Telekom CEO Timotheus Höttges on digitization, which largely decouples economic growth and resource consumption. When decoupled, you can see that it’s possible to achieve growth and support public well-being sustainably – without additional consumption and with greater resiliency that pays off in helping to avoid or better manage crises.
Timotheus Höttges, CEO of Deutsche Telekom
Katrina or Sandy, Andrew or Lothar: Climate change has many names. Just at the beginning of February, it was Sabine who, in the middle of the calendar winter, was still chasing 13° warmth with hurricane gusts of 170 km/h across Germany. Climate change is real and to a large extent man-made. And it has massive effects: thousands of deaths, depopulation, billions of dollars' worth of damage.
It’s obvious that we must limit CO2 emissions and thus global warming. As early as 2017, more resources were consumed worldwide in a year than we could replace. And a large part of this consumption is not caused by private households. It is caused by companies. Any climate policy must therefore always take corporate involvement into account. At the same time, all critics of growth must be clear: Citizens will not accept any economic approach that does not account for people’s prosperity and welfare.
This concept is called Social Market Economy. While it calls for prosperity and public participation, the problem is that it too follows a (conventional) growth concept. And growth simply means consumption of resources and thus, in most cases, CO2 emissions.
So how can we succeed in decoupling economic growth from resource consumption to the greatest extent possible? In my opinion, the answer is “consistent digitization,” focusing on three characteristics that help us to solve these challenges:
Even today, digitization is already providing what I would describe as “quiet green growth” by its very nature. Quiet because, for example, car sharing or the use of online encyclopedias such as Wikipedia save costs or are even free. In this way, they increase our prosperity and standard of living, but are no longer tangible when measuring our gross domestic product. The (digital) growth is there, but it is not evident from the indicators we use. So completely new dimensions of efficiency are emerging.
The energy industry is a vivid example of this. By the end of this year, 30 percent of electricity in the EU countries is to come from solar, wind and water. At Deutsche Telekom, we are even going so far as to source 100 percent of our electricity from renewables Group-wide by 2021 and also reduce emissions from gas, oil and other energy sources. In 10 years, we will have reduced our CO2 emissions by 90 percent compared with 2017. That’s worldwide, by the way, since our international subsidiaries, such as T-Mobile in the USA to name one of the largest, are also included in our Group climate protection target.
“The energy transition can only work digitally.”
But it is not enough to build more wind power plants and solar energy systems. It is also a question of efficient power distribution. Utilities need to know where, when and how much energy is currently being produced and, above all, where it is needed. So-called smart grids can be used in all phases of the electricity supply chain. They evaluate energy, consumer and environmental data and can thus effectively predict and control supply and demand.
So, the energy turnaround is only possible digitally, but “digital” can do even more. The management consultancy Accenture recently published the study “A vision for Europe's digital future.” According to the study, digitization can not only help to solve environmental problems, but also offer answers to other pressing issues such as education, health and nutrition. Consistent application of digital technologies could reduce CO2 emissions by 34 percent. Through car-sharing, the number of vehicles needed could be reduced by 35 percent. At the same time, intelligent traffic guidance systems could reduce congestion in cities. Telekom, for example, is already cooperating with 50 cities on “Smart Parking”. An app guides drivers directly to available parking spaces, eliminating hours of driving in circles. “Smart Farming” or online universities are further examples of enormous potential.
It would be wrong, however, to give digitization and thus digital companies per se a green stamp of approval. Digitization can solve problems, but it also creates new ones. For example, the electronic waste generated by short-lived technical devices such as smartphones. Around 100 million old mobile phones are still lying somewhere in German homes. Resources that could be recycled.
Another factor is energy consumption. If the Internet were a state, it would rank sixth in the list of countries with the highest energy consumption, according to Greenpeace. So the digital economy must be concerned, among other things, with building ever more efficient data centers. Such as the Telekom center in Biere near Magdeburg, which uses 30 percent less energy than conventional data centers – and again uses exclusively “green energy.” And even before the impact of our “new reality,” digitization has helped us reduce our travel-related emissions by 34 percent. Instead of boarding a plane, we use more video conferences – and today that trend has increased exponentially.
In other words, digitization saves up to 10 times more energy than it consumes. It is therefore an important component when it comes not only to agreeing on climate targets but also meeting them. And while in the short term the world is struggling with economic turmoil, in the long term we expect digitization to support people's prosperity: many things will actually become easier, better and more accessible.
Economist Milton Friedman was wrong with his famous quote “The business of business is business.” It has long been about more than that. Companies must move within the “sustainability triangle.” They have to bring together economy, ecology and social issues. And politics must set the framework for this. Only then will companies – and Planet Earth – have a future to look forward to.
