There’s mounting pressure on organizations of all shapes and sizes to take sustainability efforts to the next level. But while much of the focus is on IT executives to wring out inefficiencies in data centers, servers and on various devices, there’s another aspect that often winds up overlooked: the role of IT in supporting more sustainable products and services.
Various digital tools and technologies — including analytics, artificial intelligence and digital twins, computer aided design, machine learning, and deep learning — can help businesses rewire, reformulate, and repackage products and services to meet the needs of different business groups, including R&D, operations, and logistics.
For a consumer goods company, this may translate into a bottle that’s derived from plant-based materials. For an airline, it might mean moving to synthetic hydrocarbon fuels that cost less and dramatically reduce the waste stream. For a clothing retailer, it’s likely about using recycled fabrics and more sustainable materials. For just about everyone, there’s a need to reduce packaging materials.
Make no mistake, as businesses look to improve environmental, social, and governance (ESG) metrics, reduce carbon emissions and minimize environmental impacts, IT input is crucial. Organizations require the right IT foundation — increasingly an agile cloud-first framework — to support ESG initiatives and unleash innovation at scale.
“Just as digital transformation required every company to become a technology company, with technology at its heart, now every business needs to become sustainable — and technology is again taking centerstage,” explains Sanjay Podder, managing director and technology sustainability lead at Accenture.
There are more than altruistic reasons to weave sustainability into the fabric of an organization. Nearly two-thirds of consumers (66%) plan to make more sustainable or ethical purchases, according to a recent Accenture and World Economic Forum report. Companies with ESG programs in the top quartile realized financial returns about 21% better than peers for a seven-year period ending in 2020. They also achieved 2.6 times higher total shareholder returns.
Seeding technology innovation across an enterprise requires broader and deeper communication and collaboration than in the past, says Aapo Markkanen, an analyst in the technology and service providers research unit at Gartner. “There’s a need to innovate and iterate faster, and in a more dynamic way. Technology must enable processes such as improved materials science and informatics and simulations.”
Digital twins are typically at the center of the equation, says Mark Borao, a partner at PwC. Various groups, such as R&D and operations, must have systems in place that allow teams to analyze diverse raw materials, manufacturing processes, and recycling and disposal options –and understand how different factors are likely to play out over time — and before an organization “commits time, money and other resources to a project,” he says.
These systems “bring together data and intelligence at a massive scale to create virtual mirrored worlds of products and processes,” Podder adds. In fact, they deliver visibility beyond Scope 1 and Scope 2 emissions, and into Scope 3 emissions. “It’s vital to understand the impact of a change both short-term and long-term, and the ripple effect resulting from various decisions and trade-offs,” Markkanen explains.
For example, a more sustainable agricultural product used for packaging may eliminate plastic along with fuel and natural resources. Yet plant-based materials can introduce new challenges. This includes product freshness and shelf life, and different demands on the environment and various resources. It can also lead to new problems, such as developing a separate waste stream system to dispose of the bottles.
This data framework is also crucial for identifying issues and factors that can easily fly under the radar, such as how an industry-wide shift toward a more sustainable source material — say bamboo or used cooking oil — impacts sourcing, pricing, transportation and shipping, and environmental concerns.
Sustainability By the Numbers
There’s good news. Tools and technologies now exist to support next-generation sustainability efforts and business executives have gotten the memo. Accenture found that 73% of CEOs identified “becoming a truly sustainable and responsible business” as a top priority for their organization over the next three years.
Cloud and software providers, including AWS, Azure and Google, offer digital twin solutions — as well as other tools to facilitate projects. It’s possible to plug in sensors and other components that gather data and run sophisticated simulations. Other technologies such as blockchain, ML and deep learning and various specialized design and engineering tools are also valuable and can ratchet up initiatives further.
For example, “Blockchain provides a way to improve transparency and traceability in global supply chains and is increasingly being used to help consumers verify companies’ claims about being resource positive and environmentally friendly,” Podder points out. This information, particularly when used with and sustainability software that tracks carbon emissions, can find its way onto corporate websites, annual ESG reports and other pubic-facing systems.
When companies get the equation right, remarkable outcomes follow. For example, Coca Cola is moving away from petroleum-based packaging. In October 2021, it unveiled a beverage bottle made from 100% plant-based material. United Airlines is transitioning to sustainable aviation fuel — made from renewable waste such as old cooking oil and animal fat. It reduces carbon emissions by 80%. Old Navy is producing flip-flops from renewable materials, such as sugarcane and denim made from recycled cotton.
Technology Unleashes Innovation
The news isn’t all rosy, however. Only 7% of respondents to Accenture’s sustainable tech survey reported that they have fully integrated their business, technology and sustainability strategies. Addressing these gaps and achieving a “sustainable DNA” involves a three-step process that better links sustainability and profitably. Accenture describes this as “Diagnose, Define and Develop.”
Not surprisingly, it all starts at the C-suite. “CIOs must have a seat at the table on sustainability decisions. But most do not. Only 49% of CIOs are empowered to help set sustainability goals, and only 45% are assessed on achieving them,” he says. Yet, it’s also vital for IT leaders to help educate other groups about various digital tools and what role they can play within an enterprise sustainability strategy.
Make no mistake, as climate change accelerates, consumer demand for sustainable products and services increases, and the financial incentives grow, new and reformulated products and services will become the new normal. Businesses of all shapes and sizes will be required to make changes. Says Markkanen: “The tools and technology exist to innovate and iterate faster than ever.”