2020 and the Decade of
Enterprise Sustainability

January 2020:

2020 and the Decade of Enterprise Sustainability

Enterprise sustainability will be the trend to rule all trends in the coming decade.

2020 starts a brand-new decade. What legacy will it leave? What will the history books say about the 2020s and the mark these years make on society, on the planet? That’s exactly what we as a human race are about to decide. Technology will be part of the story, no doubt. Big data, the IoT (Internet of Things), machine learning and AI (artificial intelligence), cloud, and 5G—innovation in these areas and others will shape the next 10 years in ways today’s thought leaders can only guess.

Factors at play in the new decade include the need to better manage natural capital and resources like water and land. A global population boom and urbanization will result in more people than Earth’s ever housed at once, and more of these people will be concentrated in cities than ever before.

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This will alter the trajectory of processes and industries, including agriculture and the production of food, logistics and the transportation of goods and individuals, energy and utilities, emergency response, and healthcare.

As a result, one overarching directive the whole of human society has in 2020 and the ensuing decade is this: sustainability.

Sustainability is the trend to rule all trends throughout the next 10 years, and it starts now. Companies are feeling pressure to pursue sustainability goals, but they will need to look within to really win in sustainability. No one will be fooled by enterprises that look to slide under the radar or do just the minimum to placate whoever they need to placate. If companies are going to future-proof their businesses, it’s no longer enough to be the best at what they do. Rather, companies and organizations that answer the call for sustainability will be the winners of this marathon.

Directive #1: Sustainability

Melissa Goodall, associate director of the Yale Office of Sustainability, says: “According to the IPCC (Intergovernmental Governmental Panel on Climate Change), we have until 2030 to turn things around if we don’t want to get to the point of no return when it comes to climate change. This means we have to move beyond best practices to transformative change.” In life and business, Goodall says IPCC’s warning means small measures such as turning off the lights, recycling, and reducing the use of single occupancy vehicles are all well and good, but they will not be enough. “We cannot rely on governments or even wait for industry standards to change,” she adds.

Because we can’t purely rely on behavior change or cultural shifts to ensure systemic transformation, technology will be critical in answering the call for enterprise sustainability in the next decade. Goodall says technology will also be essential, because we are facing challenges we simply do not know how to solve.

Jeff Merritt, head of IoT at the WEF (World Economic Forum), says with regards to technology deployments, there are two critical lenses by which we need to look at sustainability.

Merritt says the vast majority of IoT technology deployments (84%, according to analysis by the WEF and IoT Analytics) address or have the potential to advance SDGs (Sustainable Development Goals). “Whereas businesses may be deploying these solutions first and foremost to generate operational efficiencies and increased productivity, the added benefit is that these solutions also can reduce energy consumption and generate benefits for quality of life,” he explains. “In other words, they provide that win-win combination for business and society that companies have long sought. This is a key factor driving the growth of IoT.”

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Percentage of Business Buyers Who Agree with the Following

“One relates to the sustainability of the technology itself, (and) the other relates to the benefits that the technology can provide to help meet the broader societal goals for sustainability,” Merritt says. “Both are critical to address, however, the first is developing slower than the last.”

In the next decade, companies will need to start thinking about the sustainability of these technologies themselves. Merritt predicts this will initially be led by the supply side of the market with continued growth of technology-as-a-service models and more circular approaches to extend the life of hardware. “Increased public awareness will be critical to spur a more demand-driven response to expedite change in the way these products are designed and manufactured,” Merritt adds. “Currently, low price points and demands for increased performance continue to trump sustainable practices in the development of new IoT technologies.”

Progress is being made, though. In 2018, at the WEF’s annual meeting in Davos, Switzerland, eight companies signed a Capital Equipment Pledge designed to accelerate the circular economy—an economy based on the principles of reducing waste. One participating company, Cisco, committed to 100% product returns through providing product return pickup and transport at no cost, establishing alternative commercial models that promote product returns, offering services that extend the useful life of products currently in use, and repurposing returned products and components in new product manufacturing. Besides Chuck Robbins, CEO, Cisco, other C-suite executives who signed the pledge include Michael Dell, CEO, Dell Technologies, Stuart Pann, chief supply chain officer, HP, and Frans van Houten, CEO, Royal Philips.

sustainability of planet

Todd Moss, department chair and associate professor of entrepreneurship and the faculty director of the Sustainable Enterprise Partnership at Syracuse University, says companies face pressures from diverse stakeholder groups to improve enterprise sustainability.  “Of course, government pressures firms through regulations, although this seems to fluctuate based on current administration,” Moss says. “Investors—both institutional and individual—pressure firms through buy or sell recommendations and through voting proposals. Activists use social media and other communication technologies to create networks of individuals and organizations who thereafter apply pressure individually and through the media. Employees likewise pressure companies through internal grassroots efforts. Customers in B2B (business-to-business) relationships pressure their suppliers to improve sustainability through requiring additional reporting requirements or increasingly strict standards, such as documentation of water consumption and greenhouse gas emissions.”

To respond to this pressure, Moss points to guidance from a 1999 Harvard Business Review article titled “A Roadmap for Natural Capitalism,” in which authors Amory Lovins, Hunter Lovins, and Paul Hawken suggest four interlinked business practices that improve a firm’s sustainability. “First, companies can improve their productivity of natural resources through rethinking design and improved technology,” Moss explains. “Second, they can shift to biologically inspired production models that eliminate the concept of waste. Third, they can move to a solutions-based business model in which firms provide services rather than sell products. And fourth, firms can reinvest in natural capital.”

To answer the call of sustainability in the coming decade, every enterprise should have a robust set of sustainability commitments, and these should be mission related. For instance, Yale’s Goodall says if you’re a shipping company, focus on fleet efficiency; if you are a tech firm, innovate for global solutions; if you are a higher education institution, research solutions and prepare the next generation of leaders to enter into the workforce fully prepared for the global reality they will face.

Technology will help. World Economic Forum’s Merritt gives this example: “By enabling cities and businesses to leverage realtime data to drive decisions and enact more responsive operations, we can see dramatic improvements in the efficiency and sustainability of services. Energy-management systems in buildings are a great example of this and have been shown to generate a reduction of energy consumption by 20% or more. This is a win-win for business and the environment.”

In fact, under the umbrella of sustainability, more specific trends for 2020 include smart buildings and the use of technology to achieve energy and operational efficiencies and digital supply chain, including leveraging the IoT for automation and enhanced end-to-end visibility.

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2020 Tech Trends

Jon Clarine, head of digital services at thyssenkrupp Elevator, says in the past few years, the technology buzz has been all about machine learning, AI, robotics, cloud, IoT, and mobility, but in 2020, the trend is shifting toward the extension of these game-changing technologies into buildings. “For example, in North America, thyssenkrupp Elevator has more than 83,000 elevators connected with our MAX IoT platform,” Clarine says. “This enables us to leverage machine learning to make our elevators and technicians smarter, improving elevator availability and keeping people moving like never before. Other building services, like HVAC, are also leveraging cloud and IoT for predictive analytics too, and one big trend we see is the increasing demand to integrate multi-source data and information collected across the building to help make buildings smarter and the occupant experience better.”

Companies need to frame sustainability as the way to preserve the future—the way to preserve natural capital for future generations while simultaneously future-proofing business.

“We look at natural capital risks that are posed to our business to
help us chart a way forward into the future,”
- Jon Clarine

“We look at natural capital risks that are posed to our business to help us chart a way forward into the future,” Clarine says. “Technology needs to provide efficiencies for our business, and those efficiencies usually translate to reductions in resources used to do our work. Less energy, less waste, and less embodied carbon helps us highlight our sustainability goals through the use of advancing technologies.”

Because thyssenkrupp is in the business of allowing for dense sustainable building of cities, it uses technologies like learning algorithms to help move people more efficiently, which in turn helps make buildings more efficient. “We also use building usage profiles to offer solutions that can shut down or even slow down elevators so they conserve energy,” Clarine adds.

A second tech trend to watch in 2020 that falls under the sustainability umbrella is digital supply chain. Krenar Komoni, founder and CEO of Tive, a provider of in-transit supply chain tracking solutions, says: “There are two trends that I can see based on the feedback we are getting form the market. One, the rise of automation in supply chain—simplifying the mundane work that our customers do every day to move goods from point A to point B, shifting their focus on making supply chains more efficient. (And) two, the rise of data platforms that analyze and predict the state of physical inventory while in-transit, all enabled by the ubiquitous wireless connectivity and sensors that are continuously feeding the cloud. The combination of these two trends, automation and in-transit inventory visibility, are going to get serious traction in 2020.”

Amazon has set the bar for realtime visibility across the supply chain. “According to a recent (Salesforce) study on shifting consumer expectations, 69% of surveyed  consumers expect ‘Amazon-like buying experiences’ from their vendors, while a survey from UPS found that 97% of respondents felt shipment tracking was either essential (50%) or nice to have (47%),” explains Komoni. “Consumers are no longer willing to sit in the dark, guessing as to where their packages are and when they will arrive.”

Therefore, enterprises that will remain competitive in the next decade are the ones that have complete visibility of their inventory, from manufacturing to full delivery, allowing them to meet rising end-consumer expectations and be able to proactively shift supply based on demand, even while inventory is in-transit. “In 2019, Cyber Monday had a 19% increase in purchases compared to 2018—this trend is not going to slow down,” Komoni adds. “I highly doubt that enterprises which are behind in visibility will still be in business a decade from now.”

The digital supply chain, encompassing technologies like AI and IoT, enables manufacturers to offer a new level of visibility into their customers’ shipments, solving problems before they occur and delivering an overall better experience.

AI

Without these technologies, supply chains cannot be measured, and, as Komoni puts it, “if you cannot measure, you cannot improve.” Visibility into an enterprise’s own operations is also critical to achieving sustainability on an organizational level, and technology can help with that too.

Christopher Marquis, professor in global sustainable enterprise and professor of management at Cornell University, says many sustainability initiatives can be money saving, but only through knowing what these issues are can leaders identify where to change. “Measuring and reporting environmental impacts is an essential first step,” he says. “Another global initiative that is compelling is the United Nations’ Sustainable Development Goals while not initially operationalized for business, there is increasing work to create a common language for business sustainability organized around these goals.”

The UN's SDGs are a blueprint aimed at achieving a sustainable future by 2030.

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One important roadblock in enterprise sustainability is the general mindset among business leaders that environmental costs like pollution are externalities and, therefore, aren’t really costs at all. “The more that consumers and governments can push for mechanisms that lead business leaders to better understand the financial costs of environmental damage (e.g., through carbon pricing), the more likely such mindsets will be changed,” Marquis says.

“In addition to pricing externalities, an important movement is having companies measure and track their ESG (environmental, social, and governance) activities. This brings the companies’ environmental footprint into relief for managers, encourages positive change—as once things are tracked there is an interest to not do worse than last year—and further helps identify areas for improvement.”

Transcription

Episode 646 | 12.19.2019

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Yale’s Goodall says if every enterprise examines exactly what they do and focuses on supporting excellent environmental and social practices, ideally paired with innovation, there’s a chance the change that needs to happen will keep society from approaching that point of no return. Consumers can demonstrate their commitment to change through more informed and strategic purchasing. Enterprises can recognize that it’s a pivotal time in history and consider the financial and reputational risks of not pursuing sustainability this decade. “We need solutions and action immediately,” Goodall says, and for enterprises creating their strategies for 2020 and beyond, immediately starts now.

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