c-suite

Double the bottom line, slash carbon emissions:
why Eco-Digital should be CIO’s top priority

insight
May 21, 2024
9 min read

Authors

Photo of author Ganesh Sahai

 

Ganesh Sahai

An Engineering Excellence leader serving as a Global CTO at Nagarro. He has more than 20 years of industry experience and 11 patents to his name. 

 

 


Peter Hammer

Peter Hammer is a strategy leader, a creative thinker, and a powerful communicator working towards connecting businesses with technology. He is helping businesses gain an edge through impactful technology

The year 2024 is shaping up to be a watershed year for environmental and social responsibility, with the European Union's Corporate Sustainability Reporting Directive (CSRD) now in effect. It requires companies in Europe and beyond to publicly report on their environmental and social impacts. California is joining the movement with its mandatory reporting regulations, and a wave of similar regulations is sweeping the globe.

This surge in sustainability reporting is no accident. Investors, regulators, and the public are demanding more transparency on climate-related risks. This includes a company's dependence on fossil fuels, vulnerability to extreme weather events, and overall environmental and social impacts.

The message for CIOs is clear: businesses must take concrete steps toward sustainability and commit to eco-digital measures. We're at a critical juncture, witnessing a seismic shift in global leadership's view of sustainability. They are looking at it for survival, accountability assessments, and the undeniable economic benefits of sustainable practices in the face of worsening climate catastrophes and skyrocketing costs, which are at stake. 

Sustainable innovation: the Eco-Digital revolution

Eco-Digital refers to a future economy that is both digital and sustainable. It envisions a world where digital technologies, while themselves going green, will solve environmental problems and create a more sustainable future. We are on the precipice of the Eco Digital Economy outbreak.
Ganesh Sahai
Nagarro

In today's interconnected world, countless online interactions between people, businesses, devices, data, and processes fuel the digital economy. This hyperconnectivity, driven by the Internet, mobile technology, and the Internet of Things (IoT), fundamentally reshapes how businesses operate, collaborate, and how consumers access information, goods, and services.

A surge in collaboration and platform-based solutions characterizes the eco-digital age. This fosters innovation and leads to the development of completely new business models, new sources of revenue, and significant cost reductions. Data usage, cloud technology, and the integration of products and services are at the forefront of this transformation. A recent study found that digital-first companies are 64% more likely to achieve their business goals than their peers and a large majority of 56% of CEOs say digital improvements have led to increased revenue (source: Forbes).


The future of the Eco-Digital economy   

The eco-digital economy is poised for a massive boom: it's predicted to double to a staggering 33 trillion dollars within the next five years. (source: report by Capgemini in collaboration with the Digital Data Design Institute at Harvard). A combination of factors drives this surge. Consumers are increasingly environmentally conscious and reward corporate sustainability measures. However, the benefits go beyond altruism – eco-digital practices translate to significant cost savings through reduced waste and energy consumption. Furthermore, focusing on sustainability strengthens a company's reputation and sets it apart from the competition. The digital aspect isn't just about marketing, streamlining processes, and increasing efficiency. Ultimately, embracing eco-digital practices is a smart business decision that prepares companies for a future where sustainability isn't just a trend but a core expectation.
 

In today's world, sustainability is not just a social responsibility, but a strategic imperative. By harnessing eco-digital innovation, CIOs can achieve a double win: reducing their carbon footprint while doubling their profits. It's time to lead the way to a thriving, sustainable future.
Peter Hammer
Nagarro

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Eco-Digital is booming & the statistics are demanding a call to action.

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What problem does an eco-digital economy solve for business leaders? The Bigger Picture.

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Case for Eco Digital Transformation.

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How to achieve Eco-Digital Maturity.
What parts of your business do you need to transform to build an eco-digital economy? 

Eco-Digital is booming & the statistics are demanding a call to action

Businesses are rising to the climate challenge

There is a significant impact of digital technologies on sustainability. If brought to scale, digital technologies could reduce emissions by 20% by 2050 in the three highest-emitting sectors: energy, materials, and mobility. These industries can already reduce emissions by 4-10% by 2030 by accelerating the adoption of digital technologies. (source: A study by the World Economic Forum)

Customers are making environment-conscious choices

22% of households actively make more sustainable buying decisions and 'eco-active' people are worth an estimated $456 billion (€426 billion) to the fast-moving consumer goods industry (source: According to Kantar's 2023 report).

The workforce is transforming

The workforce is undergoing a major transformation to adapt to widespread digital adoption. With nearly two-fifths (almost 40%) of future work expected to involve digital skills, a staggering 64% of organizations are actively reskilling their employees (LinkedIn-Leading-with-Learning-Insights-and-Advice-Report_.pdf). This highlights the need for adaptable learning frameworks to keep pace with rapid technological advancements.
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Businesses are rising to the climate challenge

There is a significant impact of digital technologies on sustainability. If brought to scale, digital technologies could reduce emissions by 20% by 2050 in the three highest-emitting sectors: energy, materials, and mobility. These industries can already reduce emissions by 4-10% by 2030 by accelerating the adoption of digital technologies. (source: A study by the World Economic Forum)

Customers are making environment-conscious choices

22% of households actively make more sustainable buying decisions and 'eco-active' people are worth an estimated $456 billion (€426 billion) to the fast-moving consumer goods industry (source: According to Kantar's 2023 report).

The workforce is transforming

The workforce is undergoing a major transformation to adapt to widespread digital adoption. With nearly two-fifths (almost 40%) of future work expected to involve digital skills, a staggering 64% of organizations are actively reskilling their employees (LinkedIn-Leading-with-Learning-Insights-and-Advice-Report_.pdf). This highlights the need for adaptable learning frameworks to keep pace with rapid technological advancements.

What problem does an eco-digital economy solve for business leaders? The bigger picture.

The eco-digital economy tackles a complex challenge for business leaders: it offers a path to sustainable success that balances profitability and environmental responsibility. Here is what the studies show:  

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Reduce the capital cost

There is a clear correlation— strong environmental, social, and governance (ESG) practices promoted by eco-digital initiatives lead to a lower cost of capital. This means significant savings on debt and enhanced investor appeal, both of which translate into more cash in your pocket. Embrace the eco-digital revolution, embrace sustainability, and discover the key to financial success and long-term profitability.

An analysis conducted by NYU Stern highlighted that companies with better ESG performance not only tend to outperform financially but also maintain a higher market valuation, further supporting the premise that strong ESG credentials are linked to superior financial outcomes. 

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Boost your stock value

Companies with strong sustainability ratings, achieved through eco-digital practices, outperform their less sustainable peers. This means a significant increase in your company's share price, making you a more attractive investment and unlocking a wealth of new capital for growth.

This is based on a study published by ScienceDirect. They analyzed a large sample of listed US companies from 2003 to 2017 and found that an increase in eco-innovation is associated with a significant 17.62% reduction in stock price crash risk. The study suggests that eco-innovative companies attract greater attention from institutional investors and equity analysts and disclose more information, all of which contribute to lower stock price crash risk. Further analysis shows that the negative relationship between eco-innovation and crash risk depends on the ideology and environmental orientation of political leaders.

Embrace the eco-digital revolution, prioritize sustainability, and watch your business soar in the market. 

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Improved brand reputation

Consumers are drawn to brands that are committed to the environment. Eco-digital initiatives demonstrate a business's commitment to sustainability, strengthening brand reputation and attracting environmentally conscious customers and investors. 

An analysis by Emerald Insight reinforced that an increase in ESG rating positively affects a firm’s market value, highlighting that superior ESG performance is valued by investors, especially during challenging times such as the COVID-19 pandemic. This suggests a direct link between strong ESG practices and the ability to maintain higher market valuations compared to peers (Emerald Insight).

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Future-proof the future

Consumers and regulations are increasingly focused on sustainability. By adopting eco-digital practices, companies are becoming more resilient and adaptable, preparing for a future where environmental responsibility is a non-negotiable expectation.  

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Outperform the benchmarks

Companies at the forefront of ESG performance, often achieved through eco-digital initiatives, consistently achieve higher return on capital than companies that lag. That's a significant edge in today's competitive market. By prioritizing sustainability, you're not only doing the right thing for the environment but also positioning your company for long-term financial outperformance.  

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Tackling climate change

The biggest picture is that by adopting eco-digital practices, businesses are part of the solution in the fight against climate change. This benefits the planet and puts it in a good position in the eyes of stakeholders who are increasingly interested in environmental issues.  

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Enhance customer satisfaction

Continuous improvement helps companies provide a better customer experience. Companies can meet and exceed their customers' expectations by actively soliciting customer feedback, analyzing data and implementing changes based on customer insights, resulting in higher customer satisfaction and loyalty. 

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Keep the volatility under control

In times of high market volatility and uncertainty, sustainable funds—which are often backed by companies with eco-digital initiatives—significantly outperform traditional funds. This translates to greater stability and resilience for your company's financial performance, even during economic downturns. Embrace the eco-digital revolution, prioritize sustainability, and confidently weather any storm. 

Case for Eco-Digital transformation

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How to achieve Eco-Digital maturity 

A two-pronged approach that combines sustainable tech and using tech for sustainability creates a synergistic effect. Using sustainable technology as a foundation ensures that your digital tools are environmentally sustainable. Then, use the power of technology to drive sustainability throughout your organization and beyond. Embrace the eco-digital future, create a sustainable advantage, and lead the way to a responsible and profitable future.

Sustainable tech

Make green IT the basis on which you build tech, with minimal environmental impact. Build your technology infrastructure with a focus on minimizing environmental impact.

Explore energy-efficient hardware, cloud-based solutions with lower carbon footprints, and responsible e-waste disposal practices.

Modern, interconnected technologies such as the Internet of Things (IoT), intelligent automation, and machine learning are revolutionizing energy management, especially for facilities with high energy demands, such as data centers. Google, for example, has reportedly slashed its data center cooling costs by 40% through automation and machine learning. These advances offer significant potential for businesses to optimize energy consumption and reduce their environmental footprint.

Sustainable tech

Tech for sustainability

Deploy digital to optimize the footprint of operations and the wider ecosystem.

Use digital tools to optimize the environmental footprint of the entire operation. This includes areas such as resource allocation, supply chain management, and logistics. Also, look for opportunities to use technology to extend sustainability efforts across your entire ecosystem, such as through collaboration with suppliers and partners.

The global movement is using technology as a weapon against real environmental challenges. Companies are going beyond just business and taking social responsibility by recognizing sustainability hurdles and using AI, blockchain, or other innovative solutions to tackle them. By embracing technology-enabled sustainability, businesses can solve real problems, create a sustainable future, and thrive in the years to come.

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What parts of your business do you need to transform to build an eco-digital economy?

You create a powerful synergy by focusing on purpose, process, and people. Data guides your efforts, optimized processes reduce waste, and an empowered workforce drives continuous improvement. This comprehensive approach is key to building an eco-digital success story.

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Purpose


Identify the right problems with data-driven purpose:
Understand your environmental impact— Start by using data to get a clear picture of your environmental footprint. Conduct surveys, analyze performance data, and use benchmarking tools to identify areas of high resource consumption or waste generation. This data-driven approach ensures that you're addressing the most important issues.

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People


Empower people for a sustainable future: Sustainable mindset for all: Building an eco-digital culture is crucial. Foster a fundamental sustainability mindset throughout your organization. Integrate the principles of lean thinking at all levels and empower your employees to make informed decisions prioritizing efficiency and environmental responsibility.

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Process


Eco-digitize your processes for greater efficiency and sustainability: Solve problems and eliminate waste: Once you know your environmental impact, develop data-driven strategies to solve the problems you've identified. Use technology to optimize resource allocation, streamline processes, and eliminate waste across the value chain. Continuous improvement and measurement: Set clear annual sustainability targets and track progress continuously using leading indicators. This enables course corrections and ensures you stay on track and achieve your sustainability goals.

The future of the economy is undeniably eco-digital. It's a future in which environmental responsibility and profitability are not at odds but two sides of the same coin. By embracing eco-digital transformation, you save the planet and open a world of opportunity, innovation, and long-term success.

Now is the time to act. Become a leader in the eco-digital revolution.

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