18. April 2023 By Yelle Lieder
Sustainable innovations: how can digital sustainability create value in companies?
The EU Green Deal guarantees investments of up to €1,824 billion by 2027, with the aim of making Europe the first climate-neutral continent by 2050. This blog post could already end here. We – state, society and companies – are urgently looking for ways to achieve our sustainability goals. Those who contribute in the form of new, innovative and sustainable solutions also benefit economically. However, subsidies and high amounts of investment are not the only reason for companies to see sustainability as a value driver in the future.
What does innovation have to do with sustainability?
The blog post on ‘understanding sustainability’ shows how we can make sustainability objectifiable in order to make informed decisions. But understanding alone does not create sustainability. The blog post on ‘implementing sustainability’ therefore shows what is needed in order to move from awareness to implementation. These two steps essentially constitute the minimum requirements when looking at upcoming legal regulations and customer needs. Therefore today’s blog post on ‘leveraging sustainability’ is about how sustainability is not just a compliance issue, but also a real value driver and, in the future, will be a prerequisite for economic success.
What are sustainable business models?
Economic viability and sustainability are mutually dependent on each other. Only those who act sustainably in the long term and rise to the challenges associated with society’s changing environmental awareness will be successful in the long run – because one thing is clear: not only is sustainability the biggest megatrend right now, but it is also an about-face. We will not go back to a time when companies shirk their social responsibilities with impunity. But that must not be the goal either, because innovation, prosperity and economic growth are not possible in the long term without respecting planetary boundaries. For this, companies need to internalise external costs in order to integrate sustainability into their business model. This means factoring in the actual costs – for example, in the form of air pollution, climate change or property damage in the event of natural disasters – of business activities in the business case.
At the same time, achieving the sustainability goals is the biggest unsolved problem of our time. Those who manage to use new innovative solutions to create a truly valuable contribution in this regard can simultaneously ensure both a profitable business model and economic sustainability. Companies that manage to create added value for society, for example, by contributing to reducing air pollution, educating people about sustainability, decarbonising the economy or preserving biodiversity, can and must monetise it as well.
Why use technology to achieve sustainability?
The environmental impact of digital technologies, as observed in this blog post, is devastating and urgently needs to be reduced. However, technology ultimately offers the potential to make achieving sustainability goals possible. Technology can accelerate the sustainability transformation and ensure the compatibility of decarbonisation with a high standard of living. Digital technologies help us to do this by enabling us to understand sustainability (sustainability data), implement sustainability using effective and efficient processes and systems and use sustainable innovations as value drivers.
What are sustainable innovations?
We currently have the knowledge and the technology to achieve the global climate goals. We know how to reduce greenhouse gases, act in an environmentally conscious manner and save energy. Taking fewer domestic flights, properly disposing of waste, using renewable energies and repairing defective devices are examples that show that sustainability is feasible. Our problem is not knowledge, but rather implementation. Many people find sustainability inconvenient and fear losing their standard of living. Sustainable innovations should therefore not only accelerate the achievement of sustainability goals, but also ensure a high standard of living. Technology can contribute to this, for example, by reducing information asymmetries, distributing resources more efficiently and through participatory decision-making processes. However, digital technologies particularly add value when they remove points of friction and make it easier to be sustainable.
In this context, the phrase ‘we make it easy’ is common at adesso, which often means a healthy dose of pragmatism along the lines of ‘get it done now’. From a user-centric perspective, however, this phrase should ultimately be understood as a desire for simplicity. We make it easy – that is, easy to understand, implement and use. If we manage to design sustainable innovations so that they truly are ‘easy’, we can contribute to solving the implementation problem.
What are some specific examples of sustainable innovations?
Trade, exchange and sharing platforms – more specifically, eBay Kleinanzeigen, nebenan.de or foodsharing.de – are a few. These kinds of digital marketplaces make it easy for people to act sustainably. Ecosia (a sustainable search engine), Enpal (a photovoltaic systems provider) and GLS Bank (a sustainable German cooperative bank) are some other examples. They all make it easier for people to choose a sustainable alternative, for instance, combining daily activities, such as doing searches online, with sustainability, supporting regionally sustainable energy without having any expertise in the matter or helping allocate capital for sustainability purposes. None of these things have ever been so easy to do, and at the same time, there is a viable business model behind each of them. They allow us to do things we are used to doing – googling, using electricity, banking – more sustainably.
Where do we need more sustainable innovations?
Many important technologies for achieving the sustainability goals – renewable energies, smart grids, sustainable farming – are already available. Nevertheless, at this point, there are still challenges that have yet to be overcome for which technology is a crucial part of the solution. Some of the areas that still pose major challenges to research and science include:
- Circular economy: Trading, exchange and sharing platforms are already a first step towards more circularity. However, more is still needed to make a scalable circular economy that is conducive to health possible. From digital product passports that provide information on recycling properties to robots that extract materials, to tracking waste flows, digital technologies are crucial for making a circular economy possible.
- Energy storage: Efficient energy storage systems are indispensable when it comes to meeting the increasing demand for renewable energies and balancing out fluctuations in the electricity grid. They make it possible to store energy in times of high production and dispense it again when needed. Digital technologies play a pivotal role in optimising and controlling these storage systems. Intelligent algorithms and networked sensors ensure that batteries, thermal storage systems and pumped storage plants are used effectively. In addition, digital platforms promote the exchange of energy between producers, storage facilities and consumers, thereby creating an energy system that is decentralised and flexible. The ongoing development of materials and software solutions helps to further increase storage capacity and efficiency and thus accelerate the integration of renewable energies into the energy system.
- Resilience: Even in optimistic scenarios for achieving the climate goals, the previous failures regarding climate protection will have long-term negative effects. The floods in the Ahr valley in Germany in 2021 and in Pakistan in 2022 are two striking examples of events that will become more frequent in the future – a development that can no longer be easily stopped. Our infrastructure needs to become more adaptive, our forecasting systems need to improve and our responsiveness need to become faster. Through modelling, monitoring and networking, digital innovations in the field of sustainability can make a decisive contribution to overcoming these challenges.
In these areas, it is not only start-ups and digitally native companies that can use new business models to combine what is convenient with what is useful. Established companies in particular need to position themselves here in order to use existing core competences to establish new sources of revenue and contribute to achieving the sustainability goals. The adesso offshoot Urban Energy is a somewhat self-referential example. There, we as adesso combined our core competence of software development with the topics of sustainability issues and CO2 management for properties and thereby used sustainability to create a new business model. For more on the use of digital technologies for more sustainability, have a look at this blog post.
What do companies get out of digital sustainability?
Sustainability is currently still seen as a differentiating factor for companies. Those who position themselves as authentically sustainable are more likely to be recognised by consumers, employees, investors and clients. In the medium term, however, it is mainly the companies that do not truly act sustainably that will attract attention. So the first-mover advantage still exists. Companies that position themselves as sustainable early on and are actually honest about it do not have to worry so much about coming regulation and market pressure and can even help shape the two. Those who wait too long, however, run the risk of ending up chasing after customer needs and regulatory requirements.
You can find more information about sustainability at adesso on our website.
You can find more exciting topics from the adesso world in our blog articles published so far.