Expert Insights

The rise
of the
sustainable
enterprise
Using digital tech to respond to
the environmental imperative

In collaboration with:
Experts on this topic
Wayne S. Balta Wayne has global responsibility at IBM for environmental
affairs, energy efficiency, and toxicology and chemical
Vice President management. He also leads product safety and related
Corporate Environmental Affairs, hardware compliance functions. He has been with IBM
Product Safety and Chief since 1984.
Sustainability Officer
[email protected]

Jacob Dencik, Ph.D. Jacob is the Global Economic Research Leader in

the IBM Institute for Business Value (IBV). Jacob is
Economic Research Leader responsible for leading the IBV’s research on topics
IBM Institute for Business Value, related to technology and implications on the global
Global Business Services economy. Jacob has extensive experience advising
linkedin.com/in/jacob-dencik-126861/ companies around the world on their global operations
[email protected] and location strategies. He has also advised governments
around the world as an expert and economist on
competitiveness, FDI, sector/cluster analysis, and
innovation. Jacob holds a PhD in Public policy
and Economics from Bath University.

Daniel C. Esty, J.D. Dan has primary appointments at Yale University in

the Environment and Law Schools and a secondary
Hillhouse Professor appointment in the School of Management. He is the
Environmental Law and Policy, author or editor of 13 books and numerous articles on
Yale University environmental law and policy, corporate sustainability
environment.yale.edu/profile/esty strategy, regulatory reform, sustainable investing, and
[email protected] sustainability metrics.

Scott Fulton, J.D. Scott is ELI’s fifth President since 2015. Previously,
Mr. Fulton was a Principal at the environmental law firm
President Beveridge & Diamond, P.C., and served as General Counsel
Environmental Law Institute of the U.S. Environmental Protection Agency (EPA) and in
linkedin.com/in/scott-fulton-62a59853/ a number of other high-ranking government leadership
[email protected] positions. In addition to his role as EPA’s General Counsel,
Mr. Fulton served in a number of other key leadership
roles, including as Acting EPA Deputy Administrator,
head of EPA’s Office of International Affairs, Judge on the
Environmental Appeals Board, and head of the Agency’s
enforcement program.
 No longer can “environmental
issues” remain a discrete set
of concerns outside the core of
a company’s primary focus.

Key takeaways What’s driving today’s

Digital acceleration environmental imperative
Progress in achieving environmental Environmental sustainability is no longer just a corporate
objectives has stalled because of systemic social responsibility (CSR) issue. Nor is it important only
for compliance and reporting purposes. It is, in fact, an
inertia, policy, priorities and choice—not imperative in the fullest sense of the word.1
because of a lack of technology. Digital
Opportunities and risks related to the environment
transformation can help change that.
now challenge the strategies and operating models of
organizations across all sectors and functions. Whether
Change as opportunity it’s new market opportunities, operational efficiency, risk
Leading companies are now using digital management, changing customer expectations, supply
technologies to turn environmental chain disruptions or the like, environmental objectives will
directly affect how a company operates and defines its
challenges into major business opportunities. competitive advantage (see Figure 1).2

Insights for better behavior This will be especially true as the world recovers from
Insights from data are changing business the COVID-19 pandemic. It’s now impossible to deny the
speed at which developments in one area can spread
and societal behaviors and leading to the across the entire world, nor their potential for economic
emergence of the sustainable enterprise. devastation. No longer can “environmental issues”
remain a discrete set of concerns related to sustainability,
Governance as collaboration climate change, air and water quality, waste management,
Digital technologies are enabling a new alternative energy, or other admirable goals outside
the core of most companies’ primary focus.
model of environmental governance where
the private sector and governments work
in collaboration as partners.
Figure 1
The environmental agenda: converging forces make it
a central feature of corporate strategy.

Environmental challenges and risks

Investor requirements

Consumer expectations Environmental

imperative
Employee priorities

Regulations and legislation

Source: Based on Institute for Business Value analysis

1
Insight: Defining In fact, environmental strategy choices—as a subset of
a broader sustainability agenda, which also includes
“sustainability” economic sustainability and social challenges such
as racial justice, structural inequality, and access to
Sustainability is a complex and sometimes healthcare—increasingly define a company’s prospects
nebulous concept that may have different meanings in today’s competitive marketplace (see sidebar,
to different people. For some, it clearly signals “Defining sustainability”).
environmental objectives. But others take a broader
view of the concept to encompass social, economic In the latest Global Risk Report 2020 by the World
and political dimensions. For example, the UN’s Economic Forum, the top five business risks were linked
Sustainable Development Goals include objectives to environmental challenges: extreme weather, climate
on climate change, environmental degradation, action failure, natural disasters, bio-diversity loss and
poverty, inequality, peace and justice.3 human-made environmental disasters.4 Consequently,
companies are beginning to include environmental
The individual elements of this broader definition
challenges as part of their overall risk management
of sustainability will have different implications for
and business continuity planning.
business strategies and operations—as companies
seek to address the new environmental imperative, But now, investors and financial managers are becoming
they will also have to understand the connections to increasingly discerning in their allocation of capital,
the broader dimensions of sustainability and act in incorporating sustainability criteria in their investment
a manner that advances both its environmental and decisions. For example, according to a recent survey,
broader elements. This report focuses specifically more than half of global asset owners are currently
on the environmental dimension of sustainability. implementing or evaluating environmental, social and
governance (ESG) considerations in their investment
strategy.5 In early 2020, Blackrock, the largest money
manager in the world, announced “that sustainability
should be our new standard for investing.”6 To raise
capital for future growth, it will thus be increasingly
important that companies align their business
activities with sustainability objectives.

Customers and employees have also become much more

environmentally conscious. A recent study by IBM found
that nearly 80 percent of consumers indicate sustainability
is important to them and 60 percent are willing to change
their shopping habits to reduce environmental impact.
Among the most purpose-driven customers, who
emphasize the societal and environmental impact of
their consumption, over 70 percent would pay a premium
of 35 percent, on average, for brands that are sustainable
and environmentally responsible.7

2
Talk is one thing. Finding a path
to successful action another.
Digital transformation will help
make the difference.

Research indicates employees also care: 64 percent of many governments around the world are doing—the
Millennials consider a company’s social and environmental premium on innovative solutions and the deployment of
commitments when deciding where to work; 83 percent breakthrough technologies will be even greater.
would be more loyal to a company that helps them
contribute to social and environmental issues.8 Indeed, The need to address environmental problems, therefore,
leading companies are actively engaging their employees in constitutes a major business opportunity in its own right.
shaping environmental sustainability strategy and initiatives. The total global market opportunity associated with
For example, Unilever has sustainability “ambassadors” environmental sustainability is estimated at more than
throughout the organization. As a result, 76 percent of USD 12 trillion.10 Energy spending across the world tops
Unilever’s 170,000 employees feel their role at work enables USD 6 trillion annually, making the transition to a clean
them to contribute to delivering to the sustainability agenda.9 energy economy that promises to unfold over the next few
decades an especially significant market opportunity.
These findings demonstrate that investors, consumers
and employees view sustainability as a critical issue. While Together these forces are shaping a new corporate agenda,
this data set is based on their views of sustainability in its with 62 percent of executives considering a sustainability
broadest sense, clearly environmental objectives are a strategy not as nice-to-have but, in fact, essential in order
central part of their concerns. to be competitive. Another 22 percent think it will be a
requirement in the future.11 The environmental imperative
And then there’s government—legislation, regulation, policy. has rightly planted itself in the heart of boardroom and
The backbone of environmental action for decades, its operational management conversations.12
approach, too, is changing to adapt to today’s reality.
In addition to regulatory constraints, governments are Talk is one thing. Finding a path to successful action
offering incentives for innovation and improved, “greener” another. Digital transformation will help make the
business processes. Increasingly, governmental efforts difference. Exponential technology innovations unavail-
to tackle environmental problems will in themselves create able to previous generations—artificial intelligence (AI),
new opportunities, as government funding flows to those 5G, Internet of Things (IoT), cloud, blockchain and
developing and implementing innovative solutions, including others13—will accelerate this progress in three ways:
new ways for the private and public sectors to collaborate.
1. Capitalize on data to reveal new insights and underpin
With continuing pressure on public resources to do the new solutions to existing problems right now;
traditional work of environmental protection, government 2. Help change business practices and drive the
increasingly sees private sector leadership as key to future emergence of the “Sustainable Enterprise;”
success and is looking for opportunities to catalyze and
3. Support a new level of public, private, and not-for-profit
optimize that leadership. And to the extent that regulatory
collaboration to forge a new governance model for the
strategies shift from 20th century “command and control”
environmental imperative.
mandates toward greater use of market mechanisms—as

3
We can now measure environmental
costs associated with different types of
economic activities and, effectively,
internalize them—help incorporate these
real costs using exponential technologies.

More data, more insight—more Then there is the European database Urban Mine
Platform that shows valuable materials made available
progress from high-tech products (such as vehicles, electronics,
batteries). It aims to improve the traceability, recovery
Data and information underpin the ability of economic and value retention of secondary raw materials by creating
actors to drive change in business priorities and practices. a harmonized inventory of products, materials and waste.
Greater transparency and insight allow consumers, The database records the quantities and compositions
companies, investors and governments to change the of products (for example, product type, materials,
way they buy, produce, sell, transport, consume and components, elements) put on the market and flows
govern, which in turn has the potential to transform the of waste generated per year.17
way economies operate. Moreover, data can be infused
into business processes and decision making and drive These examples underscore a central feature of many
improved environmental outcomes. With vast quantities of environmental challenges: a lack of information that would
structured and unstructured data available to them—often enable internalization of the full cost of environmental
in real time—organizations can tap into unprecedented resources and their damage to the environment, so that
levels of actionable insight for transformation and these costs and damage are not currently reflected in the
innovation. prices that economic actors pay for goods and services.
Economists, therefore, refer to environmental costs as an
For example, some organizations and industries are using “externality” caused by the inability of pricing mechanisms
data and digital technologies to apply the principles of to incorporate such societal costs.18 The availability of big
a circular economy—a systemic, regenerative approach data and advanced analytics address this problem in new
to economic development designed to benefit businesses, ways– making it possible to “internalize” externalities in
society, and the environment.14 It represents a funda- ways that could not be imagined in the past and transform
mental change in how value is created, aiming to re-use strategies of pollution control and improved natural
resources in a continuous circular loop rather than the resource management.19
traditional linear approach of extract, use and dispose, and
the increased availability of data is a paramount enabler. Specifically, we can now measure many environmental
If successful, this could dramatically reduce resource costs associated with different types of economic activities
consumption and add substantial value to our economies. and, effectively, internalize them—help incorporate these
For example, the estimated potential value of the circular real costs using exponential technologies, such as IoT and
economy in Europe alone is EUR 1.8 trillion.15 AI. These costs can be incorporated into economic
decision-making in real time and become an integral
Digital technologies—underpinned by data—can help part of economic transactions and corporate operations.
unlock this potential by improving the flow of information.
For example, several large automotive companies have From a business perspective, this means we can turn
established the International Material Data System, a environmental challenges into marketplace opportunities.
global data repository that contains information on
materials used in the industry to facilitate recycling of For example, Plastic Bank is using digital technologies to
end-of-life vehicles and their materials.16 Or the Excess reveal the value of plastic waste. Highlighting this potential
Materials Exchange (EME), an online platform that enables “lost” value, in turn, can incent resource recovery systems
companies to exchange excess materials with each other. that interrupt the flow of plastic waste to the ocean and
For example, EME uses “resources passports” and tracks instead make it available for companies to use in new
and traces materials by using Quick Response (QR) codes products. Plastic Bank uses blockchain technology to
and chips to support matchmaking. track the entire journey of recycled plastic from collection,
credit and compensation through delivery to companies
for re-use.

4
It also uses a system of token rewards based on blockchain Similarly, by instrumenting utility infrastructure and
to monetize plastic waste and records transactions at networks with sensors, utility companies are using
the micro-level. As these micro-transactions add up, they data to monitor the use of water and other critical natural
form credits that waste collectors can use to earn useful resources. They can detect anomalies such as leaks,
goods. This can help turn citizens in the world’s poorest fix them, and reduce water loss. In short, the availability
countries into recycling entrepreneurs, potentially lifting of data fundamentally changes our understanding of
millions out of poverty across the world while cleaning up and approach to meeting a wide range of environmental
the its oceans.20 objectives.21

Data and digital technologies—especially the ability to Combining data with exponential technologies, therefore,
capture data in real time with an unprecedented degree of creates immense opportunities to generate insight and
granularity—provide new levels of insight into changes in apply it to activities, processes and decision making
the physical environment. For example, by using sensor (see Figure 2).
technology, many cities can now monitor air pollution levels
in real time. By combining pollution data with weather and
transport data and applying analytics, they can identify
underlying causes and then take steps to rectify them.

Figure 2
Exponential technologies and environmental sustainability

Artificial intelligence Hybrid multi-cloud

– Applies learning algorithms for better environmental – Seamless integration and aggregation of complex
models. data on proprietary systems as well as on public,
private, or managed cloud services.
– Improve and refine responses to environmental problems.
– Integrated data from across a wide ecosystem
– Optimize resource consumption and business
drives reliable insight faster to build more accurate
processes while minimizing pollution.
environmental models.

Advanced analytics Internet of Things (IoT)

– Processes huge volumes of data – Sensors and devices provide accurate data to optimize
– Better understand environmental anomalies, processes and reduce environmental impact.
Environmental
vulnerability and risk susceptibility. – Triggers alerts and advice to help mitigate and manage
sustainability environmental problems, such as wildfires or floods.
– Refine operations and supply chains for
reduced environmental impact and improved – Can balance use of flexible and renewable energy
resilience. sources.

5G and mobile technologies Blockchain

– Faster connectivity and sharing of vast quantities of – A trusted shared digital ledger to track and authenticate
data and insight. provenance, use of resources, pollution and transactions
– Connects communities and engages stakeholders in across a supply chain.
support of environmental objectives and innovative – Assists in compliance with regulatory requirements,
solutions. enabling more efficient emissions trading schemes.
– Can balance use of flexible and renewable energy
sources.
Source: Based on Institute for Business Value analysis

5
Signify: Light as a tool Accordingly, the improved information flows made
possible by digital technologies not only inform, but also
for progress enable systemic change in economic activity. Put data and
insights from it in the hands of businesses, governments
Search for an icon for “light,” and you can bet you’ll and individual actors, and you spark change in business
find lots of light bulbs. Signify, formerly known as and societal behaviors. The opportunities inherent in
Philips Lighting, and with 2019 sales of EUR 6.2 such change suggest that the environmental imperative
billion, is the world leader in lighting for profes- will be at the heart of the corporate agenda for the
sionals and consumers, as well as lighting for the foreseeable future.
Internet of Things. Yet the company would probably
try to dissuade you from this fixation with light bulbs.
Instead, it would want you to think of what lighting Exponential technologies and
can do: reduce the world’s environmental footprint
and resource consumption, enhance safety and the Sustainable Enterprise
well-being, and make communities and cities more
The same exponential technologies that are bringing data
enjoyable places to live.
and insight to bear on the environmental imperative are
Its ambitions are embedded in its strategy, one also reshaping the very nature of a company’s operations
that relies heavily on data, analytics, IoT and other and business model (see Figure 3). Businesses are not just
exponential technologies. By using digital technolo- becoming “digital.” They are applying AI, in particular,
gies and light-points as nodes for data and informa- and other exponential technology to create new business
tion, Signify is transforming buildings, urban places, platforms on which to compete and collaborate, and
homes and even food production to increase energy intelligent workflows to drastically improve their operations
efficiency and reduce environmental impact. and customer experiences. They’re also using these
Moreover, the company is trying to decouple the technologies to augment the capabilities of their people,
notion of owning light-emitting devices—like light and improve the employee and customer experiences of
bulbs—from the function of those devices: illumina- their organizations.
tion. It believes that by moving to a new business
model, lighting as a service (LaaS), the company will
be able to nudge lighting into the circular economy. Figure 3
Today in Western Europe, only 10 percent of The digital and sustainable enterprise
discarded light sources are collected and registered.
Circular lighting, a concept the company believes
Sustainable Green and Enterprise experience,
would extend the LaaS model, could increase the business intelligent humanity and
amount of lighting equipment collected, repurposed, platforms workflows the environment
and put back into circulation, as well as reduce
investment, maintenance and headaches for
businesses as they use lighting. Data, Analytics, IoT, Blockchain, Automation and AI

Source: Based on Institute for Business Value analysis

6
Intelligent workflows present an
unprecedented opportunity to make
efficiency improvements that also
align with environmental objectives.

These structural changes in corporations themselves Another example is the Anglo-Dutch company Shell,
give rise to new opportunities for advancing and aligning which joined forces with IBM to introduce Oren, a new
business and environmental outcomes. Specifically, digitally enabled business-to-business marketplace for the
they help leading companies realize the environmental mining industry to help develop new revenue streams and
imperative through three principal dimensions: sustainable business opportunities. The platform will allow members
business platforms; green, intelligent workflows; and to find field-tested products and services from across a
enterprise experience, humanity, and a commitment trusted ecosystem. It will not only offer field-proven
to the environment. software, services and digital solutions, but also pilot
pioneering technologies in a single location. The platform
Sustainable business platforms will include environmental management and compliance
Today, digitally enabled business platforms are emerging software programs that provide detailed analysis and
that support collaboration and co-creation in a manner reporting on pollutant inventories, greenhouse gas
hitherto impossible. In the context of environmental emission, energy consumption, environmental impact
sustainability, these business platforms, which also draw assessment, mine rehabilitation, and mine life cycle
on the same technologies used to reduce transaction costs assessment. One-third of the solutions available on
between economic actors, also help drive innovation and the marketplace will be related to sustainability.
enable internalization of environmental objectives, allowing
for value creation that is more fully reflective of true Green, intelligent workflows
environmental costs and benefits. Companies are always looking for ways to cut costs,
often by increasing efficiency and automation. Exponential
Data and improved insight make it possible to incorporate technologies now enable them to devise intelligent
the environmental impact of economic activities into the workflows— comprehensive AI-powered processes that
transactions and interactions mediated by these new define a company’s customer and employee experiences—
business platforms. The platforms also support new modes to replace yesterday’s siloed, often inefficient stand-alone
of working more sustainably by combining the collective business processes.
capabilities of different stakeholders, augmented by
technologies such as AI. Indeed, business platforms This presents an unprecedented opportunity to make
integrate not only actors but also different sources and efficiency improvements that also align with environmental
types of data that contribute to improved actionable objectives. Leading companies now transform their entire
insights and new innovations. operating models, break down the silos of tasks and take
a holistic approach. They incorporate all the capabilities,
For example, the Norwegian company Yara has launched data and insight of their organization and ecosystem to
a global digital farming platform that applies artificial achieve greater value creation while achieving positive
intelligence, machine learning, in-field data and weather environmental outcomes (see sidebar, “Signify: Light as
data to unlock new insights for farmers to improve crop a tool for progress on page 6”).
yields in a sustainable way. The platform will help link
farms to the full food chain and support the development
of holistic food production from farm to plate.

7
Case in point: E&J Gallo Winery, a California company For example, in the fashion industry, companies are using
aiming to improve irrigation and conserve water using AI. AI to improve their customer experience, reduce their
Gallo already had sensors in its vineyards and analytics environmental footprint, and enhance their brand. As
models to help with precision irrigation, but the winery customers increasingly shop online, the inability to try
wanted something even better. It added machine learning items on leads to a high return rate. Forty percent of all
capabilities that allowed its models to adapt and get online purchases are ultimately returned. This is both costly
smarter over time. In the past, events like extended and creates significant additional transportation and CO2
droughts or flooding required human intervention to assess emissions. However, by using AI to help customers
what happened in the field and adjust the irrigation model purchase items that fit their physical dimensions and their
based on this new data. By combining data from satellite preferred style, the return rate can be significantly reduced.
imagery and machine learning, Gallo was able to create an The retailer Moosejaw is using such an approach to cut its
intelligent irrigation system that can deliver water in a way return rate by nearly a quarter.23
that’s situational, hyper-local, automated, and self-tuning.
It cut water use by 25 percent over three years while also
improving the quality of its wine.22
Figure 4
Enterprise experience, humanity and Human-technology collaboration advances
a commitment to the environment environmental sustainability

A company’s customers, employees, investors and

Environment
partners increasingly expect compelling experiences,
and can become quite vocal, using social media as an – Energy
amplifying platform, when disappointed. They are also Technology – Natural resources
more aware than ever before of a company’s environmental – Vitality
– Automation – Absorption
track record. This presents an opportunity as well as a risk. – Design
– AI Human-
When a company applies its human capabilities, newly – Digital Twin technology-
environment
augmented by exponential technologies, to advance triple helix
environmental sustainability—and conveys this through
compelling interactions with the company—it significantly
differentiates itself in the marketplace (see Figure 4). Human

y – Productivity
ilit – Empathy
ab
Scalability

ain – Creativity
st – Value-add
Su

Capability

Source: Based on Institute for Business Value analysis

8
Digital technologies will play a key
role in enabling pricing mechanisms
to function effectively, transparently,
and in an integrated way.

The need for a new Not only are digital technologies critical for the monitoring,
verification and reporting, but emerging technologies, such
environmental governance as blockchain, make it easier to share data and manage
transactions that support, among other things, more
For the past four decades, the environmental agenda has efficient climate markets. As noted in a recent World Bank
been, in fact, the agenda of government. Standard-setting, report, “Blockchain, Big Data, the Internet of Things (IoT),
regulation, enforcement and, to a certain extent, incentives smart contracts and other disruptive technologies hold out
from various levels of government, have driven environ- the promise of addressing the needs of new generation
mental progress. While such efforts have helped improve climate markets post-2020.”25
environmental quality in many parts of the world,
a great deal remains to be done, and governments are This is particularly important when resolving the market
increasingly challenged to muster the resources and complexity associated with multiple jurisdictions, each
political persistence needed to address remaining gaps promoting a variety of mechanisms for tackling it, such as
and needs. It’s time for a new model, one that is no longer climate change. For example, approximately 40 countries
so reliant on government to lead the way.24 and more than 20 cities, states and provinces use carbon
pricing mechanisms, such as emissions trading schemes
This is not to dismiss the important role that governments or carbon taxes.26 There is growing support for greater
will continue to play, but it acknowledges how important it use of such mechanisms across the public, private and
is to engage all relevant actors in driving the required non-governmental sectors, with members of the Climate
change. Fortunately, a new approach to environmental Leadership Council, which includes IBM, advocating for
governance also has many new mechanisms available for a fee on carbon emissions.27
engaging different stakeholders.
Digital technologies will play a key role in enabling such
To achieve the substantial transformation of economic pricing mechanisms to function effectively, transparently,
activity and innovation required for environmental and in an integrated way. Moreover, increased insight
sustainability, the full spectrum of economic actors— enables a deeper understanding of how different groups in
public, private and not-for-profit—must collaborate, taking our societies are affected by specific measures, allowing
advantage of today’s data availability and technology to innovations to lessen—or even eliminate—the impact of any
analyze and share it on a greater scale than ever before. regressive or unwanted social outcomes.
Such transparency not only contributes to common
understanding, and also allows for mutual accountability Of course, change on this scale is never simple. The
across a broader, multi-actor governance system. interaction between the environment and economic
activity constitutes a complex dynamic system with a
Digital technologies—especially exponential ones—make multitude of direct and indirect relationships. Generally
possible many market-based mechanisms that drive speaking, individual actions in complex systems generate
change and innovation. In particular, they can support both anticipated and unanticipated consequences.
incentive mechanisms for action at a scale and speed that And these consequences in one part of the system have
would be impossible through the traditional means of implications for other parts of the system, which may,
regulations and government intervention. in turn, result in systemic feedback loops. This complex
interplay can create uncertainty and lack of clarity
concerning which factors generate which results.
They also make it challenging to see how best to
intervene in order to achieve the desired outcome.

9
Fortunately, a study of complex systems shows that
improving information flows helps, especially broadening
Action guide
access to information.28 Digital technologies also give
us much more detailed information, and the ability to
The sustainable enterprise emerges to
build better models and simulations than ever before, meet the environmental imperative
deepening our understanding of what is going on in a
complex system. This can help economic actors navigate Integrate your digital transformation and
a rapidly changing landscape in order to achieve greater environmental sustainability strategies and efforts
alignment between economic and environmental
objectives. – Map out how different environmental challenges might
affect customers, suppliers, employees and investors in
Two even more important challenges in influencing the different areas of your business. Use this insight as a
behavior of such complex systems for the benefit of basis for strategic action. Apply tools such as Component
the environment are: creating the right incentives for the Business Modeling to help identify the links between
desired change; and empowering actors to add to, adjust environmental objectives, digital transformation and
and evolve system structure. AI-enabled insights can your business strategy.29
guide more targeted policies and interventions, and also – Deploy digital technologies to provide the insight
help engage and motivate action by relevant stakeholders. from big data and analytics to tap into new market
opportunities and manage potential risks. Use
The combination of business model transformation
exponential technologies, and notably AI, to give
and a new environmental governance structure has
your organization greater agility and resilience.
the potential to bring about the societal transformation
needed for environmental sustainability. Digital – Use digital technologies as a catalyst for developing
technologies can reshape what is possible, stimulate smart and innovative solutions to environmental
new innovations, and enable effective ways of working challenges. Adopt methods such as Design Thinking and
together. However, this transformation is not inevitable, a “sustainability garage” to drive the environmental
nor technologically determined. It will demand a innovation agenda within your company and enable
concerted effort by public, private and societal actors. out-of-the-box thinking.30
But after years where environmental progress has
seemed to stall, substantive change is finally Transform business processes into green intelligent
within our reach. workflows
– Define your data needs for integrating environmental
objectives into your workflows and make sure it is
accessible and ready for use.
– Infuse data and insight into a wider transformation of
business processes to create resilient operations.
Explore how exponential technologies such as IoT,
blockchain, and AI can open up new ways of achieving
outcomes.

10
– Redesign business processes with digital technologies
to reduce the company’s environmental footprint
Action guide
and harness the value of resources more efficiently.
Use digital technologies to incorporate environmental
Recasting the role of government
data and KPIs in your process mapping and design.
Become an enabler and facilitator of change
– Use data and insight to monitor, manage and reduce
operational exposure to environmental risks. – Work toward using the full spectrum of capabilities from
different for sustainable innovation and transformation.
– Deploy digital and communication infrastructure and
Facilitate and encourage the involvement of all relevant
software to enable real-time access to relevant data by
actors to drive change and innovation. Think how actors
those managing operations to allow for rapid response
can be engaged to positively contribute to resolving
to any observed environmental anomalies.
environmental challenges and legislate accordingly.
– Share data and engage with a wider set of external
– Share relevant data in an open and secure manner.
business partners and stakeholders in ways that allow
Put in place the necessary security and privacy
environmental priorities to be an integral part of the
regulations to enable the sharing of relevant data.
entire value creation process. Shift to a hybrid cloud
Support the development of data-sharing platforms
computing model to enable greater ease of collaboration
for development of innovative solutions to tackle
and sharing of data within and outside your organization.
environmental challenges and to offer system
accountability through transparency.
Infuse environmental sustainability into your
enterprise experiences and culture – To facilitate real-time correction of environmental
problems, develop a data communication superhighway.
– Provide a sense of purpose and direction and help Use it to seamlessly connect data showing environ-
employees build the skills needed to capitalize on the mental anomalies with those responsible for implicated
new opportunities of the environmental imperative. operations by using AI and machine analytics to enable
Assess if your current organization and talent pool is data linkages and identify anomalies. Promote accoun-
able to drive the required transformation, then fill any tability by transparently showing whether corrective
identified gaps. action was taken in response to such data and making
– Make environmental sustainability a key part of the related information available to the public and business
experiences you create for customers, employees and affiliates (including supply chain managers, investors,
other stakeholders. Translate these experiences into and insurers).
clearly defined outcomes that your organization must
work toward. Assess if your current governance and
organization promotes or inhibits the achievement of
these outcomes and make the necessary adjustments.

11
Leverage data and insight for effective market About Expert Insights
mechanisms, and more precise regulation, policies,
and interventions Expert Insights represent the opinions of thought
leaders on newsworthy business and related technology
– Use data and digital technologies to deploy effective
topics. They are based upon conversations with leading
market mechanisms for protecting environmental
subject matter experts from around the globe. For more
assets, pollution control and addressing climate change.
information, contact the IBM Institute for Business Value
Incentivize economic actors to innovate and transform
at [email protected].
by internalizing environmental costs in prices, for
example, through a fee on carbon and other pollutants.
Notes and sources
– Use digital technologies to create a more effective and
efficient regulatory environment. Leverage insight from 1 Esty, Daniel and David Lubin, “The Sustainability Imperative,” Harvard
Business Review. May 2010.
comprehensive, granular and timely data to identify
2 Esty, Daniel and P.J. Simmons, The Green to Gold Business Playbook:
the most appropriate levers for change. Use digital How to Implement Sustainability Practices for Bottom-Line Results in
technologies to monitor the impact of regulations Every Business Function, John Wiley Publishing. 2011.
and interventions, and identify opportunities for 3 “About the Sustainable Development Goals,” United Nations
improvement. Sustainable Development Goals website. https://www.un.org/
sustainabledevelopment/sustainable-development-goals/
4 Franco, Emilio Granados, “The Global Risks Report 2020,” World
Drive sustainable innovation Economic Forum. http://www3.weforum.org/docs/WEF_Global_Risk_
Report_2020.pdf
– Lead by example and act as the catalysts for sustainable
5 Eccles, Robert G.; Klimenko, Svetlana. “The Investor Revolution.”
innovation. Governments should play an active role in Harvard Business Review. May/June 2019. https://hbr.org/2019/05/
driving sustainable innovation within governmental the-investor-revolution
organizations, as well as invest in and channel funding 6 Dodd, David. “Should Sustainability Be Part of Your Brand Story?”
toward improved environmental outcomes. This Customer Think. March 9, 2020. https://customerthink.com/
should-sustainability-be-part-of-your-brand-story/
should include the ability of the public sector to use its
7 Cheung, Jane and Karl Haller, Jim Lee. “Meet the 2020 consumers
procurement activities to encourage more environmen- driving change,” IBM Institute for Business Value. June 2020. https://
tally sustainable business practices from its suppliers, www.ibm.com/thought-leadership/institute-business-value/report/
and to digitally monitor and report on its performance consumer-2020

in this regard. 8 “2016 Cone Communications Millennial Employee Engagement Study,”

Cone Communications. 2016.
– Collaborate closely with the private sector and other 9 Bhattacharya, CB and Paul Polman. “Engaging Employees to Create a
stakeholders to allocate resources and budgets toward Sustainable Business,” Stanford Social Inovation Review. Fall 2016.
https://ssir.org/articles/entry/engaging_employees_to_create_a_
environmental objectives. Governments should see sustainable_business
the private and not-for-profit sectors as key partners in 10 Better Business Better World,” Business & Sustainable Development
achieving the required change. This will require openness Commission. January 2017. https://www.unglobalcompact.org/
in terms of sharing of data but also in ways of working. library/5051

Governments have a key role to play in embedding these 11 Haanaes, Knut. “Why all businesses should embrace sustainability,”
IMD, Research and Knowledge. November 2016. https://www.imd.
new and more collaborative ways of working within the org/research-knowledge/articles/
relevant public sector organizations. why-all-businesses-should-embrace-sustainability/
12 Esty, Daniel and Andrew Winston, Green to Gold: How Smart
Companies Use Environmental Strategy to Innovate, Create Value, and
Build Competitive Advantage. John Wiley Publishing. 2009.
13 Rejeski, Dave and Lovinia Reynolds, When Software Rules: Rule of Law
in the Age of Artificial Intelligence (2018), https://www.eli.org/sites/
default/files/eli-pubs/when-software-rules-web.pdf; and Blockchain
Salvation (2018), https://www.eli.org/sites/default/files/eli-pubs/
policy-brief-14-web.pdf
14 “The Circular Economy in Detail,” Ellen MacArthur Foundation. 2017.
https://www.ellenmacarthurfoundation.org/explore/
the-circular-economy-in-detail

12
15 “Business—Business-led collaboration & disruptive innovation are key © Copyright IBM Corporation 2020
to building a circular economy,” Ellen MacArthur Foundation. 2017.
https://www.ellenmacarthurfoundation.org/our-work/approach/ IBM Corporation
business
New Orchard Road
16 “Welcome to the International Material Data System,” IMDS website.
2017. https://www.mdsystem.com/imdsnt/startpage/index.jsp Armonk, NY 10504
17 Hedberg, Annika and Stefan Sipka. “The Circular Economy: Going
Produced in the United States of America
Digital.” European Policy Centre. 2020. https://wms.flexious.be/ August 2020
editor/plugins/imagemanager/content/2140/PDF/2020/DRCE_web.
pdf IBM, the IBM logo, ibm.com are trademarks of International
18 “Glossary of Statistical Terms,” OECD website. March 4, 2003. https:// Business Machines Corp., registered in many jurisdictions
stats.oecd.org/glossary/detail.asp?ID=824
worldwide. Other product and service names might be
19 Esty, Daniel. “Red Lights to Green Lights: From 20th Century trademarks of IBM or other companies. A current list of IBM
Environmental Regulation to 21st Century Sustainability,”
Environmental Law, vol. 47, issue 1 (2017). trademarks is available on the web at “Copyright and
20 “Plastic Bank: Enabling plastic recycling and financial inclusion with trademark information” at: ibm.com/legal/copytrade.shtml.
Blockchain,” IBM. 2019. https://www.ibm.com/case-studies/
plastic-bank-ibm This document is current as of the initial date of publication
21 “Digital Technology Opportunities in the Colorado River Basin,” and may be changed by IBM at any time. Not all offerings
Environmental Law Institute. November 2019. https://www.eli.org/ are available in every country in which IBM operates.
sites/default/files/eli-pubs/digital-tech-water-report-final.pdf
22 “E. & J. Gallo winery client story,” IBM Watson website. https://www. THE INFORMATION IN THIS DOCUMENT IS PROVIDED
ibm.com/watson/stories/ejgallo/ “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR
23 Rabe, Lars. “The war on waste: Why artificial intelligence is making the IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF
fashion industry greener,” Essential Retail. July 12, 2019. https://
www.essentialretail.com/comments/the-war-on-waste/
MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND ANY WARRANTY OR CONDITION OF NON-
24 Fulton, Scott and David Rejeski, A New Environmentalism: The Need for
a Total Strategy for Environmental Protection, 48 ENVTL. L. REP. INFRINGEMENT. IBM products are warranted according to
10780. September 2018. the terms and conditions of the agreements under which
25 “Blockchain and Emerging Digital Technologies for Enhancing Post- they are provided.
2020 Climate Market,” World Bank Group Climate Change. 2018.
https://openknowledge.worldbank.org/bitstream/ This report is intended for general guidance only. It is not
handle/10986/29499/124402-WP-Blockchainandemergingdigitaltec
hnologiesforenhancingpostclimatemarkets-PUBLIC. intended to be a substitute for detailed research or the
pdf?sequence=1&isAllowed=y, p.5. For an inventory of global exercise of professional judgment. IBM shall not be
blockchain applications relating to the environment, see “Blockchain
Inventory,” Project on the Energy and Environmental Implications of
responsible for any loss whatsoever sustained by any
the Digital Economy. http://www.digitalenergyenvironment.org/ organization or person who relies on this publication.
resources/blockchain/
26 “Pricing Carbon—What is Carbon Pricing?” The World Bank. https://
The data used in this report may be derived from third-party
www.worldbank.org/en/programs/pricing-carbon sources and IBM does not independently verify, validate
27 “About—Mission,” Climate Leadership Council. https://clcouncil.org/ or audit such data. The results from the use of such data
mission/ are provided on an “as is” basis and IBM makes no
28 Meadows, Donella H. Thinking in Systems. Chelsea Green Publishing. representations or warranties, express or implied.
2008. P. 194.
29 “Component Business Modeling—A new perspective on cutting risk and
compliance costs.” IBM Institute for Business Value. June 2018.
https://www.ibm.com/thought-leadership/institute-business-value/
report/cbmrisk
30 “IBM Garage,” IBM. https://www.ibm.com/garage; “Enterprise Design
Thinking,” IBM. https://www.ibm.com/services/business/
design-thinking

86033886USEN-00 13