As organisations grapple with the two mega-trends of digitisation and climate change, there is a growing recognition that navigating the intersection between the two presents a huge opportunity. Our recent webinar hosted by John Smith, Partner within our Digital & Technology Practice explored how businesses can chart a course through the rapidly evolving digital and climate change landscapes. John was joined by an expert panel of guest speakers:
- Simon Benney C-level advisor and Board Executive in Digital, data and cyber security;
- Louise Bunting CIO and Sustainability leader;
- Pradyumna Pandit Managing Director, Energy and Decarbonisation, Mitie plc.
What followed was a fascinating discussion on a topic that no senior leader can afford to ignore – we share the key takeaways here.
What is meant by digital sustainability?
With a nod to our technology theme, we consulted Artificial Intelligence chatbot ChatGPT on this question. The answer was as follows:
Digital sustainability refers to the concept of ensuring the responsible and environmentally conscious use of digital technologies and resources to minimize their negative impact on the environment and society. It involves adopting practices and strategies that promote the longevity, efficiency, and ethical use of digital systems, devices, and services.
This definition implies that digital technologies have a detrimental impact on the environment and that ‘digital sustainability’ refers to reducing this negative impact. News headlines of energy-guzzling cloud-computing data centres, controversial raw material mines and mountains of hazardous e-waste mean public opinion does not necessarily see digitisation as ‘green.’ A recent research paper from the University of Cambridge ‘Act now to prevent uncontrolled rise in carbon footprint of computational science’ suggests academics too have their concerns.
So is digital technology part of the problem rather than the solution? Our expert panel thinks not. They see the use of digital technology as a means to understanding and reducing environmental impact. ‘Sustainability is the outcome and digital is the enabler,’ says Pradyumna. From his experience, the use of digital technology helps companies accelerate and enable their sustainability outcomes whether they be in environmental, governance or the impact on employees and society.
Louise agreed that technology can ‘execute and deliver change.’ Though she notes that there needs to be a move away from collecting data primarily to prepare for the annual ESG reporting cycle and instead move towards using data to fully understand and embed practices that deliver a long-term reduction in a company’s environmental impact.
How can data & digital reduce environmental footprint?
Simon made the point that this is an ever-evolving question;
I don’t think we have yet understood the scope. It’s a journey and we are all still learning.
He identified two key potential opportunities for organisations on that journey. Firstly, using real-time data from sensors to optimise operations through monitoring and analysing variables such as emissions, water usage and energy consumption.
The growth of the internet of things (IoT) – physical objects with sensors and software that can connect to each other – is further fuelling the potential for technology to inform and shape environmental impact reduction efforts. Industry watchers predict that by 2027 there will be over 29 billion IoT connections globally.
The second set of opportunities that Simon highlighted was the use of technology to design products and facilities that optimise sustainability, which he notes leading companies are already doing. So the opportunities lie not just in the immediate work on the race to carbon zero but also in designing future products and infrastructure so companies can, ‘build in a better sustainability footprint for the future.’
How does this work in practice?
The early part of the journey can look a little like firefighting; collecting data needed for environmental reporting and plugging any gaps through buying up carbon offsets. The focus initially is on optimising current operations and only once that is in place, can companies start thinking further upstream and downstream – looking at supplier credentials and future-proofing the next generation of product lines and facilities.
Drawing on her experience as Group CIO at data centre provider Yondr where she established the Sustainability function, Louise spoke of the need to understand the carbon footprint at the design phase rather than addressing the problem at the end point after ‘the horse has bolted.’ A seminal point in Yondr’s sustainability journey came with the development of an in-house automated carbon accounting process alongside the use of mini business cases to model the impact of different design changes.
‘We were able to scale this up because we had automated it,’ says Louise. A multitude of benefits followed; cost savings in the longer run, the ability to provide clients and lenders with robust carbon reports, new revenue streams and a behavioural change leading to cost and waste reductions on building sites.
Simon flagged Tesla as another real-life case study and identified it as a frontrunner in the field having embedded the use of data and digital to reduce environmental impact at every stage of its business model. He noted that Tesla undertakes a lifecycle analysis of the sustainability and carbon footprint for every new production line right down to the car and battery decommissioning at end of life.
What are the challenges in delivering digital sustainability?
Our panel felt that the biggest issue in leveraging digital to drive sustainability was achieving buy-in from the board and executive team. Simon noted that the promise of ecological benefits does not always work as well with the board as the promise of cost benefits. So how to get the board onside? If possible, linking the initiatives to potential cost savings may make it easier to get buy-in. But also making the board aware that the real value is not a short-term P&L boost but rather the potential to improve market perception and attract higher multiples for the business from investors. Simon noted:
Companies who are further along their sustainability roadmap are generating higher multiples and higher total shareholder value.
He added that there can be a need to educate the executive team that there is a correlation between sustainability initiatives and shareholder value.
Louise made the point that a negative financial impact can arise from not embracing change noting that whilst at Yondr, the group was told their data centres could become stranded assets unless they adopted sustainable practices. ‘Investors are changing the landscape and companies have to act,’ she says.
Pradyumna advises linking sustainability initiatives to broader business strategy, noting that sustainability can be a vehicle for engaging many different parties, improving customer and employee satisfaction and forging better links with the community. He also flagged the power of technology to raise awareness of environmental impact noting that 25-30% of energy is wasted on building sites, but people aren’t aware because they don’t see it happen. Data can make the invisible visible.
Our panel made the point that where the sustainability function sits is crucial as to whether it becomes merely a reporting task or a broader corporate push. ‘You need to get a person on the board who really wants to own sustainability,’ says Louise. She noted that when it comes to motivating the broader staff base to change behaviour, carbon reduction can be a greater motivator than cost reduction – saving the planet can have a larger appeal than taking out costs which is ultimately what sustainability will achieve if executed effectively.
The panel also noted the challenge of data integrity issues within the supply chain as well as difficulties knowing which technology tools to bet on for the long-term. ‘There is a lot of snake oil out there,’ noted Simon. His advice? Maintain ownership of your data, remember it’s the data not the tool that is the real asset and make sure the tool can be switched in and out if needed.
Keeping the momentum going on sustainability initiatives can be another challenge. Linking it with the company’s core purpose can help here. Look on the Tesla website and you will see the word sustainable everywhere. In Elon Musk’s own words, ‘The fundamental value of a company like Tesla is the degree to which it accelerates the advent of sustainable energy faster than it would otherwise occur.’
But what of that ChatGPT definition and the environmental bad press that digital and data can generate? Our panel concedes that technology itself generates a new set of issues around energy use and waste as well as privacy and security but feel that it still plays a positive role. Louise commented:
Digitisation can help us reduce consumption so providing overall we are reducing our impact on biodiversity, improving the circularity of components, reducing carbon and not adding to our footprint, then it’s a benefit.
One thing is clear, both sustainability and digital will continue to evolve and exert huge influence on business and society – it would be wise to keep well informed. On that note, our panel kindly signposted some useful resources for our readers who would like to learn more about the issues discussed:
- UN Sustainable Development Goals – a good place to start, outlines 17 areas for sustainable development and provides a broad framework that many leading companies refer to.
- University of Cambridge Institute for Sustainability Leadership – online short courses on a variety of topics including business and climate change, leading sustainability and sustainable supply chain management.
- Linked-in groups that discuss sustainability such as ESG today.
We would like to extend our thanks to all of our panellists for their valuable insights and thought-provoking debate.
Please do get in touch with John to continue the discussion.
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