Nearly three years on since the beginning of the pandemic, we are in the midst of a global digital revolution and sustainability awakening. As more and more services move online, digital transformation has become increasingly essential for small and medium-sized businesses (SMBs), including those looking to prioritize sustainability to future-proof their company. A recent study of 400 CEOs revealed that 40% were already seeing positive contributions towards their sustainability goals simply as a result of employing digital technologies.
While digital technology may not be a magic bullet for businesses to achieve their sustainability goals, it can help track and analyze performance across a wide range of ESG indicators– from resource consumption and product circularity to supply chain traceability, carbon footprint reduction, and employee wellbeing.
Both digital transformation and sustainability strategies are thus increasingly intertwined, and crucial for companies to understand and implement if keen to make these shifts.
Why is digital transformation pivotal to sustainability and what are the benefits?
More and more CEOs are embracing such digital technology as artificial intelligence (AI) APIs, analytics, integration and data sharing technologies into their operations and increasingly businesses are realizing that digital transformation is also the most effective way to achieve their sustainability goals. While the array of technology on offer may appear daunting, the benefits, especially for improving sustainability, should not be ignored.
An overview of how some of these technologies can support sustainability initiatives:
- Artificial intelligence (AI) uses predictive capabilities to monitor emissions & energy use and predict their future output to make effective, cost-efficient adjustments.
- Internet of Things (IoT) improves productivity and creates operational efficiency to reduce energy consumption through real time remote monitoring of machinery and processes.
- Blockchain technology can track products in the entire supply chain through a digital data base. It can prevent inefficiency and waste helping to make supply chains sustainable and transparent.
- Application Programming Interface (API) is a key technology used to collect a range of sustainability data and create a single source that can be shared and analyzed.
- Streaming Analytics allows companies to keep on top of their sustainability performance in real time by analyzing fast moving data from many sources.
What are the challenges to transitioning to sustainability without the support of digital technology?
Businesses need to collect data to assess their current baseline, create their sustainability plans and track and execute against them. Yet, data collection is complex and one of the biggest challenges faced by business. Data needs to be sourced from many different places both internal and external. There are a variety of ESG metrics that businesses need to measure and report as they map out their sustainability plans. Some of the key data used to create metrics are:
- Energy and resource use, including water, energy, or fuel efficiency
- Operations performance, including areas of wastage
- Carbon emissions
- Elements of the employee work environment, such as safety, benefits, and wages
- Diversity and inclusion statistics
- Regulatory standards and taxes
- Data privacy and security
- Supply chain data
Not only is digital technology data collection useful for internal measurement of sustainability, but data is also increasingly required from external auditors and government agencies. Digital technologies also aid the visibility and traceability of the supply chain to the public, increasing product transparency.
Embracing the digital transformation is essentially the ultimate future-proofing solution, managing everything from investor scrutiny to resource efficiency and supply chain sustainability to help SMBs reach their sustainability goals.
The bottom line-how should leaders approach their transformation?
In our post-Covid world, prioritizing sustainability and digital transformation is crucial for businesses wishing to comply with tightening regulations, identify and mitigate environmental inefficiencies, and protect against future volatility.
Tellingly, a BCG study of 300 corporate sustainability initiatives from 2020 revealed that the most successful initiatives had one common link – they addressed upstream sustainability issues by utilizing digital technologies.
Leaders should invest in sustainability smartly- Integrate rather than separate your technology strategy with your sustainability strategy. We at bgood collective are here to help with your sustainability transformation.
Bgood collective is a boutique sustainability agency that helps companies future proof their organizations by developing and integrating sustainability strategies into their business.