Go green or go home: How digital transformation helps businesses drive sustainability

Dao Duy Cuong
5-min read

Integrating digital transformation and sustainability can benefit the environment and bring about tangible business returns.

 

Prior to COVID-19, the fight against climate change took centre stage with efforts promoting the circular economy, reducing carbon footprints, fighting plastic waste, and other initiatives, but climate change took a backseat when the outbreak started. As the world gradually returns to the "new normal", environmental concerns are once again on the radar.

But companies do not face a choice between climate change and digitalisation – both require urgent attention and are complementary. Nearly three-quarters (73%) of Singapore businesses have now accelerated digitalisation amid and post-COVID-19. Digital sustainability, which harnesses digital transformation (DX) tools to improve the environment and support sustainable business operations, should be at the top of businesses’ long-term plans.

This is especially crucial considering the damaging impact of climate change and the fact that investors, consumers, and other stakeholders are no longer willing to support corporations that disregard ESG best practices. According to Accenture and the World Wide Fund for Nature (WWF), 32% of Singapore consumers make most purchasing decisions based on product sustainability and environmental impact. A further third of consumers are willing to pay a premium of up to 10% for sustainable alternatives.

The urgency for digital sustainability

The international call for urgent action on climate change and an increased focus on creating a circular economy have made sustainability an imperative for businesses. DX today needs to be purpose-led, benefitting all stakeholders and minimizing the environmental footprint. Despite this, only 30% of APAC purchase influencers say their firms are taking real action.

Fortunately, DX drives sustainability as it gives businesses a clear picture of their environmental impact, offering the necessary tools to track, monitor, and report sustainability data like the internet of things (IoT) sensors, artificial intelligence (AI), robotics and blockchain.

According to a study, incorporating digital technologies in an organisation’s business practices could help reduce global carbon emissions by up to 15%  -- one-third of the 50% reduction required by 2030. Additionally, there is a significant gap in the demand and supply of ESG expertise, which necessitates investment in technology to leverage DX for sustainability.

Leveraging next-gen technology to achieve sustainability goals

Companies that invest in sustainability can improve their resilience and operational performance and improve future readiness. Technologies such as IoT, AI, and blockchain, are considered crucial energy-efficient enablers of business process re-engineering, automation, and fleet management. A data-centric approach, combined with such generative technologies, could help businesses to achieve their net-zero ambitions while keeping an eye on the sustainability footprint.

Below are use cases of advanced technologies such as AI and blockchain that have delivered business results when focused on sustainability outcomes.

Building transparency with blockchain

Blockchain is a decentralised ledger for recording every transaction among several involved parties in a tamperproof, verifiable manner. It is increasingly gaining ground across industries to bring more transparency in supply chains.  The technology provides real-time data sharing and tracking of products on platforms, providing both transparency and accountability on how responsibly the products and materials are sourced, shipped, processed and distributed.

Blockchain has proven especially beneficial for the FMCG industry, which loses up to US$750 billion due to improper logistics and transportation of food items. Transparency in monitoring data means higher responsibility for carriers, less waste, lower risks and a reduction in insurance costs.

Minimising food wastage with AI

According to McKinsey, AI coupled with a circular-economy vision can revolutionise the food industry. This is particularly apparent when it comes to reducing food waste, with AI-enabled tracking and forecasting helping retailers sell food before it goes bad and avoids overstocking. By using these techniques, AI can generate an estimated economic opportunity of up to US$127 billion a year in 2030.

Major auto parts manufacturer, Denso Corporation provides an excellent example of how AI can reduce food wastage. The company used AI-driven facial and meal recognition, as well as data analytics, in their lunch initiative. This enabled canteen managers to access real-time data on employees’ meal preferences and adjust the menus accordingly. By applying an AI-based lunch system, Denso Vietnam reduced 34% of food waste, tripling the initial targets.

Managing product footprint with S/4HANA

The global textile industry often gets flack for having a huge environmental footprint. The industry is also responsible for 10% of global carbon emissions – more than international flights and maritime shipping combined, while globally, an estimated US$500 billion of value is lost due to clothing underutilization and lack of recycling.

Responsible organisations, however, are taking measures to combat the situation. One such organisation is SAP, which has created an application called S4/HANA that manages a product’s environmental footprint by collecting and assessing data regarding product footprints. The application can be integrated into business operations to identify wastage and minimize the carbon footprint of their products.

Thriving with an integrated digital and sustainable agenda

Enterprises have an opportunity to rewrite the playbook of both technological and sustainable business practices by integrating them.

Rather than rolling out digitalisation and sustainability strategies in silos, businesses should leverage advanced technologies to generate long-term societal, financial and individual value. This can offer tremendous benefits, including reducing energy consumption, eliminating operational and supply chain inefficiencies and supporting ESG reporting and disclosures.

Integrating both digital transformation and sustainability pushes out inefficiencies, benefiting the environment and society as well as bringing about tangible business returns.

Dao Duy Cuong is FPT Software’s chief digital & technology officer

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