5 November 2018
Chris Daniel Wong
President of Malaysia Digital Chamber of Commerce
Reducing Environmental “Exhaust” Through New Digitally-Sustainable Business Models & Processes
Every business is now a digital business in one form or another. In the spirit of “making IT good for society” in the words of the British Computer Society, there’s a tremendous opportunity for the technology community to make a difference. Such opportunity now extends well beyond IT to focus on using digital transformation to help all industries to meet their sustainability goals and reduce their carbon footprints.
While the concepts of IT and sustainable IT were originally focused on IT operations and the technology product lifecycle, the new call to action as companies undergo digital reinvention is for them to give environmental factors early consideration in their planning and to extend the scope of their sustainability improvements beyond IT operations and across many of their digitally transformed processes.
Digital transformation can make a large contribution in helping organizations, cities and nations better meet their sustainability goals including those laid out by the Paris Agreement on climate change when done correctly. It is an initiative to reduce greenhouse gas emissions to limit global warming to well below 2°C. It’s estimated that information and communications technology (ICT) devices, such as ITenabled smart grids and buildings, have the potential to deliver a 20% reduction in global carbon emissions by 2030, and over $11 trillion in new economic benefits.
But if done incorrectly, digital transformation initiatives can often hinder rather than help the issue. For instance, I recently noticed a major grocery chain in Kuala Lumpur that, when implementing its new mobile app enabled grocery pickup service, has started to bag one item per plastic grocery bag. Not only does this practice far exceed its in-store use of plastic, considering the recent trend to ban plastic bags completely, this seems like a step in the wrong direction. In the age where single use plastics are being singled out as a major pollutant that by 2050 contributing to the oceans where it contain more plastic than fish by weight, this is clearly something that needs to be improved.
Digital transformation has the potential to decouple emissions and resource use from economic growth, yet significant barriers must first be addressed. Transitioning to a sustainable world encompasses three important areas such as the societal implications cross-industry theme, examining skills and employment, and trust and shared values. With increasing pressure on the world’s resources and an urgent need to cut emissions, digital transformation can help set the world’s economy on a sustainable footing.
What role can the digital transformation of industries play in meeting this challenge? Our analysis suggests that digital initiatives offer immense opportunity to help decarbonize the global economy. There is the potential to avoid an estimated 26 billion metric tons of net CO2 emissions from just three industries: electricity (15.8 billion metric tons avoided); logistics (9.9 billion) and automotive (540 million), from 2016 to 2025. This is almost equivalent to the CO2 emitted by all of Europe across that time period, or the United States more than five times over (based on 2013 data). By 2025, this would amount to 8.5% of global emissions.
However, a number of challenges will need to be addressed if the full potential of digital transformation is to be realized; some relating to the environmental impact of digital technology itself. For example, ewaste is growing, resulting in lost potential value from reusing or recycling devices, ever-growing mountains of landfill and increasing volumes of toxic chemicals being released into the environment. According to a United Nations study, 40 million metric tons of e-waste was discarded in 2014 of which 7 million metric tons alone were from the United States and 6 million from China. Data centers also contribute significantly to emissions due to their high power consumption and often inefficient cooling systems. Data centers currently consume 1.5 to 2% of global electricity, a rate that is growing at 12% a year. Consumption is projected to increase to 140 billion kilowatt-hours annually by 2020. That would be equivalent to the annual output of 50 power plants and create carbon emissions of nearly 150 million metric tons of carbon annually.
In addition to these industry collaborations, and new circular economy approaches, it will be vital to look at each of the emerging and enabling technologies within digital transformation initiatives to determine how they can be uniquely leveraged to unlock substantial improvements in sustainability.
Digital transformation is now primarily driven by technology that includes mobile applications, IoT parking sensors and powerful analytics. In addition, even blockchain technologies are being explored in the context of “virtual power plants” that enable energy-generating resources, including residential solar panels, to be connected to smart grids in a highly-distributed, efficient and transparent manner.
The challenge for companies and organizations is to build on the successes of their IT initiatives and to pursue similar improvements across their new digitally-based business models and processes. Much of this work involves close industry collaboration with suppliers and partners across the entire value chain, and the development of a circular economy whereby we keep resources in use for as long as possible, extract the maximum value from them while in use, and then recover and regenerate products and materials at the end of their service life. It’s now time to turn our attention to digital reinvention, think about how we can reduce our environmental “exhaust” through new digitally-sustainable business models and processes.
Chris can be connected thru chris@mdcc.org.my or at twitter account @chrisdanielwong.
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