How digital technology can help adapt your business for climate change
Digital technology can be a game-changer for businesses seeking to improve their environmental performance by reducing waste, energy and water usage while increasing operational efficiency.
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According to Rene Vargas, Senior Business Advisor and Business Model Innovation Lead at BDC, “digital transformation and climate change are two of the most influential factors shaping the business landscape today.”
Vargas highlights the pressing need to reduce our carbon footprint, citing the Canadian government's target to cut greenhouse gas emissions by 45-50% from 2005 levels by 2030. “Small and mid-sized businesses are significant contributors to emissions, generating nearly 30% of Canada's total emissions,” he says.
Vargas notes that “failing to take action incurs a cost that no one should be willing to pay. Customers, suppliers, investors and employees are increasingly prioritizing environmentally-conscious companies, providing a competitive advantage for companies engaging in a low-carbon transition. Taking the first steps towards sustainability isn't difficult or costly, and businesses have the opportunity to become leaders in this space rather than playing catch-up and missing out on opportunities.”
There is growing scrutiny from customers, suppliers, investors, and employees regarding the environmental impact of companies.
Rene Vargas
Senior Business Advisor, BDC Advisory Services
How can I adapt my digital strategy to be climate-ready?
As climate change becomes an increasingly pressing concern, stakeholders are prioritizing sustainability and looking to do business with companies that demonstrate a commitment to reducing their environmental footprint.
This underscores the importance of incorporating sustainable practices and technologies into business operations and underscores the need for companies to prioritize sustainability to remain competitive in today's market.
Vargas recommends the following three steps to adjust your digital strategy.
1. Review your goals and existing digital strategy
To ensure your company is effectively addressing climate change concerns, it's important to review your goals and existing digital strategy. Begin by identifying the key climate-related issues and trends that are important to your customers and partners, and work with key employees to prioritize your company's climate change goals. These may include:
- measuring and reducing your carbon footprint
- lowering resource use and waste volumes (eg: electricity and water)
- tracking data for sustainability reporting, certifications, regulatory requirements, investors, or employees
- reducing operational costs and increasing efficiencies
- investing in the life cycle assessment of your product and services as well as in eco-design
- reducing climate change risks
Next, it's important to review your digital strategy to ensure it aligns with your business goals. Digital technology can offer numerous benefits, including:
- improved financial performance
- increased productivity and innovation
- smarter services and products
- a data-driven enterprise
Your digital strategy should include the adoption of digital tools such as:
- a data strategy that includes data analytics and AI use cases
- online collaboration applications and e-commerce sites
- business applications like ERP and CRM systems
- Internet of Things and industry 4.0 technologies
By aligning technology investments with business priorities, you can maximize the benefits of digital technology and position your company for growth in a low-carbon economy.
As you review your digital strategy and business model, consider how digital technologies can help you create a cleaner, more sustainable version of your business. By embracing technology and incorporating sustainable practices into your operations, you can de-risk the future your company, reduce your environmental impact and attract customers, partners, and investors who prioritize sustainability.
Digital technologies help you come up with a cleaner version of your business.
Rene Vargas
Senior Business Advisor, BDC Advisory Services
2. Explore digital technology options for effective climate data management
To achieve your climate change goals, it is important to explore digital technology options with your team or an external consultant. Vargas suggests considering the environmental impact of your business processes and incorporate steps to minimize it as part of your digital strategy.
Collecting environmental data
Measuring your existing efforts and tracking your progress towards improvement requires collecting data. Vargas emphasizes this, saying, "You can't manage something that you don't measure." Digital technology not only helps automate data collection but also allows immediate action to minimize impact on the environment.
Two sets of data are especially important.
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Your carbon footprint: Collect data on your company's direct greenhouse gas emissions from operations. This involves mapping your company's key resources and activities (e.g., facilities, machines, raw materials, fleet, waste disposal, heating, cooling) and determining the associated emissions.
Some companies also calculate indirect emissions associated with product use, leased assets and investments.
Many applications are available for measuring and reporting carbon footprint data, some ERP and accounting systems offer modules that automate tracking of carbon footprint data and facilitate reporting to communicate with stakeholders. Specific systems can also help manage data on environmental, social, governance, health, and safety performance.
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Waste: Identify processes that are problematic, inefficient, error-prone, not integrated, unmeasured and risky. Determine the specific areas that generate waste of time and resources to identify digital technologies that increase efficiency.
You can expand this assessment to audit energy and water use and waste volumes (i.e., garbage, recycling, and compost).
For example, implement a system that detects abnormal trends for energy, water and resource use. Such a system can either trigger self-correcting optimization processes or send automated alerts to designated employees to investigate and resolve the issue.
Digital strategy implementation
As part of your digital strategy, implement technologies to:
- increase energy efficiency in buildings and manufacturing processes
- track waste (e.g., sensors in waste bins)
- handle cost (e.g., reports on weights and invoices)
Vargas emphasizes the importance of incorporating environmental impact reduction into your digital strategy to minimize the impact of your business processes. By automating data collection, you will have access to more accurate and reliable data than traditional spreadsheets, which will help you take immediate action towards minimizing the impact of your business on the environment.
Other technologies can also help companies reduce their carbon footprint and become more sustainable.
- Online sales, collaborations tools and e-commerce platforms
These reduce time travel, the need for physical stores and enable companies to reach a wider audience while also reducing the carbon footprint associated with traditional retail. - Cloud computing
By utilizing cloud services, companies can reduce their energy consumption and carbon footprint associated with on-premises data centers. - Digital twins
Digital twin technology creates virtual models of physical assets, enabling companies to optimize the efficiency of their manufacturing processes and reduce waste. - Renewable energy technology
Investing in renewable energy technologies such as solar, wind and hydro power can help companies reduce their reliance on fossil fuels and decrease their carbon emissions. - Machine learning and artificial intelligence tools
The technologies can help you design greener products. - Blockchain
Blockchain technology can help increase transparency and accountability in supply chains, enabling companies to trace the origin of their products and materials and ensure they are sourced sustainably.
By incorporating these technologies into your digital strategy, you can not only reduce your environmental impact but also benefit from increased efficiency, cost savings, and improved customer satisfaction.
3. Execute, transform and innovate
After creating a shortlist of priority projects, it's essential to execute them effectively. For this, you need a clear action plan with timelines and an assigned project manager.
Ensure that you have a team with the necessary skills to deliver the projects. You may need to bring in external expertise or upskill your current employees to get the job done. It's also crucial to have a change management plan to ensure that your employees are ready to adopt the changes.
As you implement your initiatives, you may discover new ways of working that can help you transform your business. Don't be afraid to innovate and try out new approaches that align with your sustainability goals. By continually improving and adapting, you can stay ahead of the competition and create new opportunities for growth.
Also, don’t be put off by the daunting idea that you need to transform your business overnight. “You will be surprised how energizing and engaging a climate change roadmap and your projects will be for your employees,” Vargas says. “The process is an excellent occasion to rethink your business model, culture and to innovate.”
Create a digital roadmap
Create a comprehensive digital plan that considers your long-term goals and how technology can help you achieve them. Your plan should include a roadmap for implementing new technologies, as well as a strategy for managing data and cybersecurity risks. It's also important to ensure that your technology solutions are scalable and flexible enough to support future growth and change.
By developing a comprehensive digital plan, you can position your business for long-term success and create a positive impact on the environment.
Choose the right technology for your business
To learn more about how to develop a technology strategy that aligns with your sustainability goals, download our free guide for entrepreneurs: Making Technology Work for Your Business.