The double transition - sustainability as a driving force for digital transformation

Digital strategy and sustainability are increasingly linked. The old world relied on physical resources, which were finite and scarce. The new world depends on digital resources, which are infinite and abundant. Digitization is critical to green transformation. Without it, progress will be slower, more expensive, and less effective. But digital transformation is not just about digitizing business processes and decreasing the footprint of your operations. It is also about amplifying the positive impact of your services and products.

The transition from a linear economy to a circular economy (or even a regenerative economy) has been happening for decades. Still, it is not until recently that we have seen more companies start to embrace sustainability as a driving force for digital transformation. For this transition to happen, companies need to make sure they can adapt their business models and rewire their ecosystems.

At this very moment, a double transition is taking place. Sustainability transformation is forcing digital transformation, and digital twin platforms are crucial enablers and accelerators of this transition to sustainable, low-carbon, and resilient solutions. Sustainability goals drive digital transformation by providing a framework for businesses to assess and track their progress toward net-zero targets. Digital twins and sustainable development go hand in hand.

Infrastructure construction and operation account for more than 70% of all emissions.

Why does sustainable transition matter, and why now?

Humanity needs to keep global warming below 1.5°C to avoid potentially catastrophic and irreversible impacts on people, ecosystems, and the planet. A warmer world increases the risk of extreme weather events, such as heatwaves, droughts, and floods. It also raises the possibility of tipping points in the climate system, beyond which changes would become irreversible, such as the thawing of the Arctic permafrost and the release of greenhouse gases trapped therein. In addition, a warmer world would exacerbate existing problems, such as poverty, hunger, and water scarcity, and lead to new ones, such as mass displacement due to rising sea levels and increased conflict over scarce resources.

Keeping global warming below 1.5°C is essential to protecting people, ecosystems, and the planet from the worst impacts of climate change.

To keep global warming below 1.5°C, we must reduce our greenhouse gas emissions by 50% by 2030 as compared to 2010 levels. Infrastructure construction and operation account for more than 70% of all these emissions, but the transition is far too slow. We can already see that developed countries have reduced only 6.2% of their emissions, far from what is required. In addition to reducing carbon emissions and making our communities more resilient, infrastructure assets require a tremendous collective effort to protect and preserve our land and water resources for future generations.

"In the middle of every difficulty lies opportunity." ~Albert Einstein.

According to a recent report from Environment Analyst, the global Environemtal & Sustainability consultancy market for energy & utilities (inc. waste) will grow by almost 50% (!) while impact assessment service market will do so by about 30% between 2020 and 2025. The global consultancy market for E&S services will be have value of $53b by 2025.

Organizations can now start to build their digitally enabled offer to improve competitiveness in the market. See below my latest thoughts on how the infrastructure owners can soon take advantage of new digital-twin-enabled services, and service providers are about to seize this imminent opportunity:

These services will inlude the "provision of specialist technical, management, risk and strategic advisory services to help organizations understand, manage and limit their impacts, to protect and enhance the environment and society in line with the UN SDGs”. See below how do they map against the other type of services:

Can these services rely on analog and out of date information?

The need of digital transformation to achieve sustainable goals

There are several reasons why digital transformation is necessary to achieve sustainable goals.

First, using data and analytics to improve resource efficiency.

Sustainable goals cannot be achieved without a fundamental shift in how we produce and consume goods and services. This shift requires new technologies and processes that are more efficient and less resource-intensive, for example, by automating energy-consuming processes, adopting renewable energy sources, and using data and analytics to improve resource efficiency. Digital twins can help us to monitor and manage natural resources more effectively, optimize production processes, and reduce waste and emissions. By collecting data on everything from weather patterns to water usage, we can make better decisions about how to conserve resources and prevent environmental degradation.

Second, adopting distributed systems and ledgers to share, track, and capture value.

Digital transformation can help us move away from a linear economy, in which resources are extracted, used, and then discarded, to a circular economy, in which resources are reused and recycled. This transition is essential to achieving sustainable development goals, as it reduces waste and pollution and conserves resources. All participants in a circular economy must be able to share, track, and capture value. This is achieved by bridging, connecting, and recording the information of products across distributed systems and ledgers with diverse stakeholders. By doing so, we can strengthen consumer confidence in the origin and authenticity of products and ensure compliance with regulations.

Third, leveraging digital twins to improve resiliency.

Digital transformation can help us build more resilient societies. By increasing our ability to monitor and respond to risks, we can reduce the impact of natural disasters, pandemics, and other hazards. Digital twins can improve the resiliency of cities by providing a real-time, accurate representation of the city's infrastructure. This allows city planners and emergency responders to identify and respond to problems quickly and to make informed decisions about protecting and maintaining the city's infrastructure. Additionally, digital twins can simulate different scenarios, such as natural disasters, to help city leaders plan for and respond to potential threats. Implementation of preparedness measures in high-risk regions increases the likelihood of mitigating losses in those locations.

In short, digital transformation is essential to achieving sustainable development goals. It can help us move away from a linear economy, build more inclusive societies, manage natural resources more effectively, and create more resilient societies.

What can you do in the next 6-12 months?

There is no one-size-fits-all answer on what you can do to address the net zero challenge. However, here are some general principles that can guide your thinking:

1. Minimize your operational footprint - as you deliver your offers, consider how you can use more sustainable, recycled, or renewable materials and increase the energy efficiency across the entire lifecycle of your products and services.
2. Rethink your existing offering portfolio to maximize your handprint - make sure your products and services are compatible with a low-carbon future; conduct a comprehensive review of your current product portfolio and identify which products or product categories are most likely to have a significant impact on your net zero goals; refocus investments to double down on products which support the transition.
3. Create new value to address the sustainability transition needs - consider how your products and services can help your customers reduce their carbon footprints, save energy in their asset operations, use more renewable energy sources or reduce waste; for example, you could consider adding a digital service based on the digital twin to perform lifecycle carbon assessments for your clients.
4. Digitally enable your service offer to amplify your impact - organizations worldwide starting to create higher margin outcome-based, repeatable digital services and products; digital twins provide an interactive model of a physical asset that can be used for evaluations, simulations. preditions and scenario planning related to sustainability. (LEARN MORE)

What can you do today?

1. Mobilize - set up a cross-functional team to brainstorm how you can modify or redesign your products to help reduce their environmental impact.
2. Evaluate - assess the costs and benefits of making changes to your products, and consider both the short-term and long-term repercussions.
3. Communicate - disclose your plans to your employees, customers, and other key stakeholders, and make sure to get their feedback and input.
4. Implement - put your new product strategy in motion and monitor your progress to ensure that you meet your net zero goals.
5. Celebrate - make sure to celebrate the successes of the leaders who advance your strategy and ensure their efforts are visible; celebrating early wins is a great way to keep everyone motivated to be moving in the right direction.

How are YOU adapting your products and services to meet the net zero challenge and capitalize on the associated opportunities?

A quick note before you go: the above reflection does not necessarily represent or reflect the opinions, policies, or positions of my employer. It is not a financial advice either. You are encouraged to provide your thoughts below or by dropping me a line.