Stockholm (NordSIP) – Independent nonprofit the Global Reporting Initiative (GRI) is urging companies to keep up with the risks and opportunities brought about by the rapid spread of digitalisation. The Amsterdam-headquartered non-governmental organisation develops and manages the GRI Standards reporting framework that is used by some 14,000 entities worldwide.
The GRI is concerned that digitalisation is a blind spot in many organisations’ current sustainability reporting practices. Its new white paper The Impacts of Digitalisation provides an overview of the potential positive and adverse impacts of the trend as it pertains to data privacy and management, cybersecurity, and the use of artificial intelligence (AI) systems. While there is a growing awareness of these themes, with the latest WEF Global Risk Report including them in the Top 10 of both the 2-year and 10-year scenarios, the GRI paper also highlights the environmental threat inherent in digitalisation.
This stems from the proliferation and clustering of resource-intensive data centres, which require far more electricity and water cooling for AI tasks than has been needed for traditional computation. The GRI also highlights the issues connected with the underlying infrastructure of undersea and underground data networks, satellites, cell towers and devices. One such concern is that the sheer pace of development leads to rapid hardware obsolescence, thus severely exacerbating the e-waste crisis. This has an impact on landfill overflow and pollution as well as the potential waste of scarce raw materials in the absence of effective recycling measures.
A complex new set of risks to manage
Digitalisation’s impacts on society, the economy, and human rights are also an area of concern that the GRI aims to further incorporate in its framework. Although some aspects are covered to a degree within current standards, for instance those addressing customer privacy, the GRI believes work must be done to establish guidelines regarding the ethical use of AI, data privacy, and cybersecurity measures. It also encourages companies to seek to understand, evaluate and disclose on the complex human and socio-economic implications of the widespread implementation of AI. It remains to be seen to what extent this new type of automation will displace jobs, and whether this might be mitigated by new ones materialising. Algorithmic biases, and data privacy or copyright issues add to the complex mix of new risks for companies to manage.
Alper Cezmi Özdemir, GRI Research Associate and co-author of the report explains how important it is becoming for organisations to bring their sustainability reporting up to speed to capture the new landscape: “Digital transformation is fundamentally changing the way companies across industries and sectors operate. This transformation is fuelled by a wide array of technological advancements, from data analytics to AI. While the growing use of digital technologies holds great promise, it also creates uncertainties around sustainability issues.”
The GRI paper provides a cross-reference of digitalisation tends and effects with the existing framework, which should allow organisations to begin tackling the issue. Meanwhile, the GRI is committing to expanding and adapting the standards to fill any remaining gaps. According to Özdemir, the digitalisation trend among governments and corporations is unstoppable and has the potential to deliver sustainability benefits. However, the current rapid growth is resulting in resource-intensive production and consumption practices that must be addressed over time. Better disclosure by organisations will also inform efforts to manage the market concentration, data security, and societal implications of large scale digitalisation.