Sustainability and Digitalisation - the sum of all fears or the sum of its parts?

Sustainability and Digitalisation - the sum of all fears or the sum of its parts?

08-06-2020

Sustainability and digitalisation: two concepts that have become increasingly relevant since the new millennium. Twenty years later, it has become dramatically clear that sustainability and digitalisation engender important and even disruptive changes in businesses and society; moreover, their mutual interaction and connection predict for even greater effects.

Definition

None of the terms is easily defined, nor is their impact. Sustainability evokes the idea of a better world, with due attention for the environment and planetary boundaries, equal and just treatment for every living being, respect for all human rights. But at what economic costs? This is a question still far removed from being answered. The notion of sustainability has found its dedicated place in political and corporate governance discourses. Within boards of organisations, there is a struggle to find the right balance: too often sustainability is still considered as just another thing of compliance. The idea that it is an opportunity to innovate, is hindered by justified economic considerations. Mervyn King’s famous declaration “Sustainability is the primary moral and economic imperative of the 21st century,” says it all: sustainability does not derive from free choice; it is “imperative”. However, more and more bottom-up advantages of concern for sustainability are starting to appear. The growing societal platform of people caring for sustainability was witnessed in the climate actions taking place before Covid19. Fair trade chocolate, bananas and coffee are considered common goods, and did not lead to lower sales. Even more relevant for boards, there is a clear tendency that shareholders, stakeholders and investors more often than before turn to ESG performance, and even profit from it.

Digitalisation, on the other hand, is a business-driven, innovation-minded phenomenon: computers, Internet of Things, big data, AI, next-gen genomics: everything has been invented or developed within small or greater organisations. In philosophical accounts of digitalisation, big words are not eschewed: digitalisation means the fourth Industrial Revolution (or Industry 4.0, to remain in digital semantics), disruptive on all levels of society, consumer approaches, business models. From the “Anthropocene”, we are heading to the “Digital Anthropocene”, in which organisations and leadership modalities are changed by digital technology… However, there is no such thing as “one digitalisation”. Is it “a laptop for every student”? Is it social connectivity, e-commerce and a new way to brand your organisation? Is it big data and cyber security and privacy tracking? Is it the influence of social media on policy making and board strategies? Whereas sustainability has become something of interest to government regulations, governments have attributed lesser attention to digitalisation regulations – except for the well-known privacy-protection compliances.

Aligning sustainability and digitalisation

How can we align sustainability and digitalisation, considering their completely different origin story, aims and purposes? One way to frame their relation is to look at the impact from one tendency on the other, and most often that is the impact of digitalisation on sustainability. Superficially, that impact tends to be negative: disposable smart phones, laptops, tablets and batteries bring an exhaustion of natural resources. Circular economy remains far away as long as the U-turn in the energy sector has not been completed. In the current (light) lockdown times, the huge increase in data traffic has also been mentioned to have increased CO emissions; although in percentages, it comes nowhere near the decreased emissions from the traffic free roads and airways.

That brings us to the positive impact of digitalisation on sustainability, which is with a little effort equally high. An example is the impact of digital assessment tools on investments in companies that score high on ESG performance, and how boards can use big data to increase ESG investing. Other positive effects of digitalisation is the impact of fintech on regions difficult to reach, and the development of smart cities. Digitalization tools based on big data algorithms are essential to give decision-makers the necessary perspective on the use of infrastructure, transportation, electricity and water, air quality etc. Even in monitoring biodiversity, digital tools have an impact.

In methodologies measuring the effects of digitalisation on sustainability, it is easy to reduce its impact to material, non-abstract “things”, from a consumerist perspective. A different view emerges if one considers digitalisation as a change of mindset, as a truly disruptive phenomenon happening once in a few centuries. From a historical point of view, the immaterial effects of digitalisation will have much further bearings than our current resource and waste problems. Consider for instance the increased connectivity between people and social mobility facilitated by internet access. On the other hand, digitalisation might lead to a decrease in face-to-face meetings and the risk of an increase in social inequality. A question which regularly pops up in academic research, is how digitalisation impacts democratic decision making. This is an equally important issue for boards and shareholder’s meetings: do digital tools allow easier communication with the smaller shareholder, or does it has the opposite effect: important decisions are made through private email communication, leaving out the smaller shareholder’s voice? The fact that all data and information is more often saved in the cloud predicts for a decrease of touchable commodities. Different personal laptops, smart phones and tablets will become less necessary if everything is accessible from one device. Meetings might be organized together on one shared screen. And that’s perhaps an important observation: let’s not focus on the next five years, but let’s look at what will be possible in the far-future. In 2019, the report of the “World in 2050 initiative” was released. One of their main conclusions was that “we lack public discourse on what a human-centred, sustainable digital age would look like”.  To foster and co-create this discourse, we need the input from corporate governance institutions as well as policymakers and academia. One thing is certain, there is no way back. Let’s make this “Digital Anthropocene” also a “Sustainable Digital Anthropocene”.