. 

Cubico Sustainable Investments: ESG materiality assessment

Managing risk

Along with building trust through having an ESG strategy, is the tangential benefit of minimising a myriad of risks.

It’s important to understand that ESG risk IS business risk. Risks directly related to sustainability can include reputational risk, physical and financial risks from climate change impacts on the business, or risks related to the businesses own impact on climate change.

This is called the ‘double materiality principle’, and harnessing it (Through the ESG strategy setting process), enables a business to see its Impact and ESG story from all angles, enabling you to identify the best opportunities to reduce business risk, boost growth and catalyse wider positive impact.

For instance, a focus on harnessing clean energy could reduce the current and long-term costs for customers, while making your SaaS business more resilient to climate change. Tackling your emissions can also help you attract like-minded supply chain partners, boosting your climate story and building a resilient value chain where SaaS leaders stick together.

Then there are the softer skills, like becoming a thought leader through sustainability impact related research, which can position as one of the good guys, helping you move through regulatory traffic jams faster as you grow. This all starts with getting your own ESG house in order. 

Building a legacy

The old saying goes that what gets measured, gets managed, and that is just as true for sustainable impact as anything else.

In fact, by identifying your core values, ESG metrics and setting targets, you can compound not only impact, but your businesses growth at much higher rates overtime.

All this while building a legacy that was enabled by focusing on building a better more resilient businesses and brand.

According to PlanBe,  to fully harness ESG and Impact, getting started with ESG reporting is the best way for tech firms to move the needle on ESG action by aligning your own efforts with the reporting framework and metrics most applicable to your sector.

For instance the International Sustainability Standards Boards’ (ISSB), provides a global baseline for sustainability reporting along with sector based metrics to ensure you tackle the most impactful material topics and measure what matters.

With the Tech sector and SaaS offerings becoming increasingly important to a successful and Just climate transition, the ESG leaders of today, will likely be the success stories of tomorrow.

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About the Author

James is an award-winning ESG specialist who helps organisations lead with responsibility and turn their environmental and social commitments into real-world impact. Working alongside a collective of advisors at BeyondWords, he delivers ESG, sustainability and responsible business microsite content, ESG and sustainability reports, and strategic advisory on climate and governance. With a focus on clarity, accountability and meaningful progress, James supports teams that want to communicate their efforts with confidence and drive meaningful, lasting change.

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Visit the BeyondWords website.