Each month we highlight a company we have researched and features on our Ethical Screening Portal, this month we look at ServiceNow and the Software & Computer Services Sector.
Software & Computer Services
Software as a Service solution (SaaS) is one of the fastest-growing segments in the IT industry, with the industry estimated to be worth $700bn by 2030. Many organisations are turning to cloud-based services to resolve problems associated with cost and siloed processes and workforces. Siloed, or disconnected, processes are those that operate independently of other systems. The industry faces several issues associated with greenhouse gas emissions, sourcing clean energy and complex supply chains due to the large-scale infrastructure needed to host the cloud-based services.
In this month's Company in Focus, we look at ServiceNow Inc's approach to developing SaaS platforms that enable them and its clients to improve the management of ESG risks throughout business operations.
ServiceNow - Company Overview
ServiceNow is a US-based company founded in 2003 in California. The company focuses on being a platform-as-a-service provider developing workflows designed to improve efficiency by digitising and automating siloed processes. The company strongly emphasises ESG and its connection to long-term value creation in its operations and cultural mindset. The company has set three goals;
- Sustaining our planet
- Creating equitable opportunity
- Acting with integrity
This ethos can be seen in the company's Now Platform and workflow packages that enable clients to create digital ESG command centres designed to improve efficiency, compliance, monitoring and reporting.
ServiceNow - ESG Management
The company's ethos is to build a more sustainable, equitable, and ethical world. It has developed internal policies and procedures to emphasise this;
- Providing a carbon-neutral cloud by the end of 2022. Currently, day-to-day operations are carbon neutral, and energy is 100% sourced from renewable sources.
- In 2021, the company created the ServiceNow Racial Equity Fund worth $100m. This is designed to drive more sustainable wealth creation by funding homeownership, entrepreneurship, and neighbourhood revitalisation within Black communities in 10 regions across the United States. Managed by RBC Global Asset Management's impact investing team on behalf of ServiceNow, the fund aims to strengthen under-resourced communities by overcoming systemic barriers that lead to inequitable access to capital.
- The company operates the NextGen Professional scheme in over 15 countries, providing training and qualification opportunities for entry-level staff from non-traditional backgrounds. The program creates qualified users who gain placement with organisations using ServiceNow products. As of 2021, the company has trained 6,300 individuals, of which 3,000 have found employment.
- Addressing one of the most significant operational risks by investing around $100m in cyber security, whilst also achieving accreditation to relevant ISO standards and regional accreditations, such as UK Cyber Essentials and DoD Impact Level 4 Authorisation.
The company, in turn, offers variety of products & services that cover the following;
- Online vendor risk management, which include automated assessments with tailored tiering options and bespoke reporting. This helps to control risks in the supply chain.
- Various HR and employee-based workflow packages, designed to improve health and safety, sick, annual leave and employee onboarding.
- Tools that combine a variety of Now Platform and third-party integrations to create dashboards for management to assess and compensate for ESG risks.
Cloud-based ESG Processes and the Implications for Investors
The world of ESG governance and reporting is rapidly changing, with the ever-increasing concept of "Greenwashing" becoming an everyday verb. Governments and organisations are looking to implement more regulations requiring organisations to increase transparency in areas such as diversity, equal pay, carbon emissions and modern slavery. Consumers are choosing brands for their ethical behaviour and their record on climate change. Investors are favouring businesses with robust ESG governance and reporting approaches.
Companies often experience difficulties adapting to such changes, due to large workforces, complex supply chains and processes, undermining ESG management and nonfinancial disclosure robustness. By failing to identify and manage associated risks, a company will be at greater risk of controversies (and any reputational damages, legal fees, or fines deriving from these) negatively impacting its future sales, cash flows, growth potential, or cost of capital.
ServiceNow provides products and services that assist with data collection, progress monitoring and reporting on ESG matters. Particularly in large organisations, this enables working practices and methods to be developed that mitigate relevant ESG risks, and enable better management and performance monitoring. ServiceNow also addresses the impacts associated with its own activities in the developing sector.
ServiceNow is a company that features on our Ethical Screening Portal. To find out more about this company, or our services please contact info@ethicalscreening.com
Sources:
https://www.servicenow.com/solutions/esg-solutions.htm
www.servicenow.com/content/dam/servicenow-assets/public/en-us/doc-type/public-document/servicenow-global-impact-esg-fact-sheet-2022.pdf
https://www.servicenow.com/company/media/press-room/racial-equity-fund.html
https://hbr.org/2020/09/how-green-is-your-software
https://www.infoq.com/news/2022/03/environmental-impact-software/
https://www.bmc.com/blogs/saas-growth-trends/
https://www.prnewswire.com/news-releases/global-software-as-a-service-saas-market-size-is-projected-to-reach-700-billion-by-2030-301618870.html
https://home.kpmg/uk/en/home/services/environmental-social-governance/esg-strategy.html