The Rise of the Sustainable Enterprise - IBM

Digital transformation can help organizations reduce their environmental impact—and deliver better business results.

Environmental sustainability is no longer just a corporate social responsibility (CSR) issue—it’s a business imperative. Opportunities and risks related to the environment now challenge the strategies and operating models of organizations across all sectors and functions. In fact, environmental strategy choices, as a subset of a broader sustainability agenda, increasingly define a company’s prospects in today’s competitive marketplace.

Environmental sustainability is no longer just a corporate social responsibility (CSR) issue—it’s a business imperative. Opportunities and risks related to the environment now challenge the strategies and operating models of organizations across all sectors and functions. In fact, environmental strategy choices, as a subset of a broader sustainability agenda, increasingly define a company’s prospects in today’s competitive marketplace.

Digital transformation can help organizations reduce their environmental impact—and deliver better business results.

Environmental sustainability is no longer just a corporate social responsibility (CSR) issue—it’s a business imperative. Opportunities and risks related to the environment now challenge the strategies and operating models of organizations across all sectors and functions. In fact, environmental strategy choices, as a subset of a broader sustainability agenda, increasingly define a company’s prospects in today’s competitive marketplace.

According to the World Economic Forum’s Global Risk Report 2020, the top five business risks were linked to environmental challenges, including extreme weather and climate action failure. So it’s no surprise that investors and financial managers are increasingly incorporating sustainability criteria in their investment decisions. In early 2020, Blackrock, the largest money manager in the world, announced “that sustainability should be our new standard for investing.” Customers and employees have also become much more environmentally conscious. A recent study by IBM found that nearly 80 percent of consumers indicate sustainability is important to them and 60 percent are willing to change their shopping habits to reduce environmental impact.

Together these forces are shaping a new corporate agenda, with 62 percent of executives considering a sustainability strategy as essential in order to be competitive. Another 22 percent think it will be a requirement in the future. The environmental imperative has rightly planted itself in the heart of boardroom and operational management conversations.

The environmental agenda: converging forces make it a central feature of corporate strategy

However, talk is one thing. Finding a path to successful action another. Digital transformation will help make the difference. Exponential technology innovations unavailable to previous generations—artificial intelligence (AI), 5G, Internet of Things (IoT), cloud, blockchain and others—will accelerate this progress in three ways. They capitalize on data to reveal new insights and underpin new solutions to existing problems. They can change business practices and drive the emergence of the “Sustainable Enterprise.” And they support greater public, private, and not-for-profit collaboration to forge a new governance model for the environmental imperative.

More data, more insight—more progress

Data and information underpin the ability of economic actors to drive change in business priorities and practices. Greater transparency and insight allow consumers, companies, investors, and governments to change the way they buy, produce, sell, transport, consume, and govern, which, in turn, has the potential to transform the way economies operate. Moreover, data can be infused into business processes and decision making and drive improved environmental outcomes.

The same exponential technologies that are bringing data and insight to bear on the environmental imperative are also reshaping the very nature of a company’s operations and business model. Businesses are not just becoming “digital.” They are applying AI, in particular, and other exponential technology to create new business platforms on which to compete and collaborate, and intelligent workflows to drastically improve their operations and customer experiences. They’re also using these technologies to augment the capabilities of their people, and improve the employee and customer experiences of their organizations.

Data can be infused into business processes and decision making and drive improved environmental outcomes.

Plus, digital technologies make possible many market-based mechanisms that drive change and innovation. In particular, they can support incentive mechanisms for action at a scale and speed that would be impossible through the traditional means of regulation and government intervention. Not only are digital technologies critical for the monitoring, verification, and reporting, but emerging technologies, such as blockchain, make it easier to share data and manage transactions that support, among other things, more efficient climate markets. As noted in a recent World Bank report, “Blockchain, Big Data, the Internet of Things (IoT), smart contracts, and other disruptive technologies hold out the promise of addressing the needs of new generation climate markets post-2020.

Exponential technologies and environmental sustainability

The combination of business model transformation and a new environmental governance structure has the potential to bring about the societal transformation needed for environmental sustainability. Digital technologies can reshape what is possible, stimulate new innovations, and enable effective ways of working together.

Meet the Authors from IBM

Wayne S. Balta, Vice President, Corporate Environmental Affairs, Product Safety and Chief Sustainability Officer

Jacob Dencik, Ph.D, Economic Research Leader, IBM Institute for Business Value, Global Business Services

Daniel C. Esty, J.D., Hillhouse Professor Environmental Law and Policy, Yale University

Scott Fulton, J.D., President, Environmental Law Institute

Key Takeaways

Published on:
August 2020
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