Sustainable processes and systems: implementing sustainability with digital technologies

At the beginning of 2023, the requirements for disclosing information and targets relevant to sustainability were once again increased for many companies. Non-compliance not only means risking reputational damage, but also the potential of heavy fines of up to €10 million or five per cent of a company’s annual sales volume. By 2028, about 15,000 companies in Germany and about 50,000 in the EU will have been affected by this. Virtually the same applies with the German Supply Chain Act (Lieferkettengesetz), which this year, will affect every company in Germany with more than 3,000 employees and, beginning as of next year, every company in Germany with more than 1,000 employees.

In forward-thinking companies, however, achieving sustainability goals means much more than just meeting compliance requirements. They want to get better at what they do – plain and simple. These companies want to become more efficient, more effective, more cost-conscious and more resilient; all of which involve sustainability. In our previous blog post on the role of sustainability data, we looked at why sustainability must first be understood in order to avoid lapsing into ineffective actionism. However, data alone does not create sustainability. That is why in this blog post, we will look at how to make informed decisions based on this with the help of technologies in order to truly become more sustainable.

Challenges

Sustainability constitutes a complex field of action. It is about environmental impact (environmental sustainability) and social issues (social sustainability), and when all is said and done, the whole thing has to be economically viable (economic sustainability). Each of these dimensions come with their own challenges, which usually begs the question ‘Where do we even start?’

If we take a look at the environmental dimension, we see it is about much more than just CO2 emissions. In the future, when companies publish their sustainability report as part of the new reporting obligations, they will also have to consider their water consumption, waste and other environmental impacts. Since the reports are audited by external third parties, they must also be just as reliable as the financial report. This in turn means that for companies, the time for real change towards more sustainable business models is now. Companies must actively avert sustainability risks and optimise their own processes in such a way that their environmental impact is minimised. However, due to the complexity, diversity and heterogeneity of the data sources and the large number of stakeholders involved, this does not work without digital technologies. These challenges are the reason why we are focusing on the environmental dimension of sustainability in this post.

Paradigm shift

Employees do not simply act more sustainably overnight because they are instructed to. It is often the case that the necessary expertise and awareness are lacking or reservations exist. This calls for adequate change management. Though larger organisations have already had sustainability managers for some time now, time has shown that they have often been more occupied with fulfilling their documentation and verification obligations than with establishing effective guidelines.

In some organisations, however, we are already seeing those in charge of sustainability develop into designers. Organisations not only recognise the importance of documenting sustainability risks, but they also recognise the importance of targeted management. This is because in the future, more areas in companies will have to contribute to achieving sustainability goals, and not just the individuals in charge. In this context, sustainability management forms the connective link and breaks down silo thinking. For example, some progressive companies are already announcing that they have interlinked sustainability-related target achievement and CO2 budgets with incentive models, such as dynamic remuneration models or budgets for specialist departments. Sustainability management is the main point of contact in this context. It is to be expected that in the future, direct incentives will be used more frequently as an instrument for operationalising target achievement in companies. This means that anyone who has to adhere to a CO2 budget in the future should already be planning ways to effectively balance effort and benefit to achieve more sustainability.

Sustainable processes

True environmental sustainability only occurs in companies when fewer resources are consumed due to improvements in efficiency or effectiveness. These resources can be physical, digital or cognitive. Sustainable business processes are resilient, scalable and cost-efficient processes that protect both people and the environment. In this context, digital solutions can be used to dematerialise physical processes and media disruptions can be reduced, all of which makes it possible to save not only resources, but also costs. Specific examples of how digital technologies can contribute to more sustainability in most business areas include:

• Procurement: Where those in charge of digitalised supply chains can order exactly the right amount of raw materials for planned sales volume using machine learning predictions. This reduces unnecessary transport costs and, especially in the case of perishable goods, reduces waste.
• Service provision: By simulating physical phenomena, the production of resource-intensive prototypes can be limited to the bare minimum in product development. For example, stress tests can be done in digital twins before the final test is done with the real object. In the manufacturing industry, digital solutions with monitoring features can also help to oversee the utilisation of machines and how much they wear and potentially proactively intervene to prevent defects and thus extend the service life of the machines.
• Administration: It is not only in the cross-sectional areas that remote work and virtual meetings can help to avoid unnecessary trips and give employees more personal freedom. Digital solutions such as e-signatures and digital communication channels can minimise paper-based processes and thereby potentially make a small contribution to less paper consumption, less transport and less waste.

Sustainable systems

Much has already been written about the sustainability of IT systems in other blog posts. Even if it is nowhere near as effective in achieving the goals, saving what is possible with a reasonable amount of effort is still important to do in all areas. Some specific examples from the different stages of software engineering include:

• Requirements engineering: Influencing how sustainable the system ultimately is, for example, through service level agreements (SLAs), can already be done in the requirements definition stage. Does the system really have to react within a few milliseconds for every interaction, or is it perhaps sufficient for some use cases to reload resources more slowly, thereby requiring fewer hardware resources?
• Concept and design: Both the function and technical aspects of systems can be positively influenced by doing things such as avoiding returns in the online shop, based on the mentality that doing so will cause more CO2 emissions, or by using media, such as videos, in a way that is demand-oriented.
• Choice of technology: Does it really always have to be the framework with the largest range of functions, just in case new requirements arise later on? Or is a lightweight version that can later be expanded as needed via additional libraries perhaps sufficient for getting started?
• Architecture and development: Is my system energy efficient? Does it use as few hardware resources as possible, and is the hardware used for as long as possible?
• Operation and maintenance: Are we making the best possible use of our servers in our own data centre, or is it worth moving to the cloud? Are updates rolled out several times a day, or do we reduce the overhead for data transmission and bundle the delivery of new functions?

With software accounting for two to four per cent of emissions worldwide, compared to physical material cycles – for example, in the manufacturing industry – software emissions are not the most urgent field of action, but they are nevertheless a problem that needs to be solved. We can make a contribution to this by viewing sustainability as an equal requirement when selecting and implementing systems.

A lack of altruism

Not every company has to immediately become the most sustainable in its class, but all companies need to take a serious look at where their greatest potential for improvement lies. First and foremost, unless the really high-impact measures have already been implemented, no one should dwell on micro measures. In the case of emissions, things such as the Greenhouse Gas Protocol help. Heat maps can be derived by utilising the Greenhouse Gas Protocol’s classification of emissions into Scopes 1–3 in order to understand where making improvements is worthwhile.

To add to this, none of the measures mentioned are ever purely altruistic. Companies are coming under increasing pressure from all sides to actually become more sustainable. On top of that, being sustainably positioned as a company these days still offers a lot of room for developing more competitive advantages. It is important that those responsible now take the step from merely setting goals and meeting legal requirements to making effective changes.

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