Digital
Technology and Sustainability: Positive Mutual Reinforcement PART I
Get the balance right between these two concepts, and your business
can thrive.
Most business leaders would like to run an
environmentally sustainable company, one that does little harm to the natural
world and that leaves its employees and customers healthier. Few companies have
been able to put that ideal into practice because they haven’t had the data.
But now they do.
Enevo, a Finnish company that makes devices
for “smart” waste disposal, could not exist if it weren’t for the Internet of
Things. Its devices feature embedded sensors and analytic software. They enable
waste companies to plan pickups when waste bins are full, rather than at set
time periods, making collection of waste more efficient and reducing costs.
In traditional industrial terms, digital
technology and environmental sustainability seem mutually exclusive. The
factors that propel them are unrelated. One is driven by sweeping technological
change brought about by the Internet of Things, artificial intelligence (AI),
and robotics, all promising to transform global manufacturing, industrial
processes, and labor. Put simply, it’s about efficiencies.
The other is driven by a combination of
climate and environmental degradation and geopolitical instability, all of
which demand a new approach that prioritizes resource conservation and
environmental governance — and in particular redoubled efforts to de-carbonize
the atmosphere. Businesses increasingly recognize that it will be impossible to
meet the world’s growing demand for products and services purely through a
linear increase in production and consumption. People won’t be able to address
the ecological and social challenges of the day without fundamental business
model innovation. Moreover, unsustainable practices such as the release of
toxic emissions can no longer be hidden.
But the two concepts, digital technology and
environmental sustainability, are often mutually reinforcing. And we would go
further: Without digital technology, it is hard for companies to ease their
pollution footprint or manage waste. Without a full understanding of
sustainability, the energy drawn by computers can be wasted.
Bringing digital prowess and sustainable
practices together should be at the forefront of strategic thinking for any
business — as a way to differentiate itself and gain long-term viability among
customers, regulators, and the communities where businesses operate. In fact,
it may even be essential.
Combining Digital Expertise and
Sustainability
In
practical terms, the two concepts, properly combined, can bring myriad
benefits. In a report (pdf) published in January 2018, PwC identified 80
ways in which AI technologies could be used to benefit the environment,
including optimized energy system forecasting; demand-response charging
infrastructure in transportation; analytics and automation for smart urban
planning; “hyperlocal” weather forecasting for crop management; and supply
chain monitoring and transparency.
Indeed, the low-hanging fruit here may focus
on transparent supply chains and the sustainable sourcing of raw materials. Consumer
products companies and retailers can seek better ways of validating supply
chain claims, using digital tools and sustainability. This could be called
business value.
Many companies see an opportunity to drive
their sustainability goals through digitization in the supply chain. “We are
seeing more companies applying high-tech, data-centric applications to their
source patterns,” says Michael Rohwer, associate director, information and
communications technology at Business for Social Responsibility, a global
nonprofit organization that works with 250 companies to help them move toward
greater sustainability.
Knowing Your Assets
In the past, it was not uncommon for
companies to know little about their assets or products after they were made
and sold. So a great deal of waste has unwittingly been built into the
manufacturing and consumption cycle. But by using digital technology such as
electronic tagging, companies can start to harvest data about demand, usage,
and the life cycle of products for “circular economy” benefits. A circular
economy is one in which products are manufactured and services provided with a
focus on the reuse of materials and a reliance on renewable resources, for the
benefit of the environment.
For example, consumer electronics manufacturer
Philips is using digital technology to capture more information on the product
life cycle in order to reduce waste. The company’s analysis of the secondary
market for components revealed that its customers had opportunities to reuse
certain parts and thus extend the life of some existing equipment, such as
X-ray machines. This meant that not only could the customer lengthen the life
of the equipment it had bought, but Philips could develop an ongoing
relationship with its customers that it hadn’t had before.
What’s
often known as Industry 4.0 encompasses a range of digital improvements that
can be applied to manufacturing companies. Better data capture of assets should
enable manufacturers and users of products to better understand the life cycle
of their products. Such an understanding has many business benefits, but could
also be used to increase efficiency in use and to encourage the reuse or
remanufacturing of assets at the end of their normal working life.
Electric vehicle charging will become more
affordable via demand-response software programs enabled by big data (such as
those published by AutoGrid Systems). Clean, smart, connected, and increasingly
autonomous and shared short-haul transport will combine AI with other Industry
4.0 technologies, notably the Internet of Things, drones, and advanced
materials (in battery breakthroughs, for instance).
In another example, mining companies are
already reasonably advanced in their thinking concerning how to use
digitization to source and track the raw materials that are used in consumer
products — such as tracing and verifying the sources of metals used in mobile
phones. And in power and transport, Norwegian hydropower group Agder Energi is
using AI and the cloud to predict and prepare for changing energy needs in
Norway, particularly given the rapidly increasing penetration of electric
vehicles.
Better for Consumers
A number of programs are using digital
technology to deliver social benefits. The M-Pesa mobile phone banking and
money transfer application, developed in Kenya, has empowered people across
Africa to make financial transactions without a bank. Plastic Bank, based in
Haiti, is an organization using blockchain technology to support payment to
plastic waste collectors, creating a livelihood for some of the world’s poorest
people — on top of providing an incentive to collect the plastics that pollute
the marine environment.
Such action also addresses matters of
customer value, tackling rising concern about corporate sustainability among
millennials, who are among the biggest customers of technology-enabled devices.
New business models will need to prioritize producing better outcomes for
consumers.
Getting the Balance Right
Yet as compelling as this interplay between
digital technology and sustainability may seem, it is no panacea. Although
digital technology and sustainability are mutually reinforcing, they do not
always sit easily together. They are championed by different functions, for one
thing.
For all the enormous potential digital
technology offers for building a sustainable planet for future generations, it
also poses short- and long-term risks. These can be divided, broadly speaking,
into six categories with varying impacts on individuals, organizations,
society, and the Earth.
CONTINUES IN PART II
No comments:
Post a Comment