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Should Digital Business (Transformation) and Sustainability be seen as complementary growth drivers?

Digitalisation is expected to have profound (‘transformative’) effects on the economy, society, and politics as well as on the planet itself. This includes the production, use and disposal of hardware (Information and Communication Technologies equipment, data centres, data transmission networks) as well as of software, digital technologies, and applications – ranging from robotics, the Internet of Things (IoT), via distributed ledger technologies such as blockchain, to Artificial Intelligence (AI).

The link between digitalisation (or digital transformation) and energy use or greenhouse gas emission is much wider and well documented already whereas this is not the case for other environmental pressures, impacts and opportunities i.e., non-energy impacts.

  • Digitalisation has been both described as a potential ecological “fire accelerant” (WBGU, 2019c) and as an ecological “game changer” (Seele & Lock, 2017).
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Digital technologies are not only transforming markets and creating new paradigms of doing business, but the technologies are also providing solutions to organizations for addressing Sustainability challenges.

Few examples:

  • It is estimated that digital information and communication technologies (ICT) can enable a 20 per cent reduction of global CO2 emissions when applied to five sectors: mobility, manufacturing, agriculture, energy, and buildings. ICT solutions can help cut nearly 10 times more CO2e than they emit.
  • A similar assessment was conducted by GSMA, looking at the impact of mobile communications technologies on carbon emission reductions. This study concluded that mobile technologies had a 10:1 enablement ratio compared to the footprint of the industry.
  • Digital technologies and improved design can help reduce natural resources and other materials used in products by 90 per cent – through efficiency, tracking and tracing as well as by turning products into services in a circular economy. This can help reduce the impact of material extraction on nature and the environment
  • Estimated that digital technologies can help reduce waste & detoxify supply chains by a factor of 10-100 times through improved design, resource substitution and circularity.

However, changes in production and consumption behaviour caused by digital transformation might limit digital technologies’ mitigation effect and entail additional negative environmental effects (“digital rebound effect”). Such counterproductive effects are now being considered when designing policy interventions.

To note a couple of environmental pressures related to digitalization:

Impact on resources:

The mining and extraction of raw materials (e.g., cobalt, palladium, tantalum, silver, gold, indium, copper, lithium, and magnesium) as well as the production of microelectronic components, especially integrated circuits, are the main contributors to fossil resource depletion as well as abiotic resource depletion, global warming, freshwater eutrophication, soil acidification, human toxicity, freshwater toxicity, marine toxicity, and terrestrial toxicity.

Impact on biodiversity and land use as well as land use change:

Major impacts result from the extraction of natural resources needed to produce hardware, from the release of hazardous materials (such as heavy metals, toxic fumes, acidic leachates) related to raw material extraction processes, as well as from the inappropriate collection, recycling and disposal waste of electrical and electronic equipment

Select studies and reports suggest that impacts related to digital transformation could be significantly reduced through environmental regulation. Of the many environmental parameters for governing the digital transformation and recommended policy measures, one is – Improving (the framework conditions for) the circular economy.

  • Digitalisation and circular economy (CE) are closely interlinked.
  • On the one hand and as mentioned above, energy and raw materials used for the ICT sector cause a host of undesired ecological impacts. 
  • On the other hand, data and digitally enabled applications could make significant contributions towards a circular economy, e.g. with the help of interconnected digital tools which may help to improve the use of natural resources, design, production, consumption, reuse, repair remanufacturing, recycling, and waste management.

Digital Transformation significantly impacts the Sustainability aspects of an organization and both should form an integral part of Organizational Strategy.

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