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Sustainability is the new business maxim

With companies & governments racing to meet sustainability targets, digital innovations could lend a helping hand. 

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The need to avoid the earth's climate collapse is becoming increasingly urgent. The period of discussion is now being followed by concrete political requirements that have an impact on corporate reality. Digitalization plays an important role on the way to a more sustainable future. 

From forestry to the political agenda

1713 is seen as the year sustainability was born, when Saxon mining administrator Hans Carl von Carlowitz introduced the term to the German-speaking world. He defined sustainability as a forestry principle that relies on the natural ability of the forest to regenerate. Removed tree substance and regrowing biomass should be in balance. 

The term experienced a renaissance at the end of the 20th century. In view of unabated economic growth and the population explosion, as well as increasing bad news about the ozone hole, melting ice masses, and overexploitation in places like the Amazon, the topic crept further and further onto the agendas of political decision-makers.  

Politicians are responding – ambitious targets for less CO2 

The intensive discussion surrounding global warming ultimately led to concrete political guidelines to reduce carbon dioxide emissions. In 2021, for example, the European Commission set ambitious targets with the implementation of the Green Deal. The Fit for 55 package of measures aims to reduce net greenhouse gas emissions by 55 percent by 2030 (compared to the base year 1990). A carbon-neutral Europe by 2050 is the vision. 

The binding political guidelines – also at the level of European countries – mean that industries and companies are now obliged to include the topic of sustainability on their business agendas. In June 2021, the Bundestag also decided to set more ambitious climate protection goals. The aim is now to save 65 percent of CO2 emissions rather than 50 percent by 2030. The plan is for Germany to be carbon neutral by 2045. 

Sustainability is becoming a corporate reality

Pipes with pressure gauges for metering.

Significant energy savings in data center operations can be obtained when traditional air cooling is supplemented with water cooling.

In these framework conditions, sustainability is becoming a new maxim for all companies – and thus a component of corporate strategies too. For example, the federal government in Germany expects the energy sector to reduce its carbon footprint by almost 60 percent by 2030 (compared to 2019), and industry by at least 35 percent. 

For the energy sector, this means more electricity from renewable energies. Another key lever is greater energy efficiency. But even such commitments are not always successful. Alongside energy and industry, transport is the largest producer of CO2. It generated 150 million tons of the greenhouse gas in 2020 and is thus responsible for about 18 percent of CO2 pollution. The transport sector must contribute a reduction of 65 million tons of CO2 in the period from 2020 to 2030 in order to achieve the climate goals.  

The current balance sheet shows that, up to 2019, there was still no significant decrease in traffic-related emissions compared to 1990. The reductions due to more efficient drives were offset by an increase in individual transport, which “ate up” the effects of energy efficiency. On January 1, 2021, 14 percent more vehicles were registered than ten years earlier. The trend is towards second and third cars. 

More people, more consumption, more hunger for energy 

The good news is that, for the European region, the International Energy Agency forecasts a reduction in primary energy consumption between 2018 and 2040: a drop of 277 million tons of oil equivalent (Mtoe). The bad news is that Europe is not an island. Overall, the World Energy Outlook 2019 expects global primary energy consumption to increase by 24 percent. 

This is due to the increase in the world population from 7,602 million to 9,172 million as well as the further increasing economic output. The increase in energy consumption can be explained by the rise in demand in developing and emerging countries. India alone will consume almost four times as much additional energy as Europe saves (925 Mtoe). 

Digitalization, sustainability initiative  

More energy efficiency as well as reduced energy consumption are important components of a sustainable future. Just like digitalization. This is the finding of the Digital with Purpose report by the Global Enabling Sustainability Initiative (GeSI). “The ICT industry plays a crucial role in enabling progress in the implementation of the Sustainable Development Goals,” notes Luis Neves from the sustainability organization. 

He is not alone in his opinion. A recent study by Bitkom found that 69 percent of Germans believe the 1.5-degree target cannot be achieved without digitalization. Three quarters of those surveyed took the view that digitalization represented an opportunity for the climate. 

The IT association underscores this statement with another study. The Climate Effects of Digitalization study comes to the conclusion that the targeted and accelerated use of digital solutions will reduce CO2 emissions by up to 152 megatons over the next ten years. That corresponds to about a fifth of today's emissions – and thus about 40 percent of the total savings target.

This is because digitalization is a double-edged sword in terms of energy consumption and CO2 emissions. The ICT industry also makes its contribution to the generation of the “climate gas”. Experts assume about three to four percent of the global carbon dioxide load. However, there is a CO2 savings potential of 15 to 20 percent. The bottom line is that there is a clear benefit for the climate – especially if the data centers from which services are provided are operated with green electricity.  

This allows companies like Microsoft, Google, and Sky, which provide a large part of their services digitally, to announce net-zero targets for the year 2030. In other words: not only do they offset their carbon footprint, but they also no longer produce any greenhouse gases at all. The blessing of digital value creation. However, it should be noted that the generation of renewable energies also generates emissions, and CO2 production along the supply chain (so-called Scope 3 emissions, see below) can only be controlled to a limited extent – offsetting will probably also play a role in these net-zero announcements. 

In a customer project for a high-performance data center, Detecon consultants were able to achieve energy savings of 30 percent. An aisle containment system was installed in the data center. In combination with a reduction in the fan speed, there was significantly higher energy efficiency. 

Sustainability management requires strategic approaches 

But what should companies do to generate tangible added value? Mechanical engineers, automobile manufacturers, logisticians, industry, and public administrations also need strategies to meet green expectations. Detecon consultants are increasingly confronted with these kinds of questions in various industries. “We can clearly see that sustainability has arrived on the agendas of the management due to the now very concrete framework conditions,” explains Steffen Roos, Managing Partner of Detecon. 

Together with its customers, Detecon consultants develop sustainability concepts and strategies in which digitalization plays a central role. “It is important that companies bring together the benefits of digital technologies and sustainability requirements. But this requires a comprehensive framework that takes into account and balances the complexity of both topics and the entire ecosystem.” 

For the development of the sustainability strategy, Detecon relies on a proven six-step approach. At first, the scope of an individual, ecological sustainability strategy is defined (step 1). Based on the Greenhouse Gas (GHG) Protocol, three areas (scopes) are distinguished: emissions that the company generates itself (scope 1), indirect emissions that the company triggers (scope 2), and emissions that occur along the value chain (scope 3). Today, sustainability reports already have to provide transparent information about scope 1 and 2. Scope 3 reports are – still – voluntary but are increasingly being required by the corporate environment. 

Realized goals can then be defined (step 3) on the basis of reliable values for the current CO2 footprint (step 2). To achieve the goals, suitable measures are implemented – including a roadmap and monitoring of key performance indicators (step 4). Sustainability is anchored in the corporate strategy via a governance concept (Step 5).  

“As in other change processes, efficient change management rounds off the sustainability program,” summarizes Roos (step 6). In doing so, companies should always bear in mind that sustainability does not end at the factory gates – partners and suppliers must also be involved. “In a networked value chain, that's only natural.” 

Sustainability through remote support

A mechanic holding a tablet in his hand that projects virtual tools on a screen.

Targeted and accelerated use of digital solutions can help reduce CO2 emissions

The sustainability strategy then leads to concrete initiatives. A “hot” candidate for such initiatives are virtual/augmented-reality scenarios for remote support. Detecon implemented a remote support scenario for service personnel at a mechanical engineering company. A HoloLens was used for this. The HoloLens involves the service employee from Germany directly in the on-site situation in Abu Dhabi, thus replacing a lengthy, expensive, and unsustainable journey. A customer employee at the factory in the United Arab Emirates uses the Hololens and projects the environment to Germany. The mechanical engineering company’s service staff can use this to support the on-site staff with repairs or maintenance work. 

With a flight distance of around 6,000 kilometers, use of the HoloLens saves 1.5 tons of CO2. If production and operation of the HoloLens generates six tons of CO2, the scenario amortizes after just four sessions. In view of the ideological and regulatory discussions surrounding sustainability, however, one component is often overlooked: the positive financial aspects. In addition to avoiding energy costs, digital solutions can also reduce costs directly in the application examples. This is illustrated by a simple scaling model of the HoloLens example. 

Over a period of three years, the use of ten HoloLenses for 100 employees will cost around €390,000. These consist of hardware (€35,000), personnel costs (€90,000), and operating costs (€65,000). In addition, there are €200,000 in license costs – currently the largest cost pool. By contrast, with four maintenance or repair incidents, a conservative estimate is €48,000 for the travel time of the service personnel and €363,000 for the travel organization and direct costs. The bottom line is a saving of €21,000. 

Companies can take measures right now to reduce their carbon footprint while gaining financial and public relations benefits. The measures can be small or big, what counts is the momentum to step onto the sustainability path and never leave it. The possibilities to do it in-house or in partnership with specialized companies are countless. 

As in this VR/AR case, artificial intelligence, the IoT, and big data analytics are further levers that will increasingly reduce the carbon footprint of companies in the future. Just as it was advancing technologies that made it possible for the manufacturing process of globally distributed mass products to become increasingly environmentally friendly – primarily through simple reduction of the physical raw materials required for this up to their complete dematerialization.  

Do you remember the shellac record? Made from an unappetizing-sounding mixture of the excrement of an aphid species (shellac), rock flour, soot, and ground animal hair or cotton flakes, it weighed up to 400 grams. Its successor made of vinyl – weighing only 120 grams on average – was replaced by audio tapes and cassettes. From then to CDs and mini discs to the audio file of today is one story. From the gramophone to record players, tape recorders, Walkmen, and disc players to streaming is the other. 

This dematerialization of services, processes, and products will open up a whole new world of business areas for companies that minimize their carbon footprint by means of digitalization and virtualization even in conceptual terms. In the so-called metaverse. Some may speak of Pandora's box, but the door to it has long been open. Thus, the trend report of Germany's largest business newspaper simply stated laconically at the beginning of the year: “The Metaverse has come to stay.”

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About the author

Elina Weiss is a Business Analyst at Detecon and is assigned to the Global Functional Chapter Business Technology, where she advises national and international companies on the topics of sustainability, digitalization, and digital transformation. Her vision is to build a bridge between sustainability and business efficiency and to anchor the topic in corporate strategies.

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