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The past decade has witnessed an explosion of digital transformation initiatives, tangibly changing every aspect of our lives. In this same decade, climate change has accelerated at an alarming rate, and sustainability has been pushed high on the priority lists of both governments and corporations.
Against this backdrop, sustainability through digital transformation has become a crucial strategy in the global effort to address pressing environmental challenges. Organizations are striving to transform into greener and more flexible business models.
From optimizing energy consumption to revolutionizing waste management practices, here are the ways digital transformation is playing a key role in shaping a more sustainable future.
Sustainability has rapidly become a priority for investments. It is increasingly seen as an opportunity to create business value.
In 2022, only about ⅓ of organizations had the intention of boosting their sustainability investments. In 2024, that proportion has grown to over half, according to the Capgemini Research Institute.
Only 35% of companies have acted on their green strategies.
Economic incentives, too, are playing a key role in increasing investments in sustainability. Take, for instance, the EU Green Deal Industrial Plan in Europe and the Inflation Reduction Act in the US.
Despite the rising influence of sustainability-driven corporate agendas, according to IBM, only 35% of companies have acted on their green strategies. Furthermore, only ⅓ have incorporated sustainability metrics and objectives into business processes.
Conventional approaches to achieving sustainability objectives often involve complex processes that demand manual efforts, expertise in data science, and significant computational resources.
Fortunately, through the integration of digital technologies such as cloud adoption, data and analytics, and generative AI, business operations can be reshaped to meet sustainability agendas.
By leveraging technology and data-driven approaches, companies can reduce their environmental footprint, enhance operational efficiency, and meet the growing demands for sustainable practices.
Here’s a closer look at how digital transformation serves as a pathway to achieving sustainability goals.
Energy Efficiency
Digital technologies enable businesses to optimize energy consumption through smart systems and monitoring.
In a collaborative analysis by Accenture and the World Economic Forum (WEF), it was revealed that the energy, materials and mobility industries can reduce emissions by up to 10% by swiftly incorporating digital technologies.
Furthermore, according to new data from the International Energy Agency (IEA), digital technology could, by the end of 2050, save up to $1.8 trillion of global grid investment by increasing the lifetime of grids.
It is important to note, however, that neglecting to properly enhance and digitize network infrastructure could lead to a decrease in economic output by nearly $1.3 trillion in emerging and developing countries. This decrease is due to reduced productivity, lost sales, and excessive spending on backup generation, which increase costs and jeopardize net-zero targets.
Governments around the world have taken notice of these opportunities. For example, in 2022, the European Union introduced an action plan aimed at digitizing the energy system.
This plan emphasizes enhancing connectivity and interoperability, encouraging coordinated investments in smart grid technologies, empowering consumers, improving cybersecurity, increasing efficiency, and establishing effective governance through collaborative planning.
Furthermore, subsequent to the release of the Energy Digitalisation Taskforce report spearheaded by the energy regulator Ofgem, Innovate UK, and the Department for Business, Energy and Industrial Strategy, the UK commenced a feasibility study for a ‘digital spine’ in October 2022. This presented an opportunity to engage in policy formulation aimed at digitalizing the UK’s energy infrastructure.
By reducing energy consumption and associated costs, businesses can enhance their competitiveness, increase profitability, and demonstrate environmental stewardship.
Acceleration of Green Hydrogen and Electric Vehicles
Digital transformation is profoundly impacting the shift towards sustainable transport, especially in the domains of green hydrogen and electric vehicles (EVs).
Green hydrogen, produced through renewable energy-powered electrolysis, is a versatile, clean energy carrier. It is pivotal in decarbonizing various sectors, such as transportation, industry, and power generation.
Digital technologies are catalyzing advancements across the green hydrogen value chain, enhancing efficiency, affordability, and scalability:
With regard to EVs, technologies such as AI and IoT optimize performance, extending battery life and enhancing energy efficiency.
Data analytics inform route optimization, minimizing emissions and energy consumption. Additionally, digital platforms streamline EV adoption, from vehicle purchase to maintenance, fostering widespread uptake.
As electric vehicle manufacturers endeavor to stay technologically competitive, numerous companies are finding that embracing digital transformation offers greater value to customers, enhances financial performance, and positions the company for future growth opportunities.
Supply Chain Transparency
As much as 90% of an organization’s environmental footprint can be traced back to its supply chain, including both upstream (suppliers, production stage) and downstream (customers, usage stage) processes.
Therefore, it’s crucial to cut down on carbon dioxide (CO2) emissions within supply chains.
In reaction to climate change, numerous global corporations are pivoting their carbon reduction efforts from an internal focus to encompassing their entire supply chain.
Achieving sustainability objectives within the supply chain necessitates a worldwide, precise, and real-time perspective on inventory, alongside the capability to securely exchange data throughout the supply chain network.
Digital technologies, particularly Artificial Intelligence (AI), enable businesses to prevent the accumulation of outdated and unmarketable stock, cut down on carbon emissions resulting from logistical activities, enhance the decision-making process for order fulfillment, and decrease waste concerning raw materials, finished products, and inventory of spare parts.
Another example would be blockchain technology, which enables immutable records of transactions, ensuring transparency and traceability.
Circular Economy Models for Waste Reduction
Another instance of sustainability through digital transformation is the transition to a circular economy.
Circular companies are expected to eventually disrupt linear models and become the new industry leaders.
Circular business models seek to generate, provide, and secure value by deploying strategies that enable the closure of material cycles and increase the lifecycle of products and components. Embracing such strategies typically demands profound and comprehensive modifications to a company’s product offerings and value chains.
But reducing waste is not a distant dream – at least according to Gartner, who predicts that, by 2029, supply chains will be expected to not produce waste. Indeed, the WEF even claims that, in the 2030s, the circular economy will be the only economy.
Regardless of whether the circular economy will overtake current models in the near future, circular companies are expected to eventually disrupt linear models and become the new industry leaders. Organizations will need to adapt and transition to circularity.
Digitalization will form the bedrock of the global circular economy. It will accomplish this in various ways, including but not limited to:
Businesses, however, also have much to gain by transitioning to the circular model, such as cost savings through resource efficiency, new revenue streams and market opportunities, supply chain risk mitigation, and enhanced brand reputation and resilience.
Indeed, the WEF estimates that circular economy opportunities could unlock $4.5 trillion in additional economic output by 2030. Additionally, consumers are prepared to pay a premium for sustainable products.
Embracing circular economy principles not only drives sustainability but also fosters long-term profitability and competitiveness in a rapidly changing business landscape.
Remote Work and Mobility
Digital transformation solutions have accelerated the shift to remote work, which in turn has led to notable environmental implications. Digital collaboration tools further enhance productivity while minimizing the need for physical travel.
Reduced commuting, of course, leads to lower carbon emissions from transportation. Indeed, in the US, employees who worked from home permanently were predicted to reduce their emissions by 54%. Hybrid workers also reduced their emissions.
Additionally, digital technologies such as AI, cloud adoption, Internet of Things (IoT), imaging, and geo-location can collect and analyze real-time data for route optimization and enhanced decision-making. The WEF states that, in this manner, greenhouse gas (GHG) emissions can be lowered by as much as 5% by 2050.
Sustainability through digital transformation is quickly becoming more widespread.
By leveraging technology, data, and innovative approaches, companies can enhance efficiency, transparency, and consumer engagement while reducing their environmental footprint.
Embracing digital transformation not only aligns with sustainability goals, but also fosters long-term resilience and competitiveness in a rapidly evolving business landscape.
Silverskills is uniquely positioned to partner with clients to implement digital transformation as a strategy to reach sustainability.
We are forging partnerships with organizations to provide digital solutions aimed at embracing innovative technology-driven digital business models, scaling automation for heightened productivity and efficiency, modernizing infrastructures, and ensuring continuous security across all touchpoints.
Begin your journey of digital transformation for sustainability. Contact us now for digital transformation solutions.
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