Digital Business’ Role in Solving the Climate Crisis

Six major industries can save 7.6 gigatons (GT) of carbon emissions by digitizing business processes, according to a report by SAP.

The software company examined businesses in six industries — utilities (2.2 GT), transportation and logistics (1.5 GT), manufacturing (0.7 GT), retail and consumer products (0.5GT), agriculture and food production (1.6 GT), and construction (1.1 GT) — that are using business software such as enterprise resource planning, data analytics, supply chain, logistics, production planning, resource optimization, and remote access. SAP’s analysis then projected how applying these technologies on a global scale could help reduce carbon emissions.

The 7.6 GT figure represents 63 percent of the 12.1 GT total identified by Accenture and the Global e-Sustainability Initiative (GeSI) in the #SMARTer2030 study that could be cut by 2030 by rolling out information and communications technologies across the global economy.

Dr. Will Ritzrau, head of sustainable strategy and integrated reporting at SAP, says the new research shows businesses can be more environmentally sustainable and at the same time more profitable.

“This can be achieved by applying digital technologies, digital business processes and data about resource use in new ways — to how their supply chains are run, inventories are managed, and logistics are executed,” Ritzrau says. “Technology provides the connectivity, transparency, analytics, and reach required to drive transformational change. Cloud computing, big data or mobile provide the opportunity to fundamentally rethink current business processes and models. The associated efficiency gains help avoid costs, and can be redirected to innovation leading to financial growth.”

The manufacturing industry, for example, can use data analytics to help plant facilities run more efficiently and decrease raw materials, energy and water use, the report says. Additionally, internet of things initiatives that connect people and machines can further improve resource use and plant maintenance while reducing downtime. The report projects these and other digital business processes can remove 1.5 GT carbon emissions.

In transportation and logistics, real-time traffic management and smart routing can optimize shipping routes, airline flight paths and vehicle movement, thus reducing fuel consumption and some 1.5 GT of carbon emissions.

Asset management systems for farm equipment, livestock and crops, coupled with big data about where and when to plant, and how much fertilizer and water to use, for example, can improve efficiencies and result in a 1.6 GT savings, the report says. This also translates into higher profits, Ritzrau says.

“Leveraging available detailed information — through big data — of environmental parameters (e.g. weather, soil composition, crop specifics) allows both yield optimizations and very detailed demand forecasts, smoothing out a highly seasonal business with significant bound inventory capital in the chemical company,” he explains. “The tight engagement has positive impact on the farmer’s profit through optimized investment in fertilizer, herbicides or pesticides.”

Digitizing businesses processes can also help companies cut their carbon footprint by reducing waste — and associated waste hauling fees.

Last month Xerox released products that reduce paper waste and simplify processes for the insurance industry and human resources departments. The company says the technologies also improve customer service, by offering faster claims, for example, which translates into increased savings as well.

“In the pursuit of sustainability, many businesses are turning to digital technologies, like business process automation and enterprise content management, to help improve workplace efficiency, employee productivity, save money and cut down on physical waste in the office,” says Xerox’s Andy Jones, vice president workflow automation. “For example, when a company can move paper and paper in-efficiency out of core business processes, savings can be dramatic. By automating workflow processes, businesses not only cut down on the need to print documents, but they also reduce the need for document storage and shredding/destruction.”

And as global governments work toward a climate deal at this week’s COP21 in Paris, it will likely become increasingly important for companies to decouple carbon emissions from economic growth. Digital technologies may be a major part of the solution.