3 Minutes Read By Prof. Dr. Johann Kranz

Unlocking the Potential of ESG in AI: Insights from Prof. Dr. Johann Kranz

#Circular economy#CSR#Artificial Intelligence#Digital Strategy#Industry Trends#Innovation & Technology#Tech

Businesses and investors are increasingly recognizing the importance of integrating environmental, social, and governance (ESG) factors into their operations. As Artificial Intelligence (AI) continues to shape various industries, understanding the intersection of these two topics becomes paramount, which is why we’re very excited to shed light on the topic and hear Prof. Dr. Johann Kranz’s insights and views on how organizations can navigate the integrations of ESG considerations into AI initiatives.

Prof. Dr. Kranz is a renowned expert in digital services and sustainability at Ludwig-Maximilians-Universität (LMU), Munich’s School of Management. In his practice-oriented work, the main topics are Digitalization, Decarbonization, and Decentralization, with a strong focus on how to leverage the potential of digital technologies to create meaningful innovation and competitive advantage, more efficient ways of organizing, and at the same time social and environmental value. His work has been published in major scientific journals, received numerous awards, and was featured by BrandEins, Handelsblatt, ARD, and Wirtschaftswoche.

As a member of the OMMAX Advisor & Expert Network, he brings a wealth of knowledge and practical experience in leveraging digital technologies to drive meaningful innovation and value creation while fostering social and environmental responsibility.

Join us to discover key insights into the world of ESG and AI, and unlock actionable strategies to drive a more sustainable and responsible future.

What role do you think digital services will play in advancing sustainability in the next 3-5 years? How should businesses considering their digitalization goals effectively balance their financial performance with their environmental and social responsibilities?

Digital services are poised to be game-changers in advancing sustainability. First, however, companies must be bolder in using them and transform business models to strike a harmonious balance between profit, people, and the planet. Many companies have shown this is possible, and investments in more eco-efficient and eco-effective practices enabled by digital circular economy models, transparency, platforms, or digital twins pay off in the long run. But to start this process, firms need a compelling long-term vision and committed leadership that prioritize sustainability and analyze where the action is needed and most profitable.

As companies work to manage costs, what should boards prioritize for any partner looking to improve their ESG offering?

When improving companies’ ESG offerings, boards should prioritize three critical factors in selecting partners: Purpose, Performance, and Progress. Choose partners who are not just "talking the talk" but actively "walking the walk" of ESG, embodying the values and principles that drive positive change. Together, you can build a more substantial, more resilient business that thrives in the face of challenges while making a positive difference in the world.

Remember, a strong ESG offering is not just about ticking boxes or meeting minimum requirements but about creating lasting value for all stakeholders. By prioritizing Purpose, Performance, and Progress in selecting partners, boards can ensure that their organization's ESG efforts are cost-effective but also meaningful and impactful, contributing to a more sustainable and responsible business ecosystem. Technologies like AI, the metaverse, Web3, and Industry 4.0 are hot topics of conversation and are increasingly ‘breaking through’ into conversations with digital generalists and specialists alike.

Technologies like AI, the metaverse, Web3, and Industry 4.0 are hot topics of conversation and are increasingly ‘breaking through’ into conversations with digital generalists and specialists alike. What are the most common pitfalls companies should beware when looking into ESG and investigating new technologies and strategies?

Common pitfalls are that companies overlook the integrated sustainability potential of these technologies and do not have a clear roadmap resulting in short-termism and piecemeal approaches. But more importantly, companies underestimate the importance of engaging and educating their workforce about these technologies and their potential for ESG. Because, in the end, it’s the people that come up with creative use cases and work with these technologies. So, one could say that people eat technology for breakfast.

Are there any emerging digital technologies or trends (not necessarily those mentioned above) that you believe have the potential to contribute to sustainable development significantly? Are there any sectors where you believe these emerging trends/technologies are set to impact and transform particularly?

There are other digital technologies such as Quantum or applications such as edge computing or data spaces. But, I advise companies to always look at problems first and then look into technical solutions. All too often, tech projects are started because a technology is hot and new. What often happens then is that the technology and complementary infrastructures are not mature enough to deliver the expected benefits and as a result the enthusiasm about plummets. A wiser and more sustainable approach is to analyze ESG challenges and opportunities in-depth and then examine if and how these issues can be effectively addressed with technologies — which themselves need to be responsibly used.

By Prof. Dr. Johann Kranz

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