Insights
Navigating sustainable business transformation: Thinking ahead with global leaders
The business landscape is exposed to perennial flux in this era, marked by rapid technological advancements, evolving economies, and shifting societal dynamics. Enterprises risk obsolescence unless they adapt and transform to meet escalating consumer and industry expectations and the moral imperative for environmental sustainability while navigating the complex changes that define our world today.
As part of our latest Thinking Ahead series, we asked global leaders across industries to share their thoughts on the growing importance of sustainable business transformation. Our conversation with experts and executive decision-makers delved into the obstacles and opportunities in the transformation journey. Thought leaders emphasized the significance of integrating technology, particularly AI at the core of every transformative strategy to address global challenges and contribute to creating a better world for future generations.
In this blog, we glance at some of the emergent themes in our conversations around the role of AI and technological innovation in driving sustainable business practices and the industry trends shaping the transformation journey.
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A holistic approach to building the foundation of sustainable transformation
In a recent UST survey conducted with executive leadership and senior management across industries, we found that 92% of organizations value sustainability and technology-driven transformations and that executive leadership is significantly more likely to value sustainability and technology-driven transformation. (95%, 97% respectively)
A general trend is moving towards a comprehensive and integrated approach to sustainability, recognizing the interconnected nature of environmental, social, and economic factors as crucial for long-term business success and resilience. Experts highlighted sustainable business practices like establishing transparent and traceable supply chains, practicing ethical sourcing, and embracing circular business models such as "product as a service" to extend product life cycles in reducing environmental impact.
Although the need to transform for sustainability is unanimous among organizations, the roadmap looks different for organizations as priority areas vary. As the survey informs us, 35% of companies focus on changing their sustainability integration, 34% focus on data-driven decision-making (34%), 33% wish to change with flexibility and adaptability in mind, and 32% of organizations focus on strategic alignment with overall business goals.
You can read the full Thinking Ahead 2024 report here
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Overcoming challenges and seizing opportunities in sustainable business transformation
In our dialogue with industry experts, we discuss the headwinds to drive long-term success in building sustainable business models. Most organizations face common barriers including insufficient resources and expertise, inadequate data, and resistance to change.
Here are some of the broad enterprise challenges that leaders are addressing:
- Cultural shift: Challenging existing norms and beliefs, fostering a culture of innovation and sustainability, and aligning stakeholders around a shared vision for change.
- Regulatory compliance: Navigating complex regulatory landscapes requires a deep understanding of legal requirements, proactive risk management strategies, and continuous monitoring and reporting mechanisms.
- Supply chain complexity: Addressing supply chain complexities involves collaborating with suppliers, implementing robust traceability systems, and promoting responsible sourcing practices throughout the value chain.
- Stakeholder engagement: Building trust, fostering open dialogue, and addressing stakeholder concerns, including employees, customers, investors, and communities, requires effective communication, transparency, and accountability.
Nevertheless, leaders concur that within these challenges lie opportunities. Sustainability initiatives hold the potential to secure market leadership and gain a competitive edge while favoring cost reduction and enhanced efficiency.
Mike Herod, Director of ESG and sustainability at Fluence, mentions that unfortunate incidents such as labor code violations can provide significant opportunities to drive positive supply chain change. He also believes that determining where to focus sustainability efforts first is paramount, as their greatest challenge or opportunity has been prioritizing sustainability initiatives and overcoming hurdles in data and systems sophistication.
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AI and sustainability: democratization of AI and change management
With AI dominating the business landscape, organizations are placing AI at par with IT and data analytics when it comes to sustainable business growth. As the survey reveals, in the last five years, nearly all organizations (93%) believe AI and new technologies have improved operational efficiency, and organizations are most likely to see AI evolve by helping them to predict and mitigate sustainability risks (70%).
The sentiment is evident with the rise of green AI as an emergent trend that represents a pivotal shift in the technology landscape, where innovation is driven by performance and efficiency, sustainability, and environmental stewardship. Green AI focuses on building AI-driven solutions that prioritize energy efficiency, minimize carbon emissions, and contribute to overall carbon footprint reduction. AI-powered algorithms and analytics are being used to identify opportunities for emissions reductions across various sectors, including transportation, manufacturing, energy production, and agriculture.
Andy McMahon, head of MLOps at NatWest Group talks about the need to democratize AI to fully grasp the advantages of leveraging AI and machine learning in accelerating the transition toward a more sustainable future. It is essential to have a shared understanding of AI/ML capabilities across the organization along with increased collaboration between technology and business teams.
Along the same lines, Karenann Terrell, Former CIO, Walmart; CDTO, GSK; and UST advisor, stresses the need for an articulated AI strategy that seamlessly integrates within the core DNA of an organization across the company culture, operations, and broader ecosystem for achieving AI readiness. She accentuates the importance of adept organizational change management in accelerating AI deployment and the evolving role of CIOs in facilitating AI adoption for sustainability.
A ubiquitous integration of AI within the entire organization requires a well-defined process for AI management and widespread understanding and adoption across all organizational roles. The traditional approach of associating change management solely with program or project implementations is no longer tenable. Instead, there is a growing recognition that organizations must embark on change management initiatives that delineate the implications of AI for their workforce comprehensively and proactively.
Yet, integrating AI into business models is not without hurdles. Organizations need to overcome challenges, including data quality and bias, data security and privacy, accessibility, and standardization, to ensure the effective implementation of AI.
You can read the full Thinking Ahead 2024 report here
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Technological innovations driving sustainability
In an age of convergence of advanced technologies and sustainable business practices, aligning with change management and profitability marks organizational objectives for 2024. As our survey reveals, more than half of organizations foster innovation through sustainability goals in mission and values (57%), utilizing technology to drive sustainable practices (54%), and dedicated teams to test new technologies (51%).
Some key examples of using technology to drive sustainability practices include:
- Data analytics, ML, AI: These tools gather insights from diverse data sources to optimize resource use, track emissions, and identify opportunities for sustainability improvements. For instance, AI-powered algorithms can optimize transportation routes to minimize fuel consumption or suggest eco-friendly materials for product manufacturing.
- IT Networks and IoT: building sustainable supply chains by connecting diverse data sources across the supply chain, providing real-time visibility into material flows, emissions, and resource usage. Connecting physical assets with sensors and networks allows real-time monitoring of environmental parameters, enabling interventions like energy usage, resource consumption, waste reduction, or preventive maintenance.
- Blockchain: enhances transparency and traceability in supply chains, enabling businesses to track the origin and journey of products from raw materials to end consumers. This helps ensure ethical sourcing, fair labor practices, and environmental sustainability.
Maneet Singh, CIO of Odyssey Logistics, specifies the vital role of AI/ML in the future of supply chains. He shares an example of transforming transportation by leveraging LLMs trained on extensive data sets to optimize routes, manage storage capacity, and adjust real-time variables based on live data.
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Measuring return on investment of sustainable technology solutions
Organizations prioritize different KPIs when measuring the effectiveness of transformation strategies. Along with cost savings and operational efficiency, supply chain sustainability is a metric leadership chooses to observe long-term success.
Leaders mention that while measuring AI integration for sustainability is crucial, it is also necessary to start small. Analyzing too many parameters without a clear and measurable goal that everyone agrees to can lead to fallbacks in the transformation journey.
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Envisioning the future of technology in driving sustainable transformation
As per our survey, 91% of businesses expect an increase in their IT budget for sustainable transformation over the next three years.
Although the future of technology-led sustainable growth looks promising with AI's unbounded potential, progress will depend on how executive decision-making spearheads change in navigating the challenges and leveraging innovation to its desired potential. The opportunities are limitless with emerging innovations such as biomimicry, AI-powered design, quantum computing, and decentralized and autonomous systems.
While 2023 witnessed rapid progress in AI enthusiasm, 2024 will see a shift in the holistic and organizational adoption of AI. Jon Clay, data director at Solera, mentions that in unlocking the full potential of AI-driven sustainability solutions, we need to address the crucial questions: Is the data readily accessible and of high quality? Do contractual agreements with suppliers and customers support AI utilization? Is the organizational culture prepared for the necessary changes?
The limitless potential of AI, technology, and sustainability paints a vision of a future where innovation, collaboration, and responsible resource stewardship converge to shape a more prosperous, equitable, and sustainable world. By leveraging the transformative capabilities of AI and technology, humanity can confront the significant challenges of the 21st century, laying the foundation for a thriving future for generations to come.
In our conversations with global leaders, we examine the boundless impact of AI and technology on building sustainable futures and gain insight into business strategies implemented across industries.