In conventional industrial terms, digital transformation and environmental sustainability sound mutually exclusive. The propelling factors of these two notions seem unrelated. The former is driven by far-reaching technological changes brought about by artificial intelligence (AI), Internet of Things (IoT), and robotics – everything promising to transform industrial processes. In short, it’s all about efficiency.

On the other hand, the latter is driven by a blend of geopolitical instability and environmental degradation. All of this demands a new, unconventional approach that prioritizes environmental governance and resource conservation.

Eventually, businesses now understand that only a linear growth in production and consumption is insufficient to meet the world’s increasing demand for products and services. People will not address the social and ecological challenges of this age without an essential business model innovation. Furthermore, unsustainable practices cannot be hidden anymore.

What is the present scenario?

Digital transformation and environmental sustainability – these two concepts are mutually fortifying and have evolved. Significantly, the Covid-19 pandemic has presented an opportunity for organizations to expedite their adaptation to digital technology and keep sustainability practices at the top of their priority list.

Anticipated to be notable years for artificial intelligence, 2020 and 2021 rapidly turned into a race for how fast organizations could identify the hidden issues in their supply chain and digitally transform themselves for survival. According to IDC, 65% of global GDP will be digitized by 2022.

It’s hard to estimate just how much enterprises have needed to adapt in the past few months. Could you imagine 8 billion people working together under lockdown in the interests of a common good before? We couldn’t!

According to Science Magazine, gas emissions were reduced by 17%, and human-related seismic vibration reduced by half during global lockdowns. These quick reversals have created a once-in-a-an-age platform from which fundamental changes are being pursued.

Digital transformation and Sustainability: The pivotal combination

As the pandemic has redefined society and digital transformation across all industries, leaders have begun to shift their focus on the sustainable side of the organization or the 3Ps – Planet, People, and Profit. The most efficient leaders are forward-thinking and proactive, only letting themselves see opportunities where others see obstacles.

And now, in the brim of a global crisis, those leaders realize a sustainable digital transformation is possible that will make them more resilient and more vigorous.

Sustainability comes as a catalyst for organizations to incorporate digital technologies into many areas of their business. It’s already well evident that digital technology is helping reduce carbon emission by 15% in agriculture, manufacturing, energy, traffic and transport management, building infrastructure, and so forth. Here’s how digital transformation could be your easter egg.

Mentioned below are some examples for your better understanding:

• Machine learning and predictive analytics are being applied for automatic processes with renewable energy forecasts for wind and solar power, environmental impact, and predictive maintenance.
• Artificial intelligence is being aided with air pollution reduction, disaster response, helping make infrastructure more energy-efficient, and making affordable renewable energy.
• IoT devices are being used to analyze production processes, gather data to monitor, and assist environmental impacts.

Reasons why sustainability is important

Now, let’s come to the bottom line – why digital transformation and environmental sustainability must go hand in hand and how sustainability strategy transforms the enterprise. We’ve presented the following grounds.

1. The mounting industrial pressure to integrate sustainable practices

The MIT Center for Transportation & Logistics (MIT CTL) and the Council of Supply Chain Management Professionals (CSCMP) recently conducted a study in which 46% of the respondents stated that external stakeholders compelled them to adopt sustainable digital transformation consulting services.

With this enforcement, stakeholders demand transparency of such practices besides traditional press releases. Leaders can substantiate current state processes by incorporating sustainable practices within their organizations.

2. Voluntary sustainability reporting” – The growing expectation

Several countries such as China, Indonesia, India, USA have mandated the reporting for sustainable practices. KPMG has reported that 93% of the 250 most prominent global organizations now publish this report. As a result, stakeholders are looking forward to small and medium-sized enterprises taking part in such reporting.

By aligning the digital transformation strategy of an enterprise with sustainable reporting protocols like Global Reporting Initiative (GRI) framework, leaders of all industries will be able to chart out metrics and information from organization application into sustainability reporting templates.

3. The great change in consumer behavior

The buying power has shifted from Boomers to GenZs and Millennials, emphasizing sustainability efforts and ethical practices while making buying decisions. As per a study conducted among 10,000 consumers worldwide, 91% of them noted that they would prefer a brand that supports an environmental or social cause.

Another study found that 90% of buyers are likely to boycott a company for irresponsible and immoral business practices. The volume of green-washing is continuously increasing among small, medium, and large organizations, and consumers are now demanding organizations ‘validate’ sustainable claims.

4. Sustainability as a criterion for investment and lending

Sustainability plans used to be seen as a distraction to the essence of an organization. But now, the majority of investors and lenders consider an organization without sustainable practices a reputation and ethical risk. In this regard, Levi Strauss & Co. (LS&Co.), in association with the International Finance Corporation (IFC), has decided to offer lower interest rates to vendors that have prioritized sustainable digital transformation trends.

Additionally, investors and lenders of small and medium-sized organizations have included sustainability efforts within risk evaluations and assessments. As an initiative to record these practices from a financial perspective, the Sustainability Accounting Standards Board (SASB) involves integrating sustainability reporting and digital transformation strategy in an organization.

5. Growing augmentation and automation will need growing integration

On the surface, it might not appear as a sustainable practice. Several organizations have stepped up to create a sustainable business environment by transferring technology services to the cloud. It has been noted that organizations that move technology applications to the cloud consume 84% less power, 77% fewer servers and decrease carbon emissions by up to 88%.

On top of this, IoT has introduced effective devices across the business of an organization. Leaders now can track, evaluate, and report on a range of non-financial metrics like the use of an innovative HVAC system in the plant maintenance app of the organization.

Sustainable digital transformation: More than just a trend

Digital technologies are advancing day by day. Accordingly, financial reporting and sustainable innovations are improving as well. Organizations across all industries are compelled to look inward and look towards the coming days. In the S&P 500 Index, 86% of organizations have submitted sustainability reports in 2018, rising from 20% in 2011.

With the increasing pressure from investors and lenders to reveal quantifiable, consistent, and reliable ESG metrics, many companies are now looking for an opportunity to accomplish their sustainability goals through digital transformation in the supply chain. They’re applying the latest, high-tech, data-driven applications to their source patterns.

It seems like there’s no coming back from the critical sustainable aspect of the 4th Industrial Revolution. Sustainable strategy transforms the enterprise, and it’s no longer a nice thing to do; it’s a must to do.

Final thoughts

The wind of change is blowing from two different directions and uniting into a life-changing storm over the world economy. Digitization is on its way; in fact, in many cases, it has already arrived. Sustainability is coming along with it, and together, these are the most powerful influences in today’s corporate landscape.

But, the underlying concern still remains. The impact digitization will have on this planet, human lives, and societies are still unknown. If digital transformation is genuinely the facet of a great social and economic change, it has to be fair, relevant, and above all, sustainable to all the people. It must be working for the common good.

Therefore, the need of the hour is a perfect combination of digital transformation and environmental sustainability. Whatever strategy you execute in your business, the solution must give you the depth and breadth to incorporate these five considerations into your decision-making.

And if your company is yet to set out on its digital transformation journey, look out for digital transformation solutions that utilize technology as an accompanying instrument for sustainable development.

After all, you must integrate sustainability practices as a strategic imperative to ensure your organization remains both competitive and resilient in the long run!