Leveraging digital to improve sustainability

The threat of climate change has pushed companies to embrace a more sustainable future, with a growing number of companies announcing their commitment to ESG and sustainability. However, such commitments need to be backed up with concrete action and there are growing calls to leverage digital technologies towards a better and greener future, highlighting the potential of data for sustainable development.

Combining digital technologies and sustainability makes sense. The green transition and the digital transition are two of the most important global business trends in recent years and are dual challenges: neither can succeed without the other. In practice, digitization is increasingly understood by companies as a way to improve environmental performance with companies such as Mercedes Benz and Analog Devices announcing their commitment to sustainability using digital technology.

And now, a recent study provides empirical evidence to support the link between the two trends. A recent article by Professor David Bendig and colleagues highlights a strong positive relationship between companies that strategically prioritize digital technologies and their environmental performance

Digital Orientation and Environmental Performance

According to Bendig and colleagues, companies that have a strong strategic focus on digital technologies tend to have a greater ability to adapt to changing market conditions, and to identify and exploit opportunities for innovation. Such companies also tend to be more efficient in their use of resources, leading to lower costs and reduced environmental impact.

Take the software company Teradata Corporation, one of the companies selected for their sample. In their 2021 ESG report, Teradata committed to developing technology products and services for a sustainable future. It also committed to leveraging digital tools for video conferencing and virtual workspaces for its employees to achieve environmental goals such as resource efficiency. Similarly, computer software maker Seagate and offshore oil miner Schlumberger are committed to using new data-driven technologies and digital solutions to reduce greenhouse gas emissions and resource waste in their operations. These initiatives indicate a digital orientation on the part of these companies, which was also linked to an improvement in their environmental performance during the study period.

“We suggest that managers improve their company’s environmental performance and competitive position by increasing the level of strategic digital orientation in their organizations,” Bendig explains. Developing a strategic digital orientation consists of developing technologies, features and functions that meet the needs of the customer. developing digital capabilities within the enterprise; coordinating a digital ecosystem and shaping a digital architecture.

In this regard, the study also draws important implications for policy makers who want to drive sustainable development. Bendig recommends, “If we want companies to embrace digitalization and reduce their environmental impact, we need to give them a strong incentive, so policymakers should consider offering subsidies or tax breaks to companies that invest in proven green technologies’. With the right policies in place, a thriving ecosystem of environmentally conscious companies leading the way to a sustainable future can be created.

Positive effects for society

In addition to the immediate benefits for businesses, this shift towards digital sustainability can also have positive negative effects on society as a whole. As companies become more sustainable and efficient, they can also develop new business models and products that encourage consumers to reduce their environmental impact, leading to a more sustainable future for all. In addition, prioritizing digital sustainability enables companies to bring about positive change in their wider ecosystems, mitigating the environmental impact of their entire value chain and ultimately contributing to a sustainable future for all.

Digital technologies and data have the potential to be powerful tools to combat climate change and move towards a more sustainable future. By prioritizing digital orientation and sustainability, companies can not only improve the bottom line but also contribute to a brighter future for society at large.