We looked through more than 30 recent reports and sifted out the status, practical guidance and the roadblocks for sustainable digital transformation. Conclusion: Inaction is risky, both for your company – and the planet!

By Alexa Zerkow and Anders Magelund

Digital solutions, or so-called “4th Industrial Revolution” (4IR) technologies will and already are playing a crucial role on the road to achieving the Sustainable Development Goals (SDGs). As we see it, the 4IR is in a nutshell about 1) connecting and fusing together the digital and the biological/physical worlds and 2) giving more people access to more products and services, – better, faster and at a lower cost. At their best, 4IR technologies are enablers for breakthrough solutions, and when applied strategically they can unlock once unimaginable potential to accelerate sustainable development. A seminal initiative by Accenture and GeSI initiated in 2015 set the agenda: the 17 SDGs can be more easily achieved through 4IR tech – not least to cash in on the untapped business potential of the global goals.

Since then, 4IR tech reports assessing sustainability business potential have piled up. We took a deep dive into the findings and read through more than 30 recent reports and approximately 40 recent articles and sifted out the recommendations, practical guidelines, and prospects for businesses, – notably how to understand and exploit the digital solutions for triple bottom line purposes (read more about the concrete 4IR technologies and their sustainability potential in the end of the article). 

4IR tech is plenty with exciting opportunities, but there are still roadblocks to conquer. While it is clear that many companies find it challenging to plunge into the 4IR, what is clearer is that inaction is risky, both for your company – and the survival of the planet!

A US$ multi-trillion market

Strategically exploiting 4IR tech “for good” can unlock exponential economic gains. Recently the “Better Business, Better World” report identified a market valued at minimum US$ 12 trillion a year for businesses pursuing opportunities embedded within the 17 SDGs. The report identified 60 market hotspots and 4IR technologies are crucial enablers for almost all of them. The 2018 Global Opportunity Report exhibits how a wealth of new business opportunities that arise when the risks of traditional sectors overlap with 4IR tech.

The AccentureStrategy and GeSI (Global e-Sustainability Initiative) calculates a potential US$ 9 trillion market for applying digital solutions.

The opportunities will most likely spur more R&D and recently, Microsoft allocated US$ 50 million to help environmental groups and researchers use artificial intelligence, machine learning and a variety of the company’s cloud-based tools to further their eco-causes. Besides generating publicity around the issues faced, Microsoft hopes it will spur breakthroughs in conservation science, also benefiting businesses.

Regional and country opportunities

Germany: Set up its “Industrie 4.0” initiative to “establish Germany as a lead market and provider of advanced manufacturing solutions”.

UK: Recently launched a national plan to improve access to data, AI skills and AI research.

Kenya: Is well-positioned to adopt innovative agricultural technologies and systems such as vertical farming and precision agriculture to bolster yields and reduce risks.

China: Their monumental “A Next Generation Artificial Intelligence Development Plan” sets out to build China’s first-mover advantage in the development of AI, to accelerate the construction of an innovative nation and global power in science and technology. For its efforts, China is expected to reap up to US$ 7 trillion in GDP gains by 2030 from AI investments.

Asia Pacific: The region as a whole is particularly receptive to innovations in production in the automotive and electronic industries. International partnerships, a stronger and more secure ICT infrastructure and upskilling the workforce to embrace new tech innovations is key to capitalizing on the potential of more innovative and sustainable manufacturing methods.  

The Americas (especially Argentina and Mexico): Of particular high demand in the Americas are meat products. Argentina takes the cake for the highest per-capita consumption of meat but the US is also notorious for its affinity for meat. These ingredients are a recipe for upstream innovations in the food and beverage industry, such as lab-grown meat and CRISPR gene editing tools which if mainstreamed, could drastically reduce resource usage and GHG emissions.

For more in depth reads, it is recommended to consult World Economic Forum’s report on the 4IR tech driving sustainable production systems.

IT engineer inspecting data center servers, China.

The roadblocks

Although the opportunities are universally recognized, they are however (very) far from applied universally.

In reviewing the reports, we dug out the most salient and recurrent obstacles to embracing 4IR technology potential:

  • Need for breaking down organizational and sectoral (even societal) silos
  • Regulatory challenges and delays, and lack of adequate regulation
  • Privacy and confidentiality concerns
  • Budget and lack of financial resources
  • General uncertainty and distrust among internal organization culture and consumers
  • Concern about workers’ and consumers’ response
  • Lack of understanding about 4IR tech’s capabilities and limitations

There is among the reports, however, a general consensus that most of these barriers can be overcome – and will be over time.

The guidance, tools, and recommendations

A lot of guidance can be discerned from the bulk of reports, and we have highlighted the tools and recommendations that we found particularly useful to strategically implement 4IR tech for triple bottom line purposes.

However, because insights, tools, and recommendations might differ according to sector we present both general guidelines and sector-specific reports.

A particularly useful resource is AccentureStrategy and EconSense’s co-authored, practical “how-to” handbook for managers on how to improve their companies’ impact on SDGs while harnessing the power of digitalization.

The handbook outlines 7 practices for managers:

  1. Co-innovate with suppliers
  2. Design for SDG impact and consider digitally enabled business models
  3. Enable users to harness sustainability benefits during products/service use
  4. Pursue SDG-oriented market strategy
  5. Integrate sustainability in products
  6. Re- and upskill employees to integrate SDGs in decision-making
  7. Advocate for SDG-supportive policies

A recent Deloitte report from November 2017 The Fourth Industrial Revolution is Now: Are You Ready? identified four key considerations for businesses when working with 4IR tech:

  1. The evolving needs and expectations of the customer
    Customers have more knowledge, more data and more choice – companies must redesign operating models and platforms to meet changing customer needs. Businesses must optimize, digitize and modernize core processes to achieve operational excellence, whilst always putting the customer first
  2. The unstoppable force of automation, which is reshaping the world of human work
    It is no longer just repetitive processes that can be automated, cognitive technologies are now automating some elements of human decision making. Businesses must identify opportunities for automation and leverage their augmented workforce.
  3. Alliances and partnerships
    Fourth Revolution technologies enable more collaboration, and the opportunity for businesses to optimize their global footprint and networks. Businesses must identify opportunities for collaboration, both internally within existing teams and externally and build alliances and partnerships between providers and across borders to deliver value.
  4. The need to build a new, leaner cost structure that will keep businesses competitive in the 4IR
    Businesses must redefine their cost structure to enable them to reinvest for growth, reinvest for customer experience, reinvest for transformation and reinvest for the future.

The Reshaping Business With Artificial Intelligence report offers some specific AI management guidelines:

  1. Develop an intuitive understanding of AI
    It is not a good idea to visit Silicon Valley and get marveled by robots and drones. It is much better to attend online courses and learn the basics.
  2. Organize for AI
    Hybrid organizational models of centralized and decentralized units are preferred to get starting and unlock the AI potential. The challenge is to make a diverse group of technical people, technical people with business background, and consultants or project managers to work together.
  3. Rethink the competitive landscape
    It will require new partners and completely new forms of collaboration to gain the privileged access to data.

The report highlighted the need to ensure consumer trust, perform an AI “health check”, brace for uncertainty, adopt scenario-based planning, and add a workforce focus.

A recurrent reminder from almost all reports: Before the tech orgie sets in, we must always place humans as the end of all 4IR tech transition, not as the means. We must build a Silicon “Value” parallel to the technological advances we are witnessing at the moment.

These are the reports we read through – now you can skip them! If you want to dive deeper into it, see our recommendations:

The Sustainian’s top recommendations:

How Companies can Improve their Impact on the Sustainable Development Goals (SDGs) and Harness the Power of Digitalization. A Practical Handbook for Managers. Accenture Strategy (2017)
Innovation for the Earth Harnessing technological breakthroughs for people and the planet, PWC (2017)
Reshaping Business with Artificial Intelligence, MIT Sloan Management Review and The Boston Consulting Group (2017)
Harnessing the Fourth Industrial Revolution for the Earth, World Economic Forum (2017)
Harnessing Artificial Intelligence for the Earth, World Economic Forum (2018)
Internet of Things: Guidelines for Sustainability, World Economic Forum (2018)
Smart Cities: Digital Solutions For A More Livable Future, McKinsey & Company (2018)
Digital Transformation Initiative: Unlocking $100 Trillion for Business and Society from Digital Transformation, World Economic Forum, Accenture (2018)
Global e-Sustainability Initiative (GeSI)

General resources:
2018 AI predictions 8 insights to shape business strategy, PWC
The Fourth Revolution is now: are you ready? Future of Operations, Deloitte (2018)
Why Artificial Intelligence is the Future of Growth, Accenture 2016
Artificial Intelligence in the Real World: the business case takes shape, The Economist Intelligence Unit (2016)
Artificial Intelligence For Business, The Raconteur (2018)
Technology For People: The Era of the Intelligent Enterprise, Accenture (2017)
AI for Good Global Summit Report, XPRIZE (2017)
Human + Machine: Reimagining Work in the Age of AI, Paul R. Daugherty, H. James Wilson (2018)
Fourth Industrial Revolution for the Earth, PwC (2017)
Digital Trust in the IoT Era, Accenture (2015)
Breakthrough Business Models: Exponentially More Social, Lean, Integrated and Circular, Volans, The Business and Sustainable Development Commission, 2016
Singularity University
DeepMind research platform
The Internet of things: Mapping the Value Behind the Hype, McKinsey & Company (2015)
SDG Index and Dashboards Report 2018: Global Responsibilities Implementing the Goals, Bertelsmann Stiftung and Sustainable Development Solutions Network  

Sector-specific resources:

Supply chain management

AI and Robotics Automation in Consumer-Driven Supply Chains, The Consumer Goods Forum and PA Consulting (2017)
Driving the Sustainability of Production Systems with Fourth Industrial Revolution Innovation, World Economic Forum (2018)

Cities

Harnessing the Fourth Industrial Revolution for Sustainable Emerging Cities, World Economic Forum (2017)
Smart Cities: Digital Solutions For A More Livable Future, McKinsey & Company (2018)

Energy

More Power to the Energy and the Utilities Business, From AI, Infosys (2017)

Food & Agriculture

Future of Food & Beverage, The Raconteur (2017)
Harnessing the Fourth Industrial Revolution for Life on Land, World Economic Forum (2017)

Water

Harnessing the Fourth Industrial Revolution for Oceans, World Economic Forum (2017)

Finance

Growth in the Machine: How financial services can move intelligent automation from a cost play to a growth strategy, Capgemini Digital Transformation Institute (2017)

Social aid

Development Co-operation Report 2017: Data for Development, OECD
Hack the Future of Development Aid, Sustainia & MFA Denmark & Coinify (2017)

Here are the top 4IR technologies for sustainability

AI for Sustainability:
Implementing AI in businesses operations could add up to US$ 15.7 trillion by 2030. A recent MIT/BCG report. found that almost 85% of more than 3,000 executives believe AI will allow their company to obtain or sustain a competitive advantage (2017). But despite the high expectations only 39% of companies have an AI strategy in place, and furthermore, the implementation of AI tech is considered to be only at a “very early stage.”
The biggest business opportunities are considered to be: increased operational efficiency, enhancement in employee productivity, reduced operational costs due to process improvement, and greater legal/regulatory compliance at a lower cost. It will advance most sectors but in particular: healthcare, automotive, financial services, and transportation and logistics industries.
Top expected usage of AI by UK businesses
62% Automate judgment-based processes
54% Predictive and prescriptive analytics
54% Automate manual processes
46% Interact with clients or customers
38% Analysis of large and unstructured datasets
AI holds great sustainability potential for energy management, clean energy, waste management, pollution control and agriculture, as well as resource conservation, and wildlife protection.
(Big) Data for sustainability
From a sustainable transition perspective, this year’s SDG Index as well as an OECD Report from 2017 “Data for Development” both acknowledge that the need for comprehensive and reliable data has never been greater. We must measure what we must change. Data holds so much potential for sustainability purposes because most sustainability-enabling 4IR tech rely on data capturing and processing.
One salient challenge is the expected dramatic increase in data centers’ energy consumption. Some studies project that by 2025 data centers could count for 20% of all electricity use. Ironically, Big Data and AI might exactly address these challenges by improving energy efficiency and curb data center energy use. For instance, Google’s DeepMind has helped Google itself cut its data center energy usage, by 40%.
Internet of Things for sustainability
IoT is the ability to monitor, measure and control “things” remotely with the help of sensors, computing systems and big data analytics. It connects the physical and digital worlds and has massive potential across sectors. By 2025, IoT could generate between US$ 3.9 and US$ 11.1 trillion a year by 2025, according to an analysis by Mckinsey.
New business opportunities are waiting to be reaped in the pursuit of still untapped SDGs, such as SDG 2 Zero Hunger and SDG 4 Quality Education. IoT is used widely in smart agricultural systems like vertical farming, water management, energy efficiency in buildings, environmental protection and pollution control and its potential boundless.
Blockchain and cryptocurrencies for sustainability:
Blockchain can enable markets to expand renewables’ penetration, as well as monitor supply chains and track product origin. A recent report assessed the vast opportunities for using Blockchain for development aid. Cryptocurrencies like Blockchain can disrupt financial markets by decentralizing payment transactions, but they also represent a looming threat: Bitcoin is believed to be on track to consume the entire global electricity supply by the year 2020.
Robotics and autonomous workers for sustainability
Some predictions hold that the fantasy of liberating humans from physical work may soon come true while others fear that we may be on the brink of unprecedented job losses.
A recent Deloitte UK study concluded that in the last fifteen years, while over 800,000 jobs have been lost to technology, 3.5 million have been created. Each one of these new jobs pays on average £10,000 more per annum than the one lost, and the study estimated that this technology-driven change has added £140 billion to the UK’s economy in new wages. Meanwhile robots work 24/7, which means that humans do not have to.
3D-printing for sustainability
3D printing is the layering of material by computer-aided design. Its uses and potential are enormous, ranging from bioengineering prosthetics to closing the looping and functioning in the circular economy to transform waste into new items. As 3D printing expands, transportation costs and CO2 emissions would be eliminated and financial costs cut. Additionally it can help drive resource use efficiency and cost effectiveness due to its exactitude and will lead to more sustainable models of consumption, allowing for the printing of replacement parts and shorter supply chains. Some promising 3D applications include more efficient and less costly printing of solar cells and sprays, of lighter and more efficient vehicles, and diverse optimized and localized product designs that cut down on waste and transportation.
Bio-economy for Sustainability
A new bio-economy is on the rise and encompasses a host of new market opportunities in food and agriculture, health, medicine, ecosystem preservation and beyond – think next-generation genomics, bioinformatics, personalized medicine, synthetic biology and more. The global genome editing market is projected to jump from US$ 3.19 billion in 2017 to US$ 6.28 billion by 2022 with a CAGR of 14.5%. And the synthetic biology market was valued at US$ 3.9 billion in 2016 and is forecasted to balloon to US$ 38.7 billion by 2020. Some of the numerous modern day soon-to-be mainstream applications include stem cell cultivation which relies on biotechnology to produce synthetic proteins such as meat, gene editing in plants to make them more climate change-resistant and the production of more sustainable bioplastics.