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A look at the critical role tech and data play in strategic sustainability and how they can help your company tackle both short-term and long-term climate challenges
Business executives frequently view sustainability as an obligation stemming from rapidly evolving disclosure requirements and demands from shareholders, consumers, business partners and regulators. While organizations may take initial steps to reduce their carbon footprint, particularly Scope 1 and 2 emissions, and more recently Scope 3, they often miss the opportunity to use sustainability as a strategic growth driver.
With the appropriate investments underpinned by a strategic approach to sustainability, organizations can not only meet the moment with regards to ESG reporting, decarbonization and the like, but may also be able to innovate and create new sustainable products, boost investor confidence, mitigate supply chain risk, streamline operations, reduce waste and ultimately achieve sustainable growth. Action today may also help attract top talent as workers increasingly seek out companies that align with their values.
The currency of this intelligent enterprise is data of all stripes. Decision-makers require high-quality data along with consolidated reporting that extends across many aspects of the business, from the supply chain out to the customer. When blended with the appropriate sustainability data, such operations-focused data can unlock insights that can help track emissions and progress on decarbonization, while also addressing wider sustainability issues such as water, labor and biodiversity.
The true potential of such data though lies in business value creation. But that’s only possible if you have confidence in the data that is supporting your capital allocation process and fueling calculations to measure progress, such as emissions reductions over time and the return you realize on your sustainability investments. PwC has laid out the controls and processes you should have to help generate thorough and consistent ESG data. With reliable data, your executive team will be equipped to navigate climate change along with today’s highly disruptive business environment.
Beyond the basics: How technology can deliver a growth path through the climate transition
PwC and Microsoft have developed a tech and data architecture for strategic sustainability that can support both short-term and long-term climate challenges. It first addresses the technical challenge of aggregating ever more granular data — think individual sites, shipments, purchases of material — from enterprise operations and the value chain. This includes data originating from third parties.
This approach also aims to provide actionable insights based on the more complete snapshot of the enterprise that can help unlock value by proactively modeling climate change variables using machine learning, predictive analytics, digital twins and AI. It can engage in realistic what-if scenarios and adapt in real time to risks extending across the value chain. It’s also possible to explore new or improved sourcing opportunities, reformulate existing products, and create novel products and services.
Across both the short and long term of the climate transition, clear themes — or problem statements — emerge that this solution can help address:
- Decarbonizing and improving enterprise operations. Confirming that decarbonization is being achieved while hitting your targets.
- Developing a sustainable, transparent and resilient supply chain. Working to expand reporting visibility to Scope 3 emissions and building out capabilities to help address long-term sourcing and supply chain challenges.
- Designing (and reengineering) products and services so that they are inherently sustainable and hence, promote sustainable growth.
- Addressing the human element, including ownership, management and skills required to promote growth through sustainability.
“Actions on energy demand can be taken by all companies now, are profitable and can accelerate progress towards climate goals.”
Source: The World Economic Forum in collaboration with PwC, Transforming Energy Demand, January 2024Decarbonization is all about agility and adaptability
Today, no organization remains untouched by the impact of climate change and other sustainability issues. Most medium and large businesses already track Scope 1 and Scope 2 emissions to some extent and more recently Scope 3. What’s more, some have already adopted science-based targets for emissions.
Accelerating decarbonization and generating value depends on three critical factors:
Engaging suppliers: How to effectively collect, store and cleanse ESG data
It can be difficult to incorporate Scope 1 and Scope 2 information and leverage critical Scope 3 data. The latter accounts for somewhere between 65% and 95% of carbon emissions. Organizations also run into roadblocks when it comes to collecting and sharing accurate and complete data. An agile cloud framework enhances data automation, data management and AI. It transforms the challenge into an opportunity.
Four components comprise an intelligent architecture:
Circularity leads to a more holistic sustainability model
As sustainability evolves from an ESG-driven task to a circular ecosystem focused on value creation, financial gains and growth follow. In a best-case scenario, these organizations unlock innovation and even market disruption. This might include cosmetic and functional improvements to existing offerings or entirely new products and services.
The opportunities don’t stop there. Advanced analytics and modeling, including digital twins and GenAI, allow a business to model how even small changes in a formula or fabrication method impact carbon output, costs, risks, sales and margins. These tools also provide insight into how complex factors associated with climate change and energy sourcing change business and value chain dynamics.
AI drives transformation
AI is the newest member of the workforce. It automates essential but low value tasks, thus freeing employees to concentrate on the strategic factors that lead to growth.
This might include tracking food or medicine shipments across a supply chain and determining if environmental conditions, such as temperature or humidity, have introduced spoilage risks.
It might also include digital twins that can cycle through product and packaging options to determine how they impact sustainability as well as cost and revenue models. Digital twins can also model how climate change will impact crops or fibers used to produce products as varied as wine or garments.
With humans overseeing the AI, it’s possible to elevate processes and workflows to new levels of efficiency — and achieve greater ROI.
Smart sustainability equals growth
As sustainability evolves, it’s critical to view initiatives as more than a way to appease stakeholders and conform to ESG reporting requirements. Sustainability is smart business. It slashes costs, boosts supply chain efficiency and lowers long-term risks associated with climate change and business disruption. Most importantly, it introduces ways to improve products and services — and even introduces new revenue sources.
Wherever your organization resides in its sustainability journey, PwC can play a vital role in unlocking value and achieving growth. PwC can help you identify a viable strategy, design a Microsoft Cloud architecture that’s fully equipped for the climate transition economy and integrate essential technologies, including AI, into your business. At that point, it’s possible to achieve decarbonization goals but also transform sustainability into a strategic growth opportunity.
Explore the full report
How PwC and Microsoft transform sustainability into a growth driver
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