Published: 24 January 2024
Contributors: Tom Krantz, Alexandra Jonker
Sustainable technology describes technology created or applied in consideration of environmental, social and economic factors.
The goal of sustainable technology is twofold: to produce new technologies using sustainable processes and materials, and to use technologies to address environmental, social and governance (ESG) issues. Sustainable technologies may range from physical technologies like solar panels, to ESG reporting and ESG performance management software.
When developing technology sustainably, organizations may consider factors such as resources used to develop the technology, the provider of those materials and potential negative output throughout the technology’s life cycle, such as emissions or e-waste. In this sense, sustainable technology describes a mindset or philosophy when it comes to creating and implementing technologies.
When deploying a sustainable product or technology, companies often set out to make progress toward ESG-related objectives. For example, organizations may create technologies that reduce fossil-fuel consumption like electric vehicles or remove waste through decarbonization initiatives.
Companies can also use sustainable technologies to reduce their carbon footprint. For instance, they can leverage artificial intelligence (AI) to run diagnostics and determine what areas of their business produce the most waste. With those insights, they can then use carbon accounting to identify opportunities to reduce their greenhouse gas emissions or advocate for adopting renewable energy sources.
Take a look at the trends shaping the world of sustainable business and the insights that can help drive transformation.
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Sustainability can be defined as the long-term ambition for people to co-exist on Earth without depleting its natural resources. Ultimately, the goal is to create a better future for both people and the planet. Experts generally agree that there are three dimensions or pillars of sustainability: environmental, social and economic.
Many business leaders are aware of these dimensions given that they coincide with the triple bottom line, a sustainability framework that revolves around the three P’s: people, planet and profit. By maximizing all three bottom lines, organizations are more likely to achieve sustainability in business.
Organizations are realizing they don’t need to sacrifice their bottom line to become a sustainable business and reduce their environmental impact. In fact, some companies are seeing greater margins by developing and deploying sustainable technologies. As a result, they’re finding new ways to assess risks and improve resiliency while also considering external regulations and development goals in their decision-making.
Technology has become heavily ingrained in our society and lives, impacting the way we interact with the world around us. At the same time, people and businesses are grappling with a host of serious, unprecedented challenges: the lingering effects of the COVID-19 pandemic; the growing impact of climate change and the depletion of natural resources; and ever-increasing demands on the world’s energy resources and food supply. These challenges have spurred growing disruptions, both in the everyday lives of people around the world and in the operations and supply chains critical to businesses large and small.
Sustainable technology offers an opportunity to reframe our relationship with existing innovations in a way that helps address environmental and societal challenges. For instance, companies can leverage technology solutions like the Internet of Things (IoT) to optimize routes and make fleet management more sustainable. Similarly, an organization’s procurement department can operate more sustainably by tapping into a growing ecosystem of digital technologies like AI and the cloud to automate and optimize purchase order management.
Another type of sustainable technology is software. There are several ways software can be sustainable, For instance, it’s estimated that over 80% of all product-related environmental impacts are determined during the design phase.1 Designers can embed sustainability into their software development strategies by making sure that the user, community and social value outweigh any negative environmental or social impact of the software.
Software can also be used to improve decision-making by leveraging data insights. Tools such as automatic data capture, data harmonization and analytics dashboards can help companies identify opportunities to operate more sustainably and reduce their carbon footprints.
Industry leaders are encouraged to adopt sustainable tech in their business models as it’s not only attractive to stakeholders, but also benefits the triple bottom line. Here are a few ways sustainable technology is leveraged to create a more sustainable future:
Adopting sustainable technologies enables companies to move away from traditional linear economic models that prioritize the use of raw materials and instead empower the circular economy. The circular economy emphasizes leasing, recycling, refurbishing, repairing, reusing and sharing existing material and products as long as possible. Through this lens, companies can develop and deploy technology with the goal of reducing their carbon footprint and improving the health of both people and the planet.
Organizations can also use sustainable technologies to track ESG metrics around energy consumption, emissions production, water usage and more. This allows businesses to see how their ESG initiatives compare to larger sustainability trends through ESG scores and discover potential areas for improvement. This can inform decision-making that leads to better sustainability performance and alignment with regulatory requirements.
Sustainability has become intrinsically linked with a company’s reputation, and by extension, its bottom line. Employees seeking purpose-driven employment are more likely to work for sustainable and socially responsible companies that have a proven track record of prioritizing ESG initiatives.2 By using sustainable technologies, companies can attract and retain this growing pool of environmentally and socially conscious talent.
Companies that are sustainably driven are also more attractive to investors. According to a recent report, nearly 60% of CEOs say they see significant demand from their investors for greater transparency on sustainability.3
Sustainable technologies can play a pivotal role in helping companies measure, refine and report their progress towards achieving sustainability goals to stakeholders. For instance, IoT devices can be used on a factory floor to gather data on energy usage, creating a benchmark that can inform the organization’s energy strategy. Progress towards achieving greater energy efficiency can then be shared with stakeholders through sustainability and ESG reports that demonstrate the business's commitment to sustainability.
Today’s regulatory landscape is constantly evolving. Looking ahead, governments are likely to continue expanding on legislation like the Corporate Sustainability Reporting Directive (CSRD), a European Union legislation that requires companies to report on the environmental and sustainable impact of their business activities.
Even if sustainable technology isn’t mandated, companies are still encouraged to consider the United Nation’s sustainable development goals (SDGs) in their operations. Specifically, SDG 17 calls for, "[t]he research, development, deployment, and widespread diffusion of environmentally sound technologies in the context of a Green Economy..."4
Organizations can stay one step ahead of today’s regulatory environment by implementing sustainable technology solutions that continually capture, measure, benchmark and report on ESG performance.
Sustainable technologies have the potential to transform companies’ supply chains by providing end-to-end transparency. For instance, organizations can use AI to track carbon emissions upstream to identify both ESG opportunities and risks. At the same time, they can leverage machine learning to forecast demand downstream and deploy their fleet in a more optimized, energy efficient manner. Using the insights gleaned from sustainable technologies, companies can incorporate circular design concepts like recycling and refurbishment into their supply chain to improve and cover the entire life cycle of equipment and goods.
Organizations can also use sustainable technology to survey their ecosystem of partners and suppliers. This can be helpful when compiling metrics for ESG reporting. Companies that use the Global Reporting Initiative (GRI) or Task Force on Climate-related Financial Disclosure (TCFD) reporting frameworks are expected to report on Scope 3 emissions, a category of greenhouse gas emissions that come from outside a businesses’ immediate operations (e.g., supply chain, product usage, transportation, disposal). By having the necessary data on hand, companies can stay ahead of their reporting and provide a more accurate depiction of their supply chains.
Sustainable technologies can empower organizations to reimagine their business models to better balance financial performance with sustainability goals. For instance, financial services companies can leverage the cloud to reduce on-premises energy consumption in their data centers. Consumer goods companies can introduce robotic process automation into their manufacturing processes to improve accuracy and reduce waste. Healthcare organizations can replace physical health records with electronic ones, reducing waste while boosting security by storing the encrypted patient data in a blockchain.
These examples of sustainable innovation inspire industry leaders to increase investment in ESG initiatives. Major corporations are partnering with startups and funding ventures to build sustainable technologies that that were once unimaginable. As a result, the ecosystem of companies that are rooted in environmental and social stewardship only grows larger.
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Sustainability in business refers to a company's strategy and actions to eliminate the adverse environmental and social impacts caused by business operations.
Technology impacts every aspect of our work and lives. It is imperative that technology is built responsibly to reduce differential effects on various populations.
The Corporate Sustainability Reporting Directive (CSRD) requires businesses to report on the environmental and social impact of their business activities, and on the business impact of their ESG efforts and initiatives.
As consumer and regulatory expectations increase, participation in the circular economy business model is a challenge facing energy and utilities businesses today.
The Task Force on Climate-related Financial Disclosures (TCFD) seeks to keep investors better-informed about companies' climate-related risks.
Footnotes
1 Sustainable Product Policy, European Commission
2 Sustainability at a turning point, IBM Institute for Business Value, May 2021
3 Sustainability as transformation catalyst, IBM Institute for Business Value, Balta, Chawla, Dencik, Lin, 10 January 2022
4 Technology (link resides outside ibm.com), United Nations Department of Economic and Social Affairs