The post-pandemic world is upending a wide range of established norms, writes Henrik Hvid Jensen, Chief Technology Strategist at DXC Technology. To transition to net zero, we need to revisit the meaning of sustainability.

This realignment, which continues to disrupt seemingly immutable truths around how we live and work, provides us all with an ideal opportunity to think about our impact and to make positive changes.

This reappraisal has begun: in the wake of COVID-19, hundreds of firms and 130 countries have already committed to achieving net zero carbon emissions. An overwhelming majority of CEOs (99%) of companies with more than $1 billion in annual revenue say sustainability will be important to the future success of their business. However, there’s a danger that everyone underestimates the speed of transition, and their current initiatives will not bring them to net zero.

An accelerating transition to net zero

Disruptive technologies and policy decisions are happening in a non-linear way. To date, projected reductions in emissions from using low-carbon technologies have been far too cautious. Even the most conservative of the International Energy Agency’s scenarios have seen emissions drop by 24% in the last four years. An accelerating transition to net zero means that cautious companies risk losing revenue and maintaining obsolete business models, creating opportunities for early movers.

Navigating this seismic change entails replacing the linear economy of build-sell-use-dispose with a circular alternative based on repair, reuse, refurbishment, and recycling, where values trump value. Digitising the circular economy is the only reliable route to achieving net zero while continuing the increase in global wealth we have encountered in the last century. The good news is that the adaptation has begun – we’re already living and working in the new world.

The benefits of a circular economy

Environmental, Social and Governance (ESG) goals are driving organisations to achieve ‘sustainable sustainability’ by requiring them to oversee a data-driven and platform approach to address near-term challenges of compliance and reporting carbon emissions across supply chains. More challenging is the job of helping an organisation’s leadership reimagine and steer their business in the context of the circular paradigm to support ESG goals and to keep their business competitive.

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In a circular economy, renewable, recycled or highly recyclable inputs are used in production processes, enabling partial or total elimination of waste and pollution. In effect, waste becomes an asset, not an expensive liability. In the next 10 years, consumers and governments won’t allow supply chains to produce waste, and it’s realistic to presume the circular economy will become the only economy within two decades. The circular economy requires the redesign of products, value chains and business models. Companies must start today to learn and adapt to remain competitive in a circular economy. For example, their IT systems will require modernisation to allow efficient interactions with up and downstream partners, which will be critical in circular ecosystems.

Societal benefits of a circular economy

Born-circular products don’t have an end-of-life, instead they have an end-of-current-usage, as their inherent circular design focuses on making value recovery easy and effective. Likewise, born-circular companies have a direct economic interest in extracting all their products’ recoverable value. The business model ensures that users are incentivised to return the products, either contractually, through deposits or in the product-as-a-service model.

However, arguments in favour of circularity transcend environmental and economic advantages; they also include societal benefits. Maintaining social inequalities is increasingly seen as wasteful as dumping material resources. For example, virtual work is credited with increasing inclusivity and diversity in the workforce. These benefits have been described as “overwhelming” by the World Economic Forum.

Data driven business practices for sustainability

Having access to good data will be essential during the transition to a circular economy, so it is important to strengthen leadership capabilities in and around IT. This is especially useful as ESG in the post-pandemic world is a strategic and data-driven item on the boardroom agenda. Good data will also help ensure compliance with environmental regulations, as well as the need for visibility of partners up and downstream.

For example, tackling Scope 3 carbon emissions (indirect emissions from customers and suppliers in a company’s value chain) presents an intractable layer of complexity, including abandoning opaque carbon accounting and tracking practices, while working collaboratively with customers, supply networks and industry groups.

The good news is that there are emerging digital tools, including distributed ledger technology (DLT), geospatial technology and internet of things (IoT) implementations, that promise to overcome the limitations of current ESG models by providing direct data that support the creation of actionable insights. But also good old legacy modernisation skills are needed. The goal of sustainable sustainability is getting nearer by the day. But it requires action today.