Increasing awareness of issues related to sustainability is changing behaviour amongst consumers, who want to purchase green products, and investors who prefer to invest in companies with good ESG (Environmental, Social and Governance) practices. Enterprises are increasingly going beyond traditional metrics of success such as product performance, profits and affordability and are also focussing on burnishing their social and environmental credentials. In so doing they are also going a long way to meet UN Sustainable Development Goals (SDGs). This blog post looks at the ways in which disruptive technologies, particularly IoT, can be used to meet to improve ESG performance and meet UN SDGs.
The recently published Transforma Insights report ‘Sustainability enabled by digital transformation’ examines the sustainability and wider ESG benefits derived from the adoption of selected digital solutions. The three main elements of ESG are:
It is largely in the environmental aspects that the technology solutions have the greatest application. In particular, the use of IoT-based use cases, such as building management and smart grid, are very effective at reducing energy and fuel consumption, and CO2 emissions. Further to this, the report also considered the wider ESG landscape including areas such as fair labour practices, wildlife protection, and saving life of aquatic animals.
Probably the most prominent framework related to ESG is the 17 Sustainable Development Goals (SDGs) published by the United Nations. These 17 goals (illustrated below) are a blueprint for countries, companies and other organisations to achieve prosperity for people and the planet. They cover a wide range of major thematic goals including water, energy, climate, transport, equality, diversity, resource conservation, hunger, economic prosperity, infrastructure development, science and development, amongst others.
UN Sustainable Development Goals [Source: UN, 2022]
The Transforma Insights report identified a range of key areas (the ‘Clean Dozen’) where enterprises can use disruptive technologies such as IoT and AI to have a positive ESG impact. The chart below illustrates the ways in which the key IoT-focused solutions can have an impact on the 17 UN SDGs. The reason for focusing particularly on IoT solutions is that IoT has overwhelmingly the biggest impact. The reason is simple: IoT represents the interface between efficiency-enabling digital transformation solutions and the ‘real world’ (which is where sustainability savings can be made).
Impact of key IoT solution areas on SDG goals (indicative) [Source: Transforma Insights, 2022]
As depicted in the chart, most of the solutions discussed in this document contribute towards sustainability goals related to climate action, responsible consumption, clean energy, clean water, life on land, life below water, sustainable cities and communities, and good health. For instance:
The conclusion is clear. Across 11 of the 17 SDGs, the Internet of Things has a positive impact. In several SDGs, including particularly those related to environmental sustainability, they have widespread applicability. If enterprises and governments are serious about pursuing SDGs, then IoT-based solutions will have to be part of the mix.
This blog post was written based on Transforma Insights’ recently published ‘Sustainability enabled by digital transformation’ report. The 112-page report focuses on the sustainability benefits of a range of digital transformation (DX) solutions, and related ESG (Environmental, Social, and Governance) benefits. Overall, the report identifies twelve key areas (the ‘Clean Dozen’) where digital transformation can significantly help an organisation achieve sustainability goals. These include Fleet Operations, Supply Chain, Smart Cities, Smart Grid and Smart Buildings. For each of those solution areas, the report draws on a wide range of case studies to identify the impact that implementation of such projects might have for enterprises, including reducing electricity, fuel and water consumption, in meeting wider ESG goals, and in terms of business impact.