The overlooked COP27 Opportunity
/ Digital Technologies can serve as Force Multiplier for Social Impact
In retrospect, it is fair to say that the recent climate conference in Sharm el-Sheikh (COP 27) largely overlooked the opportunity to make corporate sustainability initiatives even more effective through the use of digital technologies. Many executives still view sustainability and technology as separate priorities and even opposing goals. The opposite is true, as the interplay between digitization and sustainability opens up brilliant opportunities to create a greener economy and society.
We see three CEO opportunities to accelerate the path to true sustainability and make today’s sustainability programs even more effective:
- Rethink Business Model Logic: The CEO plays a natural role in rethinking the company’s business models and find new ways of creating, delivering, and capturing value. However, many incumbents are still relying on yesterday’s business model logic. The first assumption to be challenged is that sustainability comes at a cost but actually we are entering a phase where sustainability is a good way of doing business. Hence, it is not about how you spend your profit, but how you earn your money. Such sustainability-focused business models offer the opportunity to increase both business and sustainability impact: 61% of companies seeking an integrated digital sustainability transformation already generate more than 10% of their revenue from these new business models, and nearly 80% expect to do so in three years.
- Invest in Sustainability smartly: Treating sustainability and technological change as an integral approach bears lots of value, also from an investment perspective. Companies, that rather strategically integrate than prioritize two separate areas, can leverage significant synergies and achieve a higher return on their innovation investments – both monetary and non-monetary. Such integrated optimization instead of separate (sub)optimization could be achieved, for example, by earmarking a certain share of R&D investments for sustainability and technology together. With a digital twin of the firm’s end-to-end value network, you can even perform scenario analysis to answer important investment questions by taking a snapshot, applying financial metrics, and evaluating strategic options.
- Orchestrate horizontally and Act collectively: Sustainability cannot be solved alone. CEOs need to bring together complementary partners to develop, test, and scale the social impact of business in a concerted effort. The automotive, metals and mining industries is an example of three industries, which are closely linked in the shift to a sustainable supply chain operating model, with the final link being large-scale electric vehicle production. At the same time, digitization – as a horizontal phenomenon – is blurring traditional vertical industry boundaries and digital platforms are the central means to orchestrate ecosystems for collaborative climate action across companies and markets at scale, and in concert with digital process flows that enable cross-sector collaboration, technology is the critical enabler. Or to put it more bluntly, sustainable change across industries is not possible without digital technology.
Figure 1
/ opportunities to accelerate the path to true sustainability
Source: bluegain Analysis [2022]
While challenging, these initiatives will prove to be very rewarding as they open up greater opportunities for long-term value creation for all stakeholders. CEOs who understand that they are increasingly expected to contribute to solving the world’s challenges are in a better position.
/ ABOUT THE AUTHOR
- Dr. Carsten Linz is the CEO of bluegain. Formerly Group Digital Officer at BASF and Business Development Officer at SAP, he is known for building €100 million businesses and leading large-scale transformations affecting 60,000+ employees. He is represented on boards including Shareability’s Technology & Innovation Committee and Social Impact. A member of the World Economic Forum’s Expert Network, Dr. Linz is also a published author who shares his expertise as an educator in executive programs at top business schools.
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