Gartner: Use digital to achieve sustainability goals
Sustainability guides decision-making by incorporating economic, social and environmental impacts. Gartner looks at digital technology’s role
Sustainability programmes often begin without digital technology. The baseline from a digital technology perspective includes spreadsheets and software that can help with tracking, compliance, risk avoidance and isolated projects for cost savings.
IT professionals have the opportunity to advance sustainability beyond compliance, help their enterprise reach sustainability goals and support new growth opportunities. To capture these new opportunities, IT leaders should establish sustainability technology governance, share relevant data and apply digital technology to important issues.
Technology governance for sustainability programmes
Passionate sustainability projects happen all over the place without governance. Projects are often won by those who shout loudest, rather than what is material and important to the enterprise. So executive leaders need a programme in place to select, prioritise and govern the most important information and technology-enabled sustainability activities.
While discussing with Gartner how to leverage digital business as a foundation for sustainability, one business leader said: “I probably get 100 sustainability ideas a day, and most of them are terrible.”
Leading-edge companies are using a sustainability technology council to concentrate efforts on projects that will have maximum return and impact on performance.
IT professionals already have tech governance in place. This offers a blueprint to create governance focused specifically on tech-enabled sustainability projects. For instance, selecting an artificial intelligence (AI) project to predict and respond to severe weather is within scope, whereas planting mangroves to prevent flooding is neither information- nor technology-related, and is therefore not within the remit of a sustainability technology council.
Such a council is a subset of corporate governance, and is ultimately the responsibility of the CEO and the board. Gartner recommends appointing an IT leader and head of sustainability to co-lead the council. Other recommendations include soliciting CEOs to set the tone, lead by example and operationalise behaviour (for example, by tying progress to remuneration) and including supply chain, human resources (HR), legal, risk and compliance, sales, marketing, research and development (R&D), finance, IT, and business unit leaders. Gartner also recommends using ethics policies to guide what the council focuses on.
Ensure a strong link with risk management and investor relations
IT professionals should encourage good ideas to come from anywhere within and beyond the enterprise, including ecosystem partners. Centralised governance can easily become heavy-handed and create bureaucratic pollution. It must be balanced with local empowerment, delegation and agile exploration.
For those seeking an alternative to centralisation, Gartner recommends putting a governance model in place that dynamically tracks against key performance indicators (KPIs) and creating an executive traffic light system based on sustainability goals embedded in the assessments.
Business intelligence for sustainability
IT professionals leading digital businesses will already have an intelligence platform that includes data, analytics, AI, machine learning (ML) and other technologies. Use this as a foundation to empower sustainability leaders.
Sustainability leaders need a range of data to track, plan, reduce risk, and deliver efficiency and growth. The problem is that more than 70% of respondents to a survey conducted by the Harvard Business Review acknowledged they were not very effective at data sharing.
Sustainability teams often waste inordinate amounts of time calculating and integrating data. Data isn’t just siloed between business units; it’s fragmented within business units. Growth in demand leads to higher energy costs, higher emissions, and so on. Without combined data, you cannot even make those calculations. Shared finance, supply chain and R&D data are particularly critical, given the central role they play in sustainability.
Gartner urges IT professionals to prepare the cultural environment for data sharing by defining it as a “business necessity”. This is a legal concept that justifies decision-making that may otherwise lead to potential legal liability. IT professionals should then work with allies, such as chief financial officers (CFOs), who will usually welcome alignment with cost savings and revenue creation. Here, IT professionals should aim to stress the importance of data collaboration over data hoarding.
To improve data sharing, Gartner recommends that every business leader has a sustainability goal that can only be reached by collaborating and sharing. IT professionals should also identify master data management maturity and gaps that need to be closed, then merge enterprise data with relevant ecosystem data using AI or ML for optimisation or improvement.
Gartner urges IT professionals to select a meeting schedule to evaluate the progress of leveraging digital for sustainability. Meeting quarterly or every six weeks is common. It recommends that business leaders:
- Evaluate the impact that each proposed project could have on sustainability goals.
- Include the ability of each project to meet sustainability goals.
- Define the payback period required – three years or faster is common.
- Limit the number of concurrent tech-enabled sustainability projects to a manageable size – around 12 is common for large companies.
IT professionals should assess which sustainability data is relevant to share. For example, operational data in manufacturing or supply chain greenhouse gas data is often useful to centralise and apply ML and AI. This type of data is material and significant in terms of representing the organisation’s impact.
It can also be useful to have the ability to break data down to assess where to invest, such as a plant manager being able to identify poor performing kit and the need for replacement. Another example is energy use, where data can be used to track procured and consumed energy, which directly aligns with cost. It can also include shadow energy, such as end-user device consumption and recycling. Annual reporting processes and sustainability reports benefit from centralisation.
It is equally important to decide which data is not relevant to share. For example, autonomous vehicles are still under development. Even if an enterprise fully adopts autonomous vehicles, it probably doesn’t need five-second interval data centralised for sustainability purposes. Instead, it could centralise the beginning and end of a journey, and the distance travelled. Some data will be competitively sensitive and may create a moral hazard if shared inappropriately.
Data can be used to “gamify” internal behaviours, such as travel, meeting times or consumption of red meat alternatives. Balance the impact of storing, transporting and managing sustainability data versus its usefulness to make improvements.
For instance, the Virginia Department of Transportation (VDOT) is focusing on sustainability issues such as connected vehicles, charging stations, smart infrastructure and dynamic electric vehicle charging. The agency provides training tools for employees to develop the skills needed to deliver data-driven decisions and solutions.
Leverage digital technology to address sustainability issues like climate change
While we have looked at how one area of digital technology, namely analytics, can be applied to sustainability, there are numerous ways digital technology can be deployed to accelerate progress towards sustainability goals and drive financial outcomes.
For example, the internet of things (IoT), data and analytics can optimise wind turbines, which reduces costs and greenhouse gas emissions. AI and IoT can help organisations reduce food loss costs and waste, and a circular economy marketplace can create new revenue and reduce waste.
Kristin Moyer is a vice-president and distinguished analyst at Gartner. This topic will be further discussed at the Gartner Symposium in Barcelona, on 6-9 November 2023.
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