Rethinking Sustainability Through Data & Digital Technologies

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Sustainability is an umbrella term that is all too often being used as a marketing ploy: a fancy CSR report meant to embellish a company’s profile. Yet it doesn’t have to be. Thanks to big data, AI, and other technologies, we can now gain a full overview of our value chains, and transform those insights into meaningful sustainable actions. For this blogpost, we asked 3 experts about their views on sustainability: Zoë Nicholson (Associate Consultant Blockchain & Msc Sustainable Business and Innovation), Leo Dijkstra (Industry Leader Environment, Energy & Utilities), and Jacob Dencik (Global Economic Research Leader, IBM Institute for Business Value).

From sustainable business to doing business sustainably

Over the past years, society’s definition of a ‘sustainable business’ started pivoting from a merely financial point of view – i.e., a viable business – to the notion of doing business sustainably. According to Jacob Dencik, this trend can be explained through various means.

Most importantly, enterprises are becoming increasingly aware of how environmental risks and natural disasters could impact their ability to drive business success. Secondly, there are the regulatory pressures from governments.

Then there are the consumers who have become much more vocal and aware of the environmental impact of their purchases. Moreover, the environmental profile of a company also impacts their ability to attract new talent as an employer – especially amongst the millennial generation.

Finally, investors drive sustainability up on the corporate agenda as well as more and more people want to add greener opportunities to their investment portfolio.

This mindset shift hasn’t gone unnoticed by IBM.

From CSR approach to core business values

Over the past year, more and more companies expressed their commitment to achieving carbon neutrality by a certain year. At IBM, we noticed the number of such Net Zero pledges by clients have increased two-fold. However, as Zoë Nicholson points out, this commitment to sustainability can only be successful if it entails more than just a CSR approach.

‘Only 9% of pledging companies have a roadmap to reach those goals (source). It needs to go from the static piece of paper that’s maybe wielded out once a year to actually being embedded in everything you do on a day-to-day basis. Compliance is the first step, but then you have to move towards the idea of wanting to create different values, to change your business, and so on.’

One of the biggest challenges? Understanding the full scope and complexity of this process. ‘Environmental challenges are very complex because they cut across many stakeholders, many organizations and even many industries’, explains Jacob Dencik. ‘You need transparency into what goes on through a whole value chain across many different organisations and many industries.’

‘Exactly’, says Leo Dijkstra. ‘Look at, for instance, a large beer brewery or coffee company – their whole value chain is impacted by the climate. In addition to the sustainable farming and ethically responsible sourcing of your resources, you also need to make sure that your production facilities run energy-efficiently. Plus, some of those production facilities may be in areas that, in due time, will be impacted by climate change. Which means you also need to assess your climate risk. On the consumer side, customers demand more transparency as well.’

‘Sustainability cannot be tackled individually or in silos’, concludes Zoë. ‘It all needs to feed into one another to actually generate useful insights which are also useful for the multiple stakeholders within the space.’

In conclusion, moving sustainability away from CSR and making it a core part of business will have fundamental implications for your entire company, since it can potentially affect every single layer within your organization.

How big data, artificial intelligence and digital technologies can help

To get the clarity needed to start moving forward, big data and digital technologies have to play a key role.

‘It’s not the lack of technology that’s the barrier. It’s about putting it to use and leveraging it fully’, says Jacob. ‘The way we interact as human beings with the environment has always been driven by input and information. And big data is in many ways just an extension of that.’

If we’re able to capture more data, we’ll be able to use those insights to transform how we consume, how we produce things, and how we do business in general. ‘And that provides a number of opportunities from a business perspective.’

Beyond greater accountability and compliance, we can implement these technologies to increase insight into the environmental implications of production processes. Then you can also infuse this insight into the way you automate or optimize your manufacturing processes. Augmenting big data with other digital technologies such as AI will enable you to seek efficiency gains, as well as enhance environmental outcomes. In short, a win-win situation for the business and the environment.

‘If we can align these technologies with the right governance structures, with the right business models, with the right business strategies to take this forward, then you can achieve impact at scale. It’s not something for the future, it’s something that we can do now.’

To illustrate this, Leo refers to the collaboration between IBM and YARA, a global leader in crop nutrition and digital farming solutions. Together, they co-created the Open Farm & Field Data Exchange, a cloud-agnostic platform that enables farmers to optimize and reduce the environmental footprint of their food production in real-time based on, for example, data related to weather, crops, and soil.

Democratization of insights and innovation

In addition to enabling us to gain more data, digital technologies also pave the way for another exciting opportunity: the democratization of insights and innovation. In the Netherlands, for example, IBM helped TenneT launch Equigy, a blockchain platform designed to balance the power grid, now being rolled out across five European countries.

As more and more renewable energy sources are powering the grid, our electricity production is increasingly subject to unpredictable fluctuations inherent to wind and solar energy.

When there is, for example, too much wind power on the grid, the surplus of energy needs to go somewhere. So the idea was to store it in electric vehicles, so as to be able to use it later or even to put it back into the grid, as Leo explains.

As such, the Equigy platform drives the energy transition as more renewable energy sources can be fed into the grid in a stable way. Additionally, there is another important result.

‘It’s also the general public with their home battery, electric vehicle or heat pump that can help the grid operators stabilize the grid and get rewarded for it in a monetary sense. To me, that’s a true example of how citizen participation can contribute to the energy transition.’

‘And it’s a great example of how you can think of a new concept by taking the problem – in this case, the renewable energy sources that put so much stress on the grid —, turning it upside down and transforming it into the solution to the problem. All these new assets are now also part of the solution.’

IBM’s commitment to climate and clients

Speaking of being part of the solution: at IBM, we have a long and proud history of helping our clients realize efficiency and environmental gains through data insights and AI-driven solutions. Additionally, we have been incorporating climate impact in our policies since 1971 and are committed to net zero greenhouse gas emissions by 2030. This represents a unique combination, which puts us in the perfect position to help you drive sustainable business success.

‘We have so much within us to help address these specific issues, especially as a company that had to go through these transitions itself’, concludes Zoë. ‘We know and understand the challenges. We developed the tools for transparent ‘net zero’-dashboards and have learnings we can share with our clients. More broadly, our hybrid-cloud, AI and Blockchain capabilities are very relevant for addressing the challenges of environmental sustainability. In particular, these capabilities enable our clients to connect, integrate, share and make use of data in ways that can foster collaboration and co-creation of new innovative solutions for environmental challenges.’

And if there’s one thing these experts would like you to remember? Leo Dijkstra: ‘It’s more important than ever to be transparent and apply today’s technology to take action based on these new insights. With every project we do, the goal is to optimize your day-to-day operation while also driving the transition to your net zero and sustainability goals.’

For more information on how digital technologies can help reduce their environmental impact, please have a look at our latest IBV point of views: Digital technology and the environment and The rise of the sustainable enterprise.