Is digital transformation a successful measure for sustainability?
Most organizations have accelerated their digital transformation initiatives since 2020. But how many leaders have managed to create sustainable digital enterprises? Often, in the race to follow the latest trends, the true meaning of specific movements is missed.
Digital transformation after the pandemic has fallen prey to this phenomenon. More than just a bandwagon, the true potential of digital transformation lies in its ability to aid sustainable solutions. In this blog, I have explored the correlation between digital transformation and sustainability and the new opportunities presented by COVID-19 with regards to these themes, specifically in terms of brand values among customers and investors. Hopefully, this perspective will help you evaluate your business strategies in a new light.
Digital Transformation with Sustainability
In the post-pandemic era, every company had to look hard at its functioning to maintain relevance. The years 2020 and 2021 were filled up to the brim with stories of successful digital transformation and technological change, with the APAC region leading the way. In a global study conducted by Microsoft, data on different sectors were also highlighted. For example, 70% of the respondents from the healthcare sector found digital transformation to be beneficial. They reported increased revenues and said that digitalization helped them meet the increased demands during the health crises.
However, the important question is, how many organizations and enterprises have successfully undertaken this task through the lens of sustainability. While people might want to classify these issues, future-readiness in a world full of environmental problems needs a combination. You might wonder what sustainable transformation looks like? And how can one achieve it? The following few sections deal with the technicalities of this issue and elaborate with examples. This will help you view the organizational goals, planet goals, and people goals as synonymous.
One of the primary examples is Microsoft’s cloud services. Microsoft Azure offers an energy-efficient and low waste-producing alternative to multiple organizations worldwide. The open-source, serverless software reduces the usual cost spent on colling, ventilation, and conditioning the legacy data centres.
Creating an Integrative Plan
Sustainable digital transformation can take on different meanings. For example, it could mean investing in long-term solutions or it could mean investing in the circular economy–building technology to reduce waste and pollution. Examples could be climate-neutral CPUs, replacing physical supply chains, or using the highest digital technologies such as 5G, blockchain, and AI.
Another take on sustainability focuses on three major pillars - economy, society, and environment. The view helps look at the issue with a holistic perspective on sustainability. Combining goals for each pillar with technology would mean ensuring accessibility, reducing the carbon footprint of data centres, and keeping track of ESG goals.
Companies can begin by incorporating environmental standards such as Global Reporting Initiative (GRI)framework into the digital transformation strategy. It is also essential to take into account the chronic and acute hazards. At present, the available metric is carbon footprint and circularity metrics, such as percentage circularity, recycling rate, and share of renewable energy.
These strategies are applicable across industries and will benefit everyone, like healthcare, manufacturing, and supply chain. For example, the digitalization of the healthcare sector would enable remote communication, data sharing, better care practices, and improved outcomes (diagnosis, therapies, and trials). Secondly, sustainable measures help uphold the principles of accessibility, scalability, privacy, transparency within the health sector.
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More Than Just A Trend: Sustainability
Rather than a fad, sustainability has to become a way of life. For corporations, more than just a compliance necessity, sustainability has to become essential to stay relevant and reach a new audience. As digital transformation and sustainability converge, this also influences the market conditions for investor behavior. Evidence continues to point to the fact that sustainable-related activities are material to a company's financial success as investors care more about Environmental, Social, and Governance performance than previously believed by executives.
Furthermore, today’s consumers prefer organizations that align with their values. Specifically, GenZ inclines sustainability, with almost 73% reporting their willingness to pay higher for their preferred ethical brands. Even the compliance needs by the governments can change as the danger of climate crisis and the demand for environmental protection increases.
Within the corporate culture, we see Nike’s sustainable digitalization, in terms of environment scenario tool, that allows it to quantifiably assess the environmental and financial impact of changes to its supply chain, from using different materials to changing its sourcing. Now, Nike can instantly see the potential impact over the next 10 years on the company’s water, energy, CO2 emissions and waste impact across the entire supply chain.
In addition, Microsoft too has done extensive research through surveys that have shown the efficacy gap digitalization fulfills by improving the workflow, facilitating collaboration within enterprises. 80% of the respondents agreed with digitalization’s benefits. In a strong digital culture, twice as many employees report high levels of productivity as compared to a weak digital culture.
The WEF’s 2022 Global Risk report notes, “Digital technologies are transforming markets and creating new paradigms of doing business, but the technologies are also providing solutions to organizations for addressing Sustainability challenges.”
Advanced technology such as Cloud, Big Data, and Social computing needs to be applied to the organization's sustainability strategy. This allows companies to become lean and create a positive brand value among consumers, shareholders, and other stakeholders. Lastly, it will enable the companies to use their existing resources to bring a change that works for people, the planet, and the community as a whole.
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