By tapping on an obvious trend among sustainability-conscious consumers, organizations can continually digitalize while meeting all-round environment, social and governance expectations.
As environmental, social and governance (ESG) frameworks becomes a top priority in boardrooms, organizations are racing to meet heightened expectations from consumers, investors, and regulators.
For example, in the Asia Pacific region (APAC), consumers are demonstrating higher levels of eco-consciousness compared to their global peers.
At the same time, regulators in the region are intensifying efforts to promote a healthy ESG landscape. Countries such as Hong Kong, Japan and Singapore are leading the adoption of the International Sustainability Standards Board (ISSB) disclosure rules.
With regulatory standards tightening progressively, organizations face the challenge of balancing ESG opportunities and risks. Proactivity is crucial for them to advance alongside emerging technologies.
Striking a balance
Both consumers and investors are closely monitoring businesses’ ESG claims. Investors are also keenly tracking organizations’ compliance with industry standards. Therefore, organizations are advised to avoid making exaggerated pledges that could land them in deep water.
At the same time, according to some studies, there is a clear link between ESG-related claims and consumer spending. Herein lies a way to tap into this trend to balance out the risks and opportunities: increase digitalization of payment systems to meet ESG expectations. How?
- Reducing carbon emissions
- Enhancing workforce performance sustainability
- Boosting data sustainability
- Facilitating better governance and social responsibility
Transitioning from paper to digital billing systems significantly reduces carbon emissions. With approximately 25m trees cut down annually to feed the demand for non-recyclable paper billing documents, automating transactions like magazine subscriptions and fitness memberships helps decrease needless paper consumption. Pay-by-link, email-based billing systems, and e-receipts streamline processes and contribute to environmental sustainability.
Digital payments can seamlessly integrate with various hardware and software used in business operations to directly support ESG goals. For instance, transactions processed through point-of-sale terminals at the frontline cashier are synchronized to multiple types of retail backend systems or hardware through application programming interfaces (APIs). By minimizing manual interventions and optimizing frontline productivity, these API integrations enhance workforce performance sustainability. This not only reduces resource consumption and emissions linked to traditional payment methods, but also empowers employees with efficient tools and processes.
With end-to-end digitalized payment systems, the payment transaction data can provide critical insights, enabling retailers to improve efficiency, reduce waste, and operate more sustainably. Metrics such as revenue trends, peak hours, payment preferences, and fraud rates all help to empower businesses to make data-driven decisions. As such, embedded payments provide valuable data and analytics that can help enterprises to enhance customer experiences, providing a seamless buying experience.
A key component of ESG — governance — is bolstered through industry compliance standards such as the Payment Card Industry Data Security Standard (PCI DSS). Organizations and businesses that process, transmit, or store cardholder data or sensitive authentication data are legally required to adhere to the PCI DSS by their payment brands. By focusing on governance, payment firms can ensure effective management of risk and protect consumer data, maintaining trust and integrity in the financial system.
Therefore, from eliminating paper-based processes to reducing carbon emissions; to improving data transparency and governance for cybersecurity — modernizing more payment systems to digital process can transform how organizations (including business and non-business entities) uphold their ESG commitments.
