The promise of the eco-digital eraTM
The eco-digital economy is expected to double in size over the next five years
The promise of the eco-digital era
Late last year we set out to study the future of digital, and ran into sustainability everywhere.
Whenever we asked business leaders about digital they talked about sustainability, and when we asked about sustainability, digital was a big part of the answer.
The story we uncovered is of a widespread, deliberate transition to more digital and more sustainable ways of doing business.
We see this as the start of an eco-digital era™ – a revolution with vast potential for new economic, social, and environmental value.
As large companies grapple with multiple disruptions, the eco-digital era™ holds much promise.
The full research paper, created in association with the Digital Data and Design Institute at Harvard.
The eco-digital era™ is not just a trend to be aware of, it's a huge opportunity for the businesses that bring it to life.
Respondents across sectors estimate that 75% of the economic value of digital tech is still up for grabs.
That's an enticing prospect, but doesn't digital tech have a heavy energy cost? How can realizing that 75% also help sustainability?
Our research shows it can. In fact, we believe digital tech is the best practical way of reducing environmental impact while also driving growth.
Digitally mature organizations are typically much more effective at implementing sustainability initiatives on top of winning commercial benefits.
Businesses that can tap into the huge commercial potential of digital tech while also being part of the solution to the climate crisis are setting themselves up for greatness.
The eco-digital economy is expected to nearly double in size in the next 5 years. For details see The eco-digital era™ report.
There are two reasons to be optimistic about the impact of digital tech on emissions.
Firstly, a lot is being done to reduce the energy requirements of technologies such as cloud, GenAI, digital twins, and others.
This includes improvements in the energy efficiency of data centers and the development of computationally less intensive approaches.
Secondly, digital technologies make it easier for organizations to cut emissions, and these cuts far outweigh the emissions that come from the digital tech itself.
The organizations we spoke to have already achieved a 20.9% reduction in emissions over the last five years by adopting digital tech in their sustainability initiatives.
By scaling up digital adoption, they have the potential to achieve a reduction of over 30% in emissions over the next five years.
Impact of digital on GHG emissions (in GT CO2-eq) over the next 5 years (high-performing scenario). For full details see The eco-digital era™ report.
Why do we say digital tech is the best practical way for organizations to meet their sustainability goals?
Digital tech improves efficiency and an organization's command of its data – both essential for effective sustainability initiatives.
Sustainability initiatives that use digital tech get better results.
Digital tech makes climate tech affordable.
Most of the execs we surveyed said that their organizations will not achieve their sustainability goals without climate tech.
The problem with climate technologies is that almost all of them are more costly than their traditional alternatives.
A striking 78% believe that emerging digital tech (AI, digital twins, blockchain, 3D printing, etc.) is the answer to reducing those costs.
Digital tech makes climate tech affordable. See our full report.
Software is a clear example of a digital technology that can deliver the business advantages and sustainability boost promised by the eco-digital era™.
52% percent of respondents in our Art of Software study expect softwarization to reduce costs. Softwarization can also have a direct impact on sustainability.
For example, fuel efficiency software developed by Airbus has given the business a new revenue stream as well as enabling their airline customers to reduce emissions (and costs).
Over-the-air (OTA) software updating is another powerful sustainability lever for eco-digital businesses.
Product software can be regularly updated to improve efficiency and meet new regulatory requirements. This also extends the life of a product, reducing resource waste.
This blending of efficiency and sustainability goals enabled by digital tech is typical of eco-digital era™ practices.
Immense revenue potential and efficiency gains. See our full report.
Data is the lifeblood of digital technology, and cloud is now where data lives.
How and where companies deploy cloud technologies can be key to how well they perform – against both financial and sustainability targets.
In addition to the benefits of using energy-efficient IT infrastructure for data and app hosting, hyperscalers such as Google Cloud, Amazon, and Microsoft Azure have developed suites of tools that can help companies derive more value from their data and accelerate their innovation efforts, more efficiently and more sustainably.
With the right data and cloud strategy, it’s easier to share your data securely across your organization and identify, realize, and measure sustainability benefits.
Tools and solutions built by hyperscalers can accelerate the development, testing, and deployment of new products and services.
Migrating business applications to the cloud can reduce an organization’s IT carbon footprint and enable it to make better use of its physical data center capacity.
Energy-efficient cloud solutions allow global companies to store and process the massive amounts of data they collect without needing to scale up their own physical IT infrastructure.
Achieving cloud security in turbulent times. See the full report.
Being more sustainable often comes down to being more efficient (in energy use, resource use, etc.).
Being more efficient often depends on being able to analyze and forecast using data from complex, interrelated systems.
AI is particularly good at this, delivering process efficiency and sustainability benefits simultaneously.
This kind of dual, mutually reinforcing benefit is typical of eco-digital era™ practices.
Use cases for AI and Generative AI (GenAI) are being explored at all stages of the value chain, from product design, to simulating product or service usage, to identifying threats and forecasting demand and supply of raw materials.
In addition to enhancing existing workflows or uncovering new business opportunities, AI is also being used to improve efficiency, reduce reliance on physical resources, and reveal new ways to make businesses more sustainable.
Generative AI offers many opportunities for efficiency. See the full report.
When we asked 800 organizations why they were investing in digital twins, “improving sustainability” was nowhere near the top answer.
But when we asked about the benefits digital twins delivered, sustainability came out on top (16% improvement).
Digital twins improve efficiency, and improved efficiency typically means improved sustainability even if that wasn't the aim.
Digital twins will be a defining feature of the eco-digital era™ for companies who need to shorten their innovation cycles and bring new products to market faster and more cost efficiently than ever before.
By designing, testing, and refining parts virtually before committing physical resources, organizations can dramatically accelerate their product development cycles, consuming far fewer physical resources in the process.
Parts and systems can be designed and tested quickly in a virtual environment until decision makers are sufficiently confident to commit physical resources.
Operation twins – a larger-scale version of digital twins – can be used to replicate and simulate entire production lines, enabling constant optimization for better cost efficiency and more-sustainable operations.
Collaboration becomes easier and more efficient. Imagine a supplier in Asia being able to develop and test a virtual part together with its client in Europe, all happening virtually, without the need for lots of travel or physical prototyping.
Digital twins will play a vital role in the eco-digital economy. See our full report.
In the course of our research with Harvard Business School, we spoke to many leading figures involved in bringing the eco-digital era™ to life.
You can catch up with their thoughts on this hot topic in Conversations for Tomorrow #8, featuring:
Senior executives from Google Cloud, Audi, Schneider Electric, Mercedes-Benz Group AG, Logitech, Bayer, and La Banque Postale.
The former UK treasury minister accredited with coining the acronym BRIC.
The neuroscientist credited with being the first woman to serve as President of MIT.
Plus a host of other thinkers and practitioners.
Digitization and sustainability go hand in hand.
an era of ‘profit with better purpose,’ where we cannot afford to avoid sustainability. More and more, we will see politicians attacking companies that just [aim to] make [a] profit
Get Conversations for Tomorrow #8: The dual transition
