The Convergence of Digitalization and Sustainability

  • David Kiron and Gregory Unruh
  • January 17, 2018

Winds of change blowing from two different directions are converging into a perfect transformative storm in the global economy.

Digitalization and sustainability are two of the most powerful market influences in today’s corporate landscape. Each has spawned a massive amount of research about how it will change management practice, and more broadly, business and society. The intersection of these trends, however, remains largely unexplored territory.

Examples of these two trends converging within the organization abound, from clean technologies to greening production processes to transforming a company’s brand equity as a sustainable company. While attention is paid to these shifts individually, less attention is directed to understanding how these trends combine to reshape the market conditions in which organizations operate.

The Digitalization-Sustainability Convergence

The promise of digitalization — big data, artificial intelligence, the internet of things, cybersecurity, and more — is often described with hyperbole. Pundits and academics alike have described “big data” as the “new oil,” “the new soil,” and the primary driver of a “management revolution,” the “Fourth Industrial Revolution,” and a “second machine age.”

Artificial intelligence is receiving similar hype, with AI being compared to the rise of electricity during the Industrial Revolution. Russian President Vladimir Putin says whatever country controls AI will become the “ruler of the world.” What’s more, renowned scientist Stephen Hawking warns that development of full AI could spell the end of the human race.”

There is similar hype around sustainability, albeit of a different flavor. “Sustainability is the primary moral and economic imperative of the 21st century,” says Mervyn King, former governor of the Bank of England. “It is one of the most important sources of both opportunities and risks for businesses. Nature, society, and business are interconnected in complex ways that should be understood by decision-makers.” Many of the most influential institutions in the world — the International Monetary Fund, United Nations, G20, Financial Stability Board, the Catholic Church — actively support sustainable development, with many focusing their support on efforts to achieve the UN’s sustainable development goals.

The digitalization-sustainability convergence in business and society offers executives both opportunities and challenges, within the organization and across organizational boundaries. Within, companies are using digital tools to map their environmental footprint and assess the impact of environmental shifts on their business. New digital technologies are improving sustainable innovation, even as they create new vulnerabilities like cybercrime and privacy loss.