10 reasons sustainability needs to be part of your digital transformation strategy
The pandemic is uncovering gaps and weaknesses in supply chains that require organizations to digitally transform themselves quickly starting with sustainability, according to Forbes magazine.
Predicted to be a breakout year for Artificial Intelligence, 2020 quickly turned into a race for how quickly every organization could digitally transform themselves to survive, starting with supply chains. Little did anyone know, a global pandemic would force organizations to shift from leveraging technology to creating a competitive advantage to survival, in some cases. With the pandemic of 2020 uncovering previously hidden issues within supply chains, leaders began to shift their focus on the organization’s sustainability.
This article frames sustainability from the commonly-known context of the triple bottom line – people, planet and profit – while also including another important pillar of enterprise environmental factors.
With the pandemic accelerating digital transformation across all industries today, it’s important to stay focused on supply chains and their integral role in achieving sustainability initiatives. As every organization works to re-invent itself to survive in these challenging times, achieving greater sustainability goals will make them stronger, more resilient and quicker to adapt.
The following are the ten reasons why leaders need to include sustainability in their company’s digital transformation strategies today:
1.The increased industry pressure to adopt sustainable practices. In a recent study conducted by The MIT Center for Transportation & Logistics (MIT CTL) and the Council of Supply Chain Management Professionals (CSCMP), 46% (n=701) of the 1,128 survey respondents noted they felt pressured by external stakeholders to adopt sustainability practices. With this pressure, stakeholders also want transparency of the practices outside of traditional press releases. By capturing sustainability practices within an organization’s enterprise applications, leaders are able to validate current state processes.
2.Every organization needs to prepare for the known unknowns of operating in a fluid, fast-changing business environment. With Joe Biden elected as the 46th president of the United States, how will this impact the global supply chain landscape? As Joe Biden pledged to rejoin the Paris Climate Agreement, along with a $1.7 trillion plan to invest in clean energy infrastructure of the next ten years, the method to track and trace the implementation of these activities within organizations will be integral to measuring the impact. It is also important to note that these analytics and metrics within an enterprise application must be able to scale as the new administration looks to fast-track sustainability efforts, as well as realize the impact of government support for sustainability.
3.The increased expectation of ‘voluntary sustainability reporting.’ As countries such as India, Indonesia and China mandate the reporting of sustainable practices, the reporting of sustainable practices continues to be voluntary in the United States. With KPMG reporting that 93% of the 250 largest global organizations now publish sustainability practices, stakeholders will look for small and medium enterprises to begin publishing these reports as well. By incorporating sustainability reporting standards such as the Global Reporting Initiative (GRI) framework into an organization’s digital transformation strategy, leaders of large, medium and small enterprises could be able to map information and metrics from enterprise applications into sustainability reporting templates.
4.Evaluating sustainability as a basis for investment and lending. Given Levi Strauss & Co. (LS&Co.) has partnered with the International Finance Corporation (IFC) to provide lower interest rates for vendors that have sustainability practices in place, lenders and investors of small and medium organizations include sustainability within risk assessments and evaluations. Previously viewed as a distraction to the bottom line, some lenders and investors now view organizations that do not have sustainability plans as a potential ethical and reputational risk. To document sustainability efforts from a financial perspective, the Sustainability Accounting Standards Board (SASB) includes sustainability reporting that can be integrated into an organization’s digital transformation strategy.
5.Increased automation and augmentation will require increased integration. Although it may not seem like a sustainable practice on the surface, many organizations have already taken an initial step to creating a sustainable business environment by moving technology applications to the cloud. Jamie Morgan of Mission, an Amazon Web Services managed services partner, noted organizations that move technology services to the cloud consume 77% fewer servers, 84% less power and reduce carbon emissions by 88%. Now, with IoT introducing devices across an organization’s enterprise, leaders can track and report on a variety of non-financial metrics such as the utilization of a smart HVAC system within the organization’s plant maintenance application.
6.Increased monitoring of supplier requirements. As the awareness of sustainable practices continues to grow, leaders realize that a sustainability initiative extends outside of the organization. To communicate and collaborate on sustainability efforts with business partners such as suppliers, leaders should consider integrating sustainability applications into their digital transformation efforts. Identified by Gartner as a Cool Vendor in Sourcing Technology, as the name of the company suggests, Vizibl provides visibility into an organization’s sustainability efforts with its Vizibl Sustainability offering. As ERP vendors began to integrate SRM applications into ERP offerings, there may be the inclusion of sustainability KPIs integrated into vendor scorecards in the near future.
- Including sustainability as the fifth pillar of the balanced scorecard. In integrating sustainability into the organization’s mission and strategy, adding sustainability to the balanced scorecard of a company will provide transparency to the importance of the organization’s initiative. As a shift in organizational culture and mindset will be integral to the success of a sustainability initiative, including sustainability into an organization’s digital transformation efforts may be a critical success factor in its implementation.
- A shift in consumer buying behavior.As the buying power shifts more toward Gen Zs and Millennials, these consumers place a greater emphasis on ethical practices and sustainability efforts when making buying decisions. One study of 10,000 global consumers found that 91 percent of shoppers worldwide will likely switch to brands that support a social or environmental cause. Additionally, another study found that 90 percent of shoppers would boycott a company based on moral or irresponsible business practices. This demographic will research organizations’ practices before purchasing products. Due to the increasing amount of greenwashing among small, medium and large organizations, they want organizations to ‘prove’ sustainable claims and organizations can track and publish this with enterprise applications.
- The introduction of Sustainable Project Management. With sustainability projects varying in scope, the same methods and criteria used in traditional digital transformation projects may not be applicable. As Labuschagne and Brent highlighted the push, pull, pressure and support drivers to a sustainability project, project managers within these projects must ensure internal and external environmental factors are identified, monitored and updated throughout the project’s life. As geopolitical considerations may impact a sustainability initiative, a project manager may also consider an Agile Project Management methodology in their sustainability efforts. As the Project Management Institute will be integrating Agile in the new release of the Project Management Professional (PMP) certification in January of 2021, do we foresee a new Agile methodology that focuses on the geopolitical, iterative nature of sustainability in a future version?
- Sustainability is no longer a nice to do; it is a must-do. Given some may view this as a biased statement, we have experienced the negative impact of current operational practices. In taking The
Pandemic of 2020 as an example, the map below shows the nitrogen dioxide (NO2) concentrations over China before and after the shutdown earlier this year. Magnifying this to a global level, if organizations do not hold themselves and their business partners accountable to ethical environmental, social and even economic standards, we must ask ourselves what kind of world could our children’s children’s children live in?