The Digital-ESG framework is designed to serve the digital economy. It is not designed to replace the existing ESG framework, but to serve as an extra layer on it.
Although commonly adopted ESG frameworks and standards have advanced the environmental agenda, there have been concerns raised about the following points: 1) their guidelines are in general risk-focused and downplay the opportunities that can potentially be created by industries; 2) their guidelines along the social and governance dimensions may not be universally applicable due to cultural differences across different regions and cultures, and 3) their guidelines on the disclosure of social and business risks related to the world’s rapid digital transformation remain inadequate.
Digital-ESG aims to compensate for those areas where ESG falls short—especially in managing
- 1) digital-related risks with greater focuses on the social (S) and governance (G) dimensions and
- 2) digital-related opportunities through cross-dimensional technologies to enhance environmental sustainability (E).
Considering that all digital- and technological-related matters are universal in nature, the enhancement of S and G dimensions with digital-related risks add values to the current ESG Framework with less controversial, culture-neutral, and more objective standards for businesses.
FOR THE ENERGY SECTOR
Cross Carbon Economy
Climate change is a global existential threat. More than 70 countries covering about 76% of global emissions, as well as the world’s largest corporations, have committed to achieve net zero emissions within the next few decades. How can these net zero pledges be translated into tangible actions peacefully, inclusively, and practically?
This Digital-ESG Case Study for the Energy Sector examined how Aramco’s sustainability goals can be better served by reconceiving their Circular Carbon Economy model as a Cross Carbon Economy (CCE) model. The CCE emphasizes creating value from carbon waste and does so in a way that is more equitable to the world inclusively.
This approach will provide practical insights and valuable tools to all stakeholders in the energy sector to shape a global energy system that better balances affordable energy, energy security, and net zero goals.
This Case Study was published at the roundtable event at the World Economic Forum Annual Meeting 2023, Davos.
GUIDELINES for Digital-related Risks and Opportunities
The TDFD Guidelines, being developed based on the Digital-ESG Framework, is an actionable tool for investors and other capital market participants to provide information about companies’ digital-related risks and opportunities and help them make informed decisions. It adopts the principles and approaches of the Task Force on Climate-related Financial Disclosures (TCFD). Along these lines, we propose structuring disclosures around the four themes that represent core elements of how companies operate: governance, strategy, risk management, and monitoring.