Business sustainability has come a long way in the fifty years since environmental regulations were first established. Today, it is a strategic concern. Market forces are demanding change, making it table stakes for any competitive organization.
Doing the right thing for our planet can feel complex. Businesses are simultaneously managing risk, building resilience, maintaining profitability, and protecting brand equity and reputation. For some, these may feel like conflicting forces. Yet for others, it is possible to do it all.
The difference is their use of technology.
While technology is not a magic bullet that will solve climate change, it can make a powerful difference to the way organizations plan, set targets, execute, optimize, measure and report on sustainability initiatives.
Feel free to read on or watch the recording of my presentation at the Sustainability Leaders Summit in Melbourne where I spoke about sustainability transformation enabled by technology.
The sustainability imperative
After two years of pandemic-led disruption to supply chains and operations, external risks are all too real. In a recent survey of over 100 Australian C-suite leaders, 54% agreed the operational impact of climate-related disasters was the top climate change issue already impacting their business.
Yet almost a third of Australian companies believe they’re falling short on their ESG commitments. Meanwhile, just 36% of ASX 200 companies have set a net zero target, and the majority (62%) don’t even publish their ESG plans.
There are several reasons for this apparent lack of momentum.
Organizational structures, along with decision-making and governance processes, are rarely designed to treat sustainability as a material business issue. Many organizations also struggle with the perceived trade-off between sustainability and other business issues. Even employee and leader mindsets will differ.
It is also challenging to stay on top of a sustainability imperative. Business leaders recognize they bear significant responsibility and that there’s a lot at stake, however, they’re not in control of external factors. For example, consumer product companies can’t control what happens to their products post-purchase. They may also need to educate partners and customers to help drive behavioral change.
And then there’s an ongoing misconception that sustainability and profitability cannot coexist. This couldn’t be further from the truth, but many organizations struggle to quantify the potential return on their sustainability investments. The reality is, unless the business case for sustainable practice can be proven, and the impact measured and reported on, nothing will change.
That’s where technology – including AI-based tools, decision science modelling, and green cloud computing – can make a difference.
The most important thing is to act. To turn good intentions into genuine progress.
Big, inspiring sustainability goals are all well and good. But to achieve impactful results for business and society, sustainability must be addressed as a holistic challenge within and beyond company walls.
Present-day measures of success are no longer enough. Business leaders need to consider the balance between short-term and long-term investments and outcomes. And this isn’t easy: organizational processes and vast supply chains, are inherently complex, making it almost impossible for human intuition to accurately predict the impact of different initiatives.
This is where sustainability transformation – where reliable data and technology that sparks innovation – can help to identify new opportunities and create tomorrow's measures of success.
Ultimately, you need to be able to prioritize certain sustainability initiatives and investments over others – and (most importantly) show how profitability and sustainability can coexist.
Accelerating net zero progress for a textile manufacturer
Using machine learning and decision science, we can simulate and explore future scenarios, better understand complex problems, and leverage data to optimize solutions. Artificial Intelligence tools can also uncover alternative options that might otherwise have been missed or underestimated. In turn, these data-based insights can inform the business case for investment.
When Thoughtworks worked with a textiles manufacturer to map out the cost, timeframe and impact of over 200 different sustainability related scenarios – from switching to electric vehicles (EVs) to changing raw materials – the outcome was surprising.
They found that switching to EVs could potentially reduce carbon emissions by 16.9% year on year, but this was costly and would take time to fully transition. Switching to organic cotton and incentivizing customers to choose more sustainable products would have a similar emissions reduction impact of 12.3% each year.
The difference? Switching materials could also be implemented in weeks, rather than years, and would have a negligible impact on business costs. In fact, when we ranked the initiatives by the amount of emissions reduced, duration and cost, switching to EVs failed to make the top 10 for impact.
Are you using data to guide your decisions, or gut instinct?
How can you use decision science to prioritize the right initiatives?
Reduced waste, increased profitability for a fast-growing supermarket service
Technology can also help us find smarter, cleaner ways of working. For example, Thoughtworks helped UK-based supermarket chain Waitrose manage the challenges of its rapidly growing home meal delivery service.
As demand for the service grew, Waitrose continued to expand the range of recipes. However, this presented new challenges. It became increasingly difficult to accurately forecast customer demand and preferences for specific recipes, leading to over or under-ordering of the raw ingredients. And that was creating a poor customer experience, while also contributing to food wastage and impacting the service’s profitability.
Within three weeks, we developed and deployed a new AI-based demand forecasting system that could learn customer preferences and adjust for seasonality. This immediately reduced food waste by 25%, improved the customer experience and made the service more cost-effective.
How mature is your organization’s ability to measure and report on the progress of sustainability initiatives and associated benefits?
How could simple tech tools reduce costs and improve sustainable outcomes?
The business case for sustainability
Sustainable organizations are making ESG (Environmental, Social and Governance) part of their core business and realising the rewards – including attracting talent, investment and achieving growth. Indeed, companies with a sustainability focus are achieving better financial results than their peers, generating value through revenue growth from new opportunities, and improved employee retention. And investors are leading the momentum, with ESG mandates on the rise in Australia – including within its $3.3 trillion superannuation pool.
Solving the sustainable tech paradox for a green energy supplier
Tech may be a sustainability enabler, but it’s also a large source of emissions. Since 2007, the tech industry has contributed to around 6% of greenhouse gas emissions – and the world’s collective carbon footprint will only continue to rise as our dependence on technology for simple daily tasks increases.
As a technology consultancy, Thoughtworks is aware our work can create a carbon footprint. That’s why we also work on ways to improve this – not just for our clients, but for the whole industry. Through a collaboration with major public cloud providers, we developed an open source Cloud Carbon Footprint tool.
Green energy provider Holaluz recently used this tool to understand the environmental impact of its current cloud infrastructure. Holaluz wanted to minimize the emissions generated from their cloud compute to ensure its operations aligned with its core values and purpose. The tool identified ways to reduce annual costs by 3% – while also cutting CO2 emissions and energy consumption.
By using this tool to benchmark the impact of cloud and compute services, organizations can also find opportunities to relocate workloads to regions with a higher mix of renewable energies, or switch to more energy efficient compute options.
Are you measuring how much your servers and software contribute to emissions?
Are there opportunities to reduce emissions from your cloud infrastructure?
The next phase of sustainability
An effectively executed sustainability strategy can help you mitigate the risks of operating in an uncertain future. This is fundamental to building supply chain and operational resilience – and in turn, can create strategic business value and competitive advantage.
To begin working towards more sustainable practices, business leaders will need to show how the impact can complement, rather than conflict with, business profitability and growth goals. And that’s where technology can make the difference. Using AI-based tools, decision science modelling, and green cloud solutions, you can prioritize, measure and manage your sustainability targets – and reach those goals sooner.