Digital Transformation Can Turn Sustainability Into Your Winning Business Strategy IBM Supply Chain and Blockchain Blog.

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Container cargo trucks at the inspection stationGone are the days when businesses took their sustainability efforts seriously. Governments, shareholders, employees and consumers want businesses to integrate environmental issues into their decision-making. In fact, a study from the IBM Institute for Business Value (IBV) found that 50% of consumers say they are willing to pay a premium for sustainable brands.

But there is a clear gap between good intentions and meaningful action: in the same IBV study, less than one in three consumers reported that sustainable products made up more than half of their last purchase. There is also a gap on the business side: only 35% of businesses surveyed have taken action on their strategies in this area.

But what if digital business transformation goes hand in hand with sustainability transformation? For the new report “Sustainability as a dynamic catalyst” (IBV) surveyed 1,958 executives in various manufacturing-based industries in 32 countries. The study found that by combining their sustainability and digital transformation efforts, a small group of “transformation paths” emerged.

These companies show how they can bridge the gap between demand and action, while achieving better sustainable results in innovation and revenue growth. In the year Between 2018 and the first half of 2021, these companies saw an estimated cumulative 51% revenue growth – a nine percentage point difference from their next best-performing peers.

Only 39% of companies are developing more energy efficient products and services.

Increasing government regulation and consumer concerns around sustainability make it clear that organizations today must consider the environmental impact of their activities at every level. And the changes you make should also be factored into the price.

But trails aside, many are not ready to do this. While half of the companies surveyed are motivated to improve their sustainability reporting, less than half indicate they are willing to change existing business practices at the expense of profits. And 39% of companies are developing more energy-efficient products and services.

However, businesses know that solutions exist, and organizations often state that they have technological solutions to achieve sustainability. Executives cite mobile, Internet of Things (IoT), cloud technologies and AI as essential to achieving sustainability goals. The issue is implementation related.

This is where “flexible paths” come in. These companies combine their sustainability and digital transformation efforts to differentiate themselves in the market and use sustainability to create business value.

Key features of transformation paths

Transformative paths share many characteristics. First, they recognize that sustainability is fundamentally a business game changer, driving change and innovation. Therefore, they are more likely to use new technologies such as AI, hybrid cloud and blockchain.

As a result, these organizations see sustainability not as an “add-on” but as a strategy to embed it into the core of the organization. Technology is central to achieving these initiatives, which means the CIO has a central role to play. In fact, in these organizations the CIO often shares responsibility for the sustainability agenda with the COO, helping the business integrate sustainability and digital transformation at work and also in their corporate governance.

Transformational Pathways go outside their organizations to collaborate closely with ecosystems and supply chains, working closely with business partners to jointly achieve their sustainability goals.

One example of this is the electric service utility Ebedrola. In the year As part of its commitment to achieve global carbon neutrality by 2050, the company had to ensure that 70% of its major suppliers implemented effective sustainable development policies and standards by 2022.

In collaboration with IBM and SAP, Iberdrola has successfully implemented protocols and catalogs of pre-approved products and services in its procurement processes. As a result, the company can ensure that each department makes purchases at a unified price and fulfills the correct contract conditions.

Meanwhile, for suppliers who do not initially meet Iberdrola’s sustainability objectives, the scoring tool is used to provide a clear set of actions to improve the sustainability of their business model.

Listening to employees and customers is key to sustainable success.

Engaging with ecosystems and supply chains is critical to the success of transformational paths, but there is another important component: listening.

IBV has proven that businesses that engage employees and customers gain critical input in shaping their sustainability agenda. No one has the monopoly on good ideas, so being open to a wide range of opinions can help companies identify the best opportunities for innovative new products and services.

Achieving sustainability is not easy. But there is a way forward. Those who understand that sustainability and business transformation go hand in hand are well positioned to become leaders in their industries.

In this radically changed business landscape, IBM is working to deliver five digital benefits designed in partnership with organizations. Predict And design results based on data, automate For productivity and efficiency, safe Keep all touch points up-to-date, all the time Infrastructure and transformation Digital business models driven by new technology.

For an in-depth look at how to achieve business and sustainability success, read IBV’s full report; Sustainability as a catalyst for change.

Learn more about how sustainability can be part of your transformation strategy.

IBM’s Institute for Business Value provides thought leadership and insights to drive business value.

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