What is the balance between Digitalisation and Sustainability?
Updated: Sep 2
Combining digital technology and environmentally sustainable practices should be at the centre of every business's strategic planning. However, getting the balance right is challenging.
With much of the world required to work from home due to the COVID-19 pandemic, many businesses and organizations are fortunate that they can keep operations going thanks to the myriad digital technologies available for collaboration and communication. The move to remote work has significantly reduced the number of individuals commuting to work, resulting in noticeably cleaner skies in many parts of the world.
Most business executives want to run a firm that is environmentally friendly, with less negative effects on the environment. Because they lacked the data, few organisations have been able to put that vision into effect. Fortunately, they now do.
Although digital technology and environmental sustainability may seem mutually exclusive, the two concepts are often mutually reinforcing. Without digital technology, it is difficult for businesses to reduce their carbon footprint or minimise waste. Without a thorough understanding of sustainability, computer energy may well be wasted.
Technology and the application of modern innovation has played an important role in advancing sustainable development. Looking at the goals of sustainable development, from health to energy, economy, infrastructure, and so on, all of these are aspects that can be improved through the application of technological ingenuity.
Numerous businesses view digitalisation in the supply chain as an opportunity to pursue their sustainability goals. “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 non-profit organisation that collaborates with 250 businesses to help them become more sustainable.
What is commonly referred to as Industry 4.0 comprises of a variety of digital advancements that may be used in manufacturing organisations. Better asset data capturing should allow product makers and users to better understand the life cycle of their goods. Such appreciation has numerous business value, but it may also be utilized to improve usage efficiency and stimulate the reuse or remanufacturing of assets after the end of their typical working life.
A variety of initiatives are utilising digital technology to provide social advantages. M-Pesa, a mobile phone banking and money transfer application developed in Kenya, has enabled people all throughout Africa to conduct financial transactions without the use of a bank. Plastic Bank, established in Haiti, is an organization that uses blockchain technology to provide payment to plastic waste collectors, providing a source of income for some of the world's poorest people while also giving an incentive to collect the plastics that damage the marine environment.
However, it is important to approach these advancements with caution, balancing the twin imperatives of pushing efficiency while also guaranteeing an environmental footprint improvement.
The first potential concern to resolve is the carbon footprint of the digital infrastructure itself. According to the International Energy Agency, data centers consumed around 200 terawatt-hours of electricity in 2019, accounting for 1% of total global consumption.
However, certain datacenter and cloud providers are cleaner and greener than others. “It is true datacentres are themselves energy hungry, however many of the big cloud providers, such as AWS and Google, are now buying in much of their energy needs from solar and wind”, says Duncan Grierson, founder and CEO of sustainable investing platform Clim8 Invest.
Furthermore, Google announced intentions to invest up to $2 billion more in clean energy in 2019, signing the largest renewable energy agreement in corporate history. The business then announced in September that it has removed Google's complete carbon legacy by purchasing offsets to account for all operating emissions prior to being carbon neutral in 2007.
Waste and Carbon Footprint
Company-specific data and carbon footprint concerns are growing, exposing businesses to hazards they may not have foreseen. Banks that are expanding into digital services, for example, are discovering that the energy consumption involved with processing ever-growing amounts of data is rapidly increasing their carbon footprint — in some cases drastically.
In fact, carbon is not the sole benchmarking tool applicable to digital transformation and sustainability. Much of the energy required by data centers globally is utilized for cooling, which is why they are often located near the Arctic Circle. This cooling, however, necessitates the use of billions of gallons of water, at a time when water scarcity is a growing climate risk factor.
Take another example - 3D printing. 3D printing can result in significant waste as users experiment in the design phase, resulting in “misprints”. “With such a vast range of potential uses and applications for the technology, it is not easy to say whether 3D printing helps to protect resources or, conversely, it is just another source of waste; the environmental performance will vary depending on the product” addressed by Prof Dr. Holger Petersen, a professor of sustainability management at Nordakademie of Elmshorn in Germany.
What is the balance?
We believe that the application of digital technology necessitates a far more balanced sustainability approach, one that recognises and addresses its economic and social implications. Below are six principles for a digital-age sustainability strategy:
Analyse the types of activity; outcomes; and social, environmental, and economic impacts of the business to understand how your company's operations produce or destroy societal value.
Rethink your products and services (e.g., their usage and design) and recognise conflicting objectives.
Engage strategically with a broader set of stakeholders in your value chain.
Distribute economic prosperity and create marketplaces based on circular economy concepts.
Develop the management knowledge required to drive these challenges in your company's operational activities.
Teach personnel to become what may be referred to as implicit sustainability managers.
There should be a balance established between the need to cut emissions from the technology industry and the critical role that digital technologies play in economic and social progress — as well as in keeping the world connected in times of disaster. While the technology sector is rapidly reducing emissions, the net environmental impact of digital technologies is difficult to calculate.
Whatever approach you use in your firm, the solution must provide you with the breadth and depth of analysis necessary to effectively incorporate these factors into strategy development and decision making.
At a personal level, if you are interested in beginning your zero-waste venture, check out our blog "The Three Rs - Where to Start?", to learn more about applying the “reduce, reuse, recycle” principle in your home.
Further Reading & Sources