How to make your digital transformation sustainable

With all eyes firm­ly fixed on the COP26 cli­mate change con­fer­ence in Glas­gow in recent weeks, sus­tain­abil­i­ty has nev­er been such a cru­cial issue, nor cap­tured pub­lic atten­tion more.

Aim­ing to secure glob­al net zero emis­sions by the mid­dle of this cen­tu­ry and lim­it­ing glob­al warm­ing to 1.5 degrees, world lead­ers have called on indus­try to lim­it emis­sions and act in a more sus­tain­able way. How­ev­er, accord­ing to the Roy­al Soci­ety, dig­i­tal tech­nol­o­gy accounts for between 1.4% and 5.9% of glob­al emis­sions. That’s much the same as the air­line indus­try – and the fig­ure has been steadi­ly ris­ing.

John Frey is chief tech­nol­o­gist, sus­tain­able trans­for­ma­tion at Hewlett Packard Enter­prise and a lead con­trib­u­tor to the World Eco­nom­ic Forum’s (WEF’s) Bridg­ing Dig­i­tal and Envi­ron­men­tal Goals play­book. He esti­mates that by 2025, 61% of the world’s pop­u­la­tion and 41.6 bil­lion inter­net of things devices will be online.

“The expan­sion is improv­ing liveli­hoods and dri­ving pro­duc­tiv­i­ty, but we can’t ignore a fun­da­men­tal issue: the rapid growth of the dig­i­tal uni­verse and its ener­gy con­sump­tion is con­tribut­ing to cli­mate change,” he says.

So how can organ­i­sa­tions car­ry out a dig­i­tal trans­for­ma­tion while keep­ing sus­tain­abil­i­ty in mind?

Sustainable business benefits

Frey believes dig­i­tal trans­for­ma­tion and sus­tain­abil­i­ty can often be com­ple­men­tary. “Sus­tain­able inno­va­tion often results in solu­tions that save mon­ey, have a low­er envi­ron­men­tal and social impact, improve employ­ee attrac­tion and reten­tion, and gen­er­ate lit­tle to no waste,” he says. 

That’s what Pao­lo Tat­ic­chi found when con­sult­ing on a dig­i­tal trans­for­ma­tion project for phar­ma­ceu­ti­cal com­pa­ny Con­silient Health. The com­pa­ny hoped to secure impor­tant part­ner­ships with major man­u­fac­tur­ers and cus­tomers in the phar­ma indus­try, while also wish­ing to retain its rela­tion­ship with the NHS, itself imple­ment­ing new sus­tain­able sup­ply chain and pro­cure­ment strate­gies.

Accord­ing to Tat­ic­chi, a pro­fes­sor who teach­es strat­e­gy and sus­tain­abil­i­ty at UCL’s School of Man­age­ment, it became very clear that dig­i­tal trans­for­ma­tion projects would enable the sus­tain­abil­i­ty strat­e­gy by pro­vid­ing real-time infor­ma­tion and mea­sure­ment of process­es, along with greater trans­paren­cy for inter­nal and exter­nal stake­hold­ers. These projects includ­ed dis­trib­uted ledger tech­nol­o­gy in the man­age­ment of sup­ply chains and the imple­men­ta­tion of a new ERP sys­tem.

“The sus­tain­abil­i­ty objec­tives have become a true source of inno­va­tion in the con­text of the dig­i­tal trans­for­ma­tion agen­da,” Tat­ic­chi says.  

Sim­i­lar­ly, the Euro­pean Farm to Fork strat­e­gy aims to improve trace­abil­i­ty in food sup­ply chains, but also intrin­si­cal­ly works to reduce waste. For exam­ple, the Sec­QuAL (Secure Qual­i­ty Assured Logis­tics for Dig­i­tal Food Ecosys­tems) project, fund­ed by the Indus­tri­al Strat­e­gy Chal­lenge Fund, intro­duces smart labels to mon­i­tor cold chain con­di­tions, pre­dict shelf-life more accu­rate­ly and iden­ti­fy bot­tle­necks and inef­fi­cien­cies in sup­ply chains.

The pro­gramme will help reduce waste through­out the sup­ply chain says Clive Stephens, head of research and devel­op­ment at food pro­duc­er Cran­swick. “Our vision is to be the world’s most sus­tain­able meat busi­ness,” he says.  

The EU has found that par­tic­i­pants in farm-to-fork smart farm­ing ini­tia­tives have shown reduc­tions in water use, pes­ti­cide use and NO2 emis­sions. Mean­while, the WEF sug­gests that using arti­fi­cial intel­li­gence to design out waste for food, keep prod­ucts and mate­ri­als in use for longer and regen­er­ate nat­ur­al sys­tems could rep­re­sent sav­ings of up to $127bn (about £93bn) a year in 2030.

Overcoming the hurdles

How­ev­er, a sus­tain­able dig­i­tal trans­for­ma­tion cre­ates chal­lenges because dig­i­tal tech­nol­o­gy itself is a sig­nif­i­cant con­trib­u­tor to glob­al cli­mate change. While improve­ments in ener­gy effi­cien­cy have helped to lim­it the growth of ener­gy demand from data cen­tres and data trans­mis­sion net­works, each account­ed for around 1% of glob­al elec­tric­i­ty use in 2019, accord­ing to the Inter­na­tion­al Ener­gy Agency. 

Oliv­er Iltis­berg­er, pres­i­dent of ABB Smart Build­ings, thinks the answer is to install renew­able ener­gy gen­er­a­tion – such as pho­to­volta­ic tech­nol­o­gy, wind tur­bines, bat­tery ener­gy stor­age sys­tems or ther­mal ener­gy stor­age – or to buy renew­able ener­gy from the grid.

As part of the com­pa­ny’s own dig­i­tal trans­for­ma­tion, it cre­at­ed its first car­bon-neu­tral pro­duc­tion site at Lüden­scheid in Ger­many. Solar tech­nol­o­gy now gen­er­ates up to 100% of the factory’s ener­gy require­ments, enough to sup­ply 340 pri­vate house­holds, Iltis­berg­er says.

“When used with the site’s co-gen­er­a­tion plant, Lüden­scheid can gen­er­ate 14% more ener­gy than need­ed. This sur­plus is sold back into the pub­lic grid, mean­ing the site is ener­gy pos­i­tive,” he adds.

Physical waste

For a solar farm, any increase in effi­cien­cy is a pos­i­tive move in terms of sus­tain­abil­i­ty. But when R‑evolution, a sub­sidiary of sen­sor and soft­ware firm Hexa­gon, recent­ly cre­at­ed a dig­i­tal twin for its solar farm in Archi­dona, Spain, phys­i­cal elec­tron­ic waste was reduced too. 

“We are work­ing to estab­lish a ‘smart dig­i­tal real­i­ty’ that mir­rors our Archi­dona solar farm to improve effi­cien­cy, remote­ly and autonomous­ly detect solar pan­el anom­alies, improve main­te­nance, aid inspec­tions and more,” says CEO Erik Josef­s­son. “We dis­cov­ered, for exam­ple, that an east­er­ly wind is the most dam­ag­ing and which pan­els are most at risk; this means oper­a­tors can more effi­cient­ly take pre­ven­ta­tive coun­ter­mea­sures.”

Phys­i­cal waste is also a grow­ing issue, with the not-for-prof­it WEEE Forum esti­mat­ing that the amount of waste from elec­tri­cal and elec­tron­ic equip­ment will total as much as 57.4 mil­lion tonnes in 2021 – heav­ier than the Great Wall of Chi­na.

Frey, though, thinks such waste can be min­imised through the prod­uct-as-a-ser­vice con­cept. This aims to opti­mise device refresh cycles by using automa­tion and data, such as infor­ma­tion on work­loads and pow­er con­sump­tion, to pro­vide life­cy­cle analy­sis and work out when a prod­uct might need to be replaced.

“This enables com­pa­nies to ful­ly lever­age their IT and to opti­mise resource plan­ning, there­by min­imis­ing waste and pos­i­tive­ly impact­ing the envi­ron­men­tal foot­print,” he says.

Oth­er poten­tial neg­a­tive side effects of dig­i­tal trans­for­ma­tion include high lev­els of water usage. The Water Resources Group, part of the World Bank, says that water demand is expect­ed to exceed cur­rent sup­ply by 40% by the end of this decade. 

Dig­i­tal­i­sa­tion means more online activ­i­ty. The data cen­tres need­ed to han­dle this require vast amounts of water for cool­ing: a 15MW data cen­tre can use as much water as three aver­age-sized hos­pi­tals, or more than two 18-hole golf cours­es. How­ev­er, the indus­try is start­ing to tack­le the issue, with Microsoft, Google and sev­er­al oth­er tech com­pa­nies recent­ly com­mit­ting to becom­ing water-pos­i­tive by 2030.

Getting staff on board

On the upside, one of the most com­mon pit­falls with a dig­i­tal trans­for­ma­tion project – staff buy-in – is far less like­ly to be a prob­lem when the project has a sus­tain­abil­i­ty focus. Research has repeat­ed­ly shown that peo­ple pre­fer to work for com­pa­nies with sol­id envi­ron­men­tal cre­den­tials.

In a recent sur­vey in the US, UK, India, Cana­da, Ger­many, Mex­i­co, Spain, Brazil and Chi­na, the Insti­tute of Envi­ron­men­tal Man­age­ment & Assess­ment (IEMA) found that almost three-quar­ters of employ­ees and job­seek­ers were more attract­ed to com­pa­nies that were envi­ron­men­tal­ly sus­tain­able.

Mean­while, accord­ing to recruit­ment firm Robert Wal­ters, a third of white-col­lar pro­fes­sion­als in the UK say they’d turn down a job offer if a company’s envi­ron­men­tal, sus­tain­abil­i­ty or cli­mate con­trol val­ues did­n’t align with their own, along with more than half of job­seek­ers in France, Chile and Switzer­land.  

“It’s there­fore all the more impor­tant for lead­ers to embed sus­tain­abil­i­ty in their strate­gies and sup­port and empow­er team mem­bers to use their pas­sion and exper­tise with­in com­mu­ni­ties and ini­tia­tives to become a dri­ving force them­selves with­in and beyond the organ­i­sa­tion,” says Frey. 

Accord­ing to the WEF, dig­i­tal trans­for­ma­tion offers an “immense oppor­tu­ni­ty” to help decar­bonise the glob­al econ­o­my. There’s the poten­tial, it says, to avoid an esti­mat­ed 26 bil­lion met­ric tons of net CO2 emis­sions from just three indus­tries – elec­tric­i­ty, logis­tics and auto­mo­tive – from 2016 to 2025. 

Mean­while, accord­ing to the Glob­al e‑Sustainability Ini­tia­tive, each met­ric ton of CO2 emit­ted by the ICT sec­tor can help users save 10 tons, thanks to devel­op­ments such as tele­con­fer­enc­ing, improved logis­tics and smart build­ings.

This trend must con­tin­ue, says Frey. “The world needs to urgent­ly accel­er­ate sus­tain­able inno­va­tion cycles,” he says. “Experts esti­mate that rough­ly half of the car­bon reduc­tions that the world needs to achieve net-zero emis­sions in the com­ing decades must come from tech­nolo­gies that have not yet reached the mar­ket.”

Sustainable transformation: what to consider 

1. Conduct an impact assessment and define the scope 

The first step in a sus­tain­able dig­i­tal trans­for­ma­tion, advis­es the World Eco­nom­ic Forum, is to car­ry out an assess­ment to work out which envi­ron­men­tal risks and oppor­tu­ni­ties are of strate­gic sig­nif­i­cance to the com­pa­ny. How can improved sus­tain­abil­i­ty lead to oth­er oper­a­tional ben­e­fits? How can greater effi­cien­cy improve sus­tain­abil­i­ty?

As with any dig­i­tal trans­for­ma­tion, it’s impor­tant to look at the whole pic­ture; it’s not just a case of trans­form­ing in-house oper­a­tions. What is the envi­ron­men­tal impact of sup­ply chain oper­a­tions, such as the man­u­fac­tur­ing and trans­porta­tion of goods used? What is the down­stream impact from the dis­pos­al of end-of-life assets?

“It’s impor­tant to engage with sup­pli­ers and do reg­u­lar audits to ensure main­te­nance of high eth­i­cal stan­dards through­out the sup­ply chain,” says Frey. “It is key to engage with peers, indus­try bod­ies and cross-sec­toral organ­i­sa­tions to share best prac­tices and new chal­lenges, and to advance sup­ply chain pro­grammes and stan­dards beyond one’s own busi­ness.” 

2. Set measurable goals

A sus­tain­able dig­i­tal trans­for­ma­tion will not only mean set­ting busi­ness goals, but envi­ron­men­tal ones, too: goals that are mea­sur­able and time­bound. Each should be linked to an explic­it prof­it and loss result and backed by clear key per­for­mance indi­ca­tors, incen­tives and report­ing mech­a­nisms, so that progress can be tracked against busi­ness and envi­ron­men­tal tar­gets. 

“No mat­ter what your goals are, the way to get there is bet­ter data. You can’t opti­mise or pre­dict any­thing with­out it,” says Josef­s­son. “If you can find ways to mea­sure every aspect that mat­ters and pro­duce data you can trust, you can make oper­a­tions increas­ing­ly autonomous – and that’s ulti­mate­ly the future for effi­cient, sus­tain­able process­es.”

3. Establish governance

The World Eco­nom­ic Forum advis­es organ­i­sa­tions to define a gov­er­nance struc­ture that helps embed envi­ron­men­tal sus­tain­abil­i­ty through­out the trans­for­ma­tion strat­e­gy. This could mean estab­lish­ing a steer­ing com­mit­tee involv­ing the chief sus­tain­abil­i­ty offi­cer and oth­er cor­po­rate lead­ers to map out pri­or­i­ties across the organ­i­sa­tion. Areas of respon­si­bil­i­ty and deci­sion-mak­ing pow­ers should be defined.

It’s impor­tant to make clear the poten­tial busi­ness ben­e­fits to get buy-in from part­ners both out­side and with­in the busi­ness.

“The process wasn’t easy, as the dig­i­tal trans­for­ma­tion and sus­tain­abil­i­ty agen­da pushed the organ­i­sa­tion to a major change in the way of work­ing,” says Tat­ic­chi, refer­ring to his work with Con­silient Health. “A clear busi­ness case for all ini­tia­tives was defined in order to engage the board and senior man­age­ment team. The CEO act­ed as cham­pi­on of both ini­tia­tives.” 

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