Digital strategy and sustainability are increasingly important and increasingly intertwined. In a recent survey of 400 executives from various industries and regions conducted by Bain & Company and the World Economic Forum, 40% of respondents said they believe digital technologies are already having a positive impact on their sustainability goals.
Today, digital technologies are being used to measure and track sustainability progress, optimize the use of resources, reduce greenhouse gas emissions, and make possible a more circular economy. But digital technologies also enable innovation and collaboration. Artificial intelligence (AI) in design, additive manufacturing and digital twins are some of the powerful tools enabling the next wave of climate change solutions. Internet of Things–enabled sensors, blockchain-based authentication, data-sharing platforms and gamified apps are examples of technologies that foster collaboration across the value chain and align participants on common metrics and goals.
But along with many benefits, digital also brings downsides. One in 10 of those surveyed believe digital technologies represent a risk to sustainability. They are especially concerned about the impact on mental health and wellness, data privacy, skills for the future, and diversity and inclusion. It’s important to mitigate these issues now. Two hundred years passed before we fully reacted to the impact of the First Industrial Revolution on our climate. The impacts of the Fourth Industrial Revolution will affect us exponentially faster.
Any strategy for building sustainability must account for both the positives and negatives of digital technology. Executives integrating digital technologies and sustainability benefit from thinking of this transformation as a three-part game plan, pressing across offense, midfield and defense to create an aligned and effective team.
1. Unleash a creative offense
Going on offense harnesses the positive energy around digital and sustainability. It begins with renewing your strategy and focusing on how digital technology can help create a more sustainable future for your company and industry. At the heart of that strategy is innovation that addresses your customers’ raw needs – the essence of what they want – with new products and services, economic models and operating models. As you set that strategy, recognize the importance of collaboration. How can your enterprise have a positive effect on all stakeholders, and how can you work with the participants in your industry’s value chain to deliver on an inspiring purpose?
Three years ago, Olam International, a global agribusiness company with nearly $27 billion in annual revenue, took a big step toward helping the agriculture field meet its ambitious goals to lower greenhouse gas emissions, reduce waste, and improve the livelihoods of farmers by launching AtSource, a groundbreaking digital sustainability platform. AtSource makes it possible for customers to trace their products’ origin, measures the environmental and social impact of those supply chains, and offers insights on how to influence them for the better. Customers can view the journey from source to factory for more than 20 ingredients across more than 60 supply chains, and in many cases they can trace crops to specific groups of farmers, calculating the environmental footprint of a specific crop by volume, origin and destination.
2. Strengthen the midfield
In soccer, good midfielders work together to feed the offense and support the defense. Many organizations already recognize the value of getting these basics right. To meet sustainability goals, they ensure they can measure their impact in areas like CO2 emissions. With that data, organizations can put in place tools and algorithms to optimize operations to minimize environmental impact and lay the foundations for circular business models that seek to reduce waste in the economy. Armed with good data and tools, organizations augment their ability to make faster, more effective decisions and support new ways of working with more diverse teams and communities.
The connection between measurement, optimization, augmentation and waste reduction is clear in the experience of Grupo Bimbo, a $16.6 billion baking company that combined advanced analytics, machine learning, frontline input and ongoing feedback in order to improve inefficient ordering and reduce waste. The approach worked so well that the company was able to boost its forecast accuracy by 20% to 50%, reduce product waste by 50%, and significantly improve satisfaction among frontline workers.
3. Tighten up the defense
The defense manages risk. Organizations increasingly use forecasting tools to protect business operations and strengthen risk controls. When COVID-19 hit, one major retailer built a hub to pull together data from disparate internal and external sources and make it accessible to teams across the company. That helped them make decisions based on real-time information and protect both employees and customers during a period of great uncertainty and difficulty.
The more data-driven organizations become, the more important it is to manage data privacy and security well. Safeguarding systems is a must-have, but there are other risks too, including how data is used, and the ethics and integrity of the AI algorithms and platforms used by many enterprises today. Arguably the biggest worry for executives is the impact of automation on the jobs of their employees. Reskilling employees is imperative, as is creating promising new career paths to ensure they have the training to thrive in an era of automation.
To build a sustainable digital future, it’s necessary to manage all aspects of the game at once; offense, midfield and defense. That’s the only way to harness digital to deliver the innovative and collaborative sustainability solutions we need today and, at the same time, recognize and manage the risks digital may pose for the future.
James Anderson, Partner, Bain & Company Inc.
Gregory Caimi, Partner; Environmental, Social and Governance Champion, Americas, Bain & Company
The views expressed in this article are those of the author alone and not the World Economic Forum.
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