Consulting Group Says Tech Can Offer a Fast Track to Sustainability
Mechanization has certainly not always had a positive impact on the earth’s air, water, soil, and habitat since the start of the Industrial Revolution, but today’s shift to a digital-first world could offer the world a fast track to sustainability.
“Twentieth Century technology, specifically mechanization and other industrial processes, got us into the climate change conundrum. Can 21st Century data and digital technology help us get out of it?” ask Boston Consulting Group’s (BCG) Karalee Close, Norbert Faure, and Rich Hutchinson.
The answer is in the title of the trio’s thought-provoking report: “How Tech Offers a Faster Path to Sustainability”.
The BCG report says that building sustainability as a competitive advantage requires integrating technology and data from the start.
“The role of tech goes well beyond “green IT.” As more companies think about their technology and sustainability agendas in concert, management teams should ask whether they are bringing game-changing technology and digital thinking to the task of meeting sustainability goals—or whether this critical business issue is missing an important dimension,” writes the BCG trio.
4 Ways Tech Can Help Companies Achieve Net Zero
Technology can play a leading role in helping companies reach their net zero emissions initiatives.
According to BCG, four ways that technology can speed up the journey to Net Zero include:
- Process Optimization: Average CO2 reduction of 5 to 10 percent via cloud-native architecture for AI and data-driven optimization of processes and operations. E
- Carbon Data Transparency: Average CO2 reduction of 30 to 40 percent via system-wide visibility to drive sustainable decision-making and behavior across an organization.
- Circular Products and Services: Average CO2 reduction of 5 to 10 percent via digital products and services to incentivize sustainable consumer behavior within the industry.
- Data Ecosystems and Ventures: Average CO2 reduction of 5 to 10 percent via cross-industry and sector data partnerships for joint abatement initiatives across the ecosystem.
“Such initiatives can yield substantial cost savings as well,” says the report. “A big benefit of the technology eco advantage mindset is that companies can set a roadmap for new tech adoption that will speed the journey to sustainability by helping to embed it as a core value.”
Leveraging Tech Accelerators to Advance Sustainability
The BCG report says that industry leaders are leveraging tech accelerators to advance their sustainability goals including the falling case studies:
- Digitized Operations: Innovative textile-dyeing technology that reduces water, energy, and chemicals used and pollution generated.
- Digital Products and Services: Customer-centric sustainability solutions that reimagine how parcels are delivered while reducing emissions.
- Cloud, IoT, and Blockchain: Blockchain-based “value chain transparency” solution guaranteeing the integrity of products from producer to retailer.
- AI and Advanced Analytics: IoT- and AI-based real-time energy efficiency optimization solution, tracking and incentivizing energy savings over time.
- Data Sharing and Ecosystems: Software integrating insurance and telecommunications to deliver microinsurance via phone subscriptions.
“Frontrunners in this area create inherently more sustainable operations and processes—for example, new manufacturing or materials technologies that leverage alternative inputs to reduce emissions and waste—and win consumer and investor reward as a result,” said BCG.
BCG Looked at 300 Corporate Sustainability Initiatives
The BCG report came after the consulting group looked at 300 corporate sustainability initiatives. The researchers found:
- 85 of the 300 sustainability initiatives were cases of sustainable business model innovation that generated both societal and business value.
- Half of the companies used innovations in products or processes, or changes to the value chain, to mitigate negative environmental impact.
- About 25 percent of the companies reimagined value chains and business ecosystems, attempting to address root causes of environmental and societal needs.
- Another 25 percent reimagined their business entirely – reshaping the boundaries of competition to address the root causes at scale for growth and advantage.
“A key differentiator for these frontrunner companies was using digital capabilities and technologies to break economic constraints and unlock new solutions,” concluded the BCG report. “But success depends on leveraging technology and data from the very start. Before making a major commitment of time, management energy, and company resources, management should take a forward-looking and strategic view of how advanced technology and data can accelerate the journey to sustainability advantage.”
Gartner Agrees: Digital Solutions Can Enable ESG Outcomes
BCG is not the only consulting firm looking at the role of technology and sustainability as Gartner released a report in September that says sustainable technology can be a framework of digital solutions that can enable environmental, social, and governance (ESG) outcomes for both enterprises and their customers.
“Sustainable technology is increasingly important operationally — for optimizing costs, energy performance, and asset utilization, for instance — but it also drives ESG outcomes like improving wellness and providing the traceability needed to ensure responsible business practices,” says Gartner Principal Analyst Autumn Stanish. “Sustainable technology also facilitates new business models and tech-enabled products to better serve customers.”
According to Gartner, sustainable technology creates opportunity in three critical areas:
- Internal IT Operations: Sustainable IT means selecting and working with the right tools, hardware, and vendors to deliver the maximum possible output using the minimum viable resources. Solutions may include new sustainable approaches for the responsible stewardship of IT assets, like using robots for recycling to drive circular economy principles into IT, or outsourcing IT operations to sustainable operators, such as hyper-scale cloud providers.
- Enterprise Operations: Examples include providing transparency on sourcing and trade practices, improved energy and material efficiency, reduced emissions, and fair labor practices. Opportunities include:
o Automation to reduce resource-intensive activities
o AI to predict the impact of climate on business
o Advanced Analytics to capture real-time performance analysis
o Cloud to transform processes and enable remote work
- Customer Operations: Sustainable technology also provides a prism through which to deliver products and services that enable customers to meet their own sustainability goals.
“Ultimately, sustainable technology will incorporate both well-established and leading-edge technologies. Prioritize technology investments based on the top material issues that your enterprise has identified as most important to future success,” concluded the Gartner report.