Ultimately, sustainability is about retaining a minimal impact on the surrounding community and environment, reducing waste and improving operational efficiency. In many cases, it involves upgrading more conventional practices to be less dependent on resources, such as switching to renewable energy over fossil fuels. Another aspect might involve lowering energy consumption through the adoption of newer, more efficient technologies.
It seems strange then that the United Nations has coined digitization as an instrumental component for achieving sustainable development goals. After all, the concept does have some requirements for moving away from digital mediums as a means to lower dependency.
The reality is, many digital tools exist for improving sustainability levels, particularly when it comes to tracking resource consumption. Certain IoT devices, for example, can monitor and report water and energy usage. The incoming information can then improve processes or operations, cutting down on total consumption.
Digital and emerging technologies help businesses to become more sustainable. That helps promote an active push toward eco-friendly and green operations across the entire spectrum of the business world, where companies focus on “going green” not just for the community but for the many benefits it reaps.
What Technologies Drive This Change?
The fourth industrial revolution — what some have referred to as the “management revolution” — very much involves the digitization of modern operations. It’s driven by the rise of technologies such as big data, artificial intelligence and machine learning, advanced cybersecurity, IoT and more.
These technologies have not only provided a near-endless supply of opportunity, but they also transformed the landscape completely. Big data and advanced analytics, for example, can extract and build a variety of insights pertaining to regular operations, maintenance, habits, customer behavior and resource-usage. The systems ingest and process a huge database of information, looking for trends and correlating sets that reveal more about the goings-on of a business and any related activities.
Talking about AI and machine learning specifically, PWC identified more than 80 ways AI technology can be leveraged to improve and benefit the environment. Some examples include an optimized energy system for accurate forecasting, analytics and automation for urban planning, and the improvement of supply chain monitoring and transparency. All of these applications can help contribute to the overall sustainability of the business world, as opposed to a single operation.
When applied to daily operations as a means to become more efficient, these systems introduce a natural push towards sustainability. Using fewer resources more effectively means lower operating and supply costs which is better on its own. But it also eliminates the impact on the environment, provides economic benefits particularly because of a brand’s success and lowers the dependency on additional factors such as energy — which itself stems from fossil fuels.
It explains why the digital transformation encourages a merger between digitization and sustainability, a convergence if you will.
Digital-Sustainability Investments: Worth It or Not?
One problem that stands out, however, is that most investors don’t seem to care about an organization’s impact. In fact, sustainability performance tends to be more of a consumer-facing touchpoint simply because of how much customers care about such things. Business managers and leaders often forego sharing sustainability statistics with investors, along with major changes that happen as a result. But it's all a misunderstanding.
The reality is much different, however. Investors are paying more and more attention to ESG performance, which stands for environmental, social and government metrics. Not only that, many investors already understand how they can profit from this revolutionary change. Evidence can now be presented that sustainability-related practices help improve the financial success of a company in many ways.
Corporations that actively manage and plan for climate change secure an 18% higher ROI than companies that do not. These same companies also perform 67% higher than organizations that refuse to disclose emissions ratings.
There’s also something to be said about the power of consumer support in regards to this issue. Many customers will simply refuse to do business with brands that disregard their influence on the surrounding environment and community. A whopping 87% of consumers say they would purchase a product because the company advocated for an issue they cared about. In addition, over 75% will refuse to purchase a product after finding out the company supported an issue contrary to their beliefs.
In this context, it’s not difficult to see why widespread sustainability remains such a hot topic. Organizations that adopt more sustainable practices see a variety of benefits from cost and finance savings, to better performance and fewer produced waste. It’s also evident how important it is to invest in such practices, especially to retain a competitive advantage in today’s market.