Technology is- and will continue to be- the fundamental driver of sustainability for organisations, and their supply chains, customers, and broader business ecosystem.
Embracing the ‘technology ecoadvantage’ mindset boosts business adoption of transformation and accelerates sustainable development. However, caution must be exerted as well
TAKE a step back in time to the 1950s, where computers were extremely expensive. It was reported that leasing one could cost up to US$200,000 or RM822,421 a month. Only large, prestigious technology companies and educational institutions could afford it then.
Along came Alan Turing and John McCarthy who transformed the world with their innovative ideas. Turing, the father of modern computer science, developed the first modern computers which decoded the encryption of German Enigma machines during the Second World War, and detailed a procedure known as the Turing Test.
McCarthy, the father of artificial intelligence (AI), coined the term in 1955 and subsequently created the computer programming language List Processing (LISP) in 1958. LISP was initially used primarily by the AI community.
Suffice to say, Turing and McCarthy’s extensive work laid the foundation for technology and AI - which like social media - took the world by storm.
At present, green technology embedded with AI is making dramatic improvements in climate and emissions management, energy and the grid, transportation, water, food and agriculture, buildings and cities, and more.
This results in better modelling and higher transparency into operations that is considered helpful in assisting governments and businesses reduce carbon emissions.
A wealth of potential
Technology adoption is the new normal for businesses and governments seeking to enhance their decision-making process, increase business productivity, lower costs, and power overall sustainability gains.
In energy and grid management, technology is being used to balance supply and demand on the grid. In food and agriculture, it is utilised in precision agriculture, which can boost farm efficiency through better weather prediction and more precise application of water, fertiliser, or pesticides, and reduce waste.
Technology is also used to lower risk, cut costs, waste, and inventory through better forecasting and management in supply chains. All in all, it is used in sectors ranging from logistics and transportation, education, product design, healthcare, public safety, and more.
A new research by Accenture demonstrated that technology is - and will continue to be - the fundamental driver of sustainability for organisations, and their supply chains, customers, and broader business ecosystems.
It is reported that 92% of companies in Accenture’s survey aim to achieve net-zero targets by 2030, which will require deployment of advanced technologies to measure, reduce, and remove an organisation’s carbon footprint.
“Technology is essential to improving transparency and traceability in global supply chains. It helps companies uncover insights to spur action, whether that means transforming customer experiences or building a more sustainable organisation.”
Accenture’s study titled Uniting technology and sustainability was based on 560 chief information officers, chief technology officers, chief sustainability officers, as well as directors and VPs from companies which make revenue of above US$1bil in 12 countries, 11 industry sectors.
Emphasising that companies with a higher sustainability performance - across environmental, social and governance (ESG) indicators - perform better financially than their peers, the research noted that most organisations which aim to achieve their net- zero ambitions by 2030 want to embed sustainability throughout their supply chain.
This is to reduce carbon emissions while addressing issues like human rights and ethical sourcing.
“Technology is a vital enabler across the five key areas, namely accelerating net-zero transitions, moving towards sustainable value chains, promoting sustainable choices for customers, measurement, reporting and performance on ESG goals, and building a sustainable organisation.”
“Various technologies - AI, cloud, blockchain, analytics, Internet of Things, and more - can play a role in reducing carbon emissions. AI is a particularly powerful tool. For instance, of the companies in our sustainable tech survey that successfully reduced emissions in production and operations, 70% used AI to do it.”
It was also pointed out that technology will be a key enabler in solving complex problems at scale.
Malaysia on the move
In line with global sustainability goals, Malaysia has been taking bold steps to embrace digital transformation and innovation with ESG initiatives in its national policies and corporate practices.
Its government launched a multitude of plans including the Green Technology Master Plan (2017-2030) to provide actionable strategic directions to support the National Green Technology Policy - which outlines strategic plans for green technology development to create a low-carbon and resource efficient economy.
In addition to the 12th Malaysia Plan (2021-2025) which aspires to meet the nation’s net-zero greenhouse gas (GHG) emissions aspiration by 2050 at the earliest, other efforts include updating its Nationally Determined Contributions (NDC), signing the Paris Agreement, implementation of the National Energy Policy 2022-2040, National Efficient Action Plan (2016-2025), National Energy Transition Roadmap (NETR), MyHijau, among others.
The Renewable Energy Act 2011 is also in place, aiming to increase electricity generation from renewable energy sources such as energy solar photovoltaic, biogas, biomass and small hydropower via a Feed-in Tariff (FiT) mechanism. This mechanism allows producers and users to sell excess power to the national power grid.
In a move that signals the growing importance of ESG considerations in corporate governance, Bursa Malaysia - one of the largest bourses in South-East Asia - made it mandatory for publicly listed companies to disclose their sustainability practices in their annual reports through detailed ESG reporting.
According to a World Economic Forum report, this measure has pushed Malaysian businesses, such as SD Guthrie (formerly known as Sime Darby Plantation), Tenaga Nasional Berhad, Maybank, among others, to innovate and adopt necessary technologies that encompasses AI to enhance sustainability and resource efficiency.
Bursa Malaysia also introduced the Enhanced Sustainability Disclosure Framework in 2022 as well as digital tools that help companies meet their ESG reporting requirements, particularly the Centralised Sustainability Intelligence (CSI) solution, which provides tools for assessing carbon emissions across value chains and streamlining sustainability reporting. This greatly facilitated access to green financing and new markets.
The Malaysia Centre for the Fourth Industrial Revolution (Centre4IR) launched its ESG Innovation Challenge, which invites innovators from around the world to propose groundbreaking projects that leverage digital technologies such as automation, AI and data analytics to minimise environmental impact and advance ESG goals.
The challenge aligns with Bursa Malaysia’s Public Listed Companies Transformation (PLCT) Programme, which promotes best practices in digital transformation and ESG adoption to propel corporate Malaysia towards higher performance, while fostering a dynamic environment that attracts both local and global investors. These are just a number of efforts among the many.
It’s not all green
There’s always two sides (or more) to every situation. Currently, there are plenty of predictions that technology will massively drive sustainability efforts while boosting the economy through cost savings as well as entirely new products and markets. However, some argue otherwise.
According to a report titled “AI won’t give you a new sustainable advantage” published in the Harvard Business Review (HBR), AI is not poised to help sustainability changes. It stated: “Unless the business already has a competitive advantage that rivals cannot replicate using AI. Then the technology may serve to amplify the value a business derives from that advantage.”
Another recent report published in HBR titled The uneven distribution of AI’s environmental impacts, noted that the training process for a single AI model can consume thousands of megawatt hours of electricity and emit hundreds of tons of carbon.
“AI model training can also lead to the evaporation of an astonishing amount of freshwater into the atmosphere for data centre heat rejection, potentially exacerbating stress on our already limited freshwater resources.
“These environmental impacts are expected to escalate considerably, and there remains a widening disparity in how different regions and communities are affected.”
However, HBR reported that the ability to flexibly deploy and manage AI computing across a network of geographically distributed data centres offers substantial opportunities to tackle AI’s environmental inequality.
It does so by prioritising disadvantaged regions and equitably distributing the overall negative environmental impact.
Andrew Winston, a globally recognised expert on how to build resilient, profitable companies that help people and the planet thrive, pointed out that AI has the potential to help address societal problems like climate change. But challenges like high energy consumption threaten to negate its benefits.
In his column in the MIT Sloan Management Review titled Will AI help or hurt sustainability? Yes, Winston opined that AI can make the things that already produce climate-changing emissions worse.
“The fossil fuel industry uses AI to find more resources, fast fashion companies use it to identify more niche markets and produce more short-lasting apparel, and AI can help fishing companies overfish the oceans even more quickly.”
He added AI has also become the source of both information and “dangerous misinformation” and that it will have unknown, large impacts on jobs and livelihoods - which could either mean more productivity or fewer jobs.
The Accenture study noted that while software drives intelligent solutions designed to tackle environmental challenges, companies also need to make their software itself an integral part of their sustainability strategy.
“While technology is a fundamental driver of sustainability, the solution itself needs to be monitored so that it doesn’t become the problem. Technology can and does create sustainability issues.
“The reality is that software is at the heart of all technology. And companies need to adapt how software is designed, developed, deployed, and used to minimise its carbon footprint.
“Software runs on hardware, and any uptick in software use increases the emissions of machines and devices on which it runs. Green software practices can reduce energy consumption in multiple ways,” the report stated.
In summary, the role of technology in driving ESG initiatives will only increase in importance as the world continues to navigate the complexities of climate change and resource management.
Businesses are constantly being encouraged to embrace digital transformation to achieve sustainability goals and secure long-term success in a rapidly evolving global landscape.
However, one should ponder if humans are capable of controlling the utilisation of technology - the good and the bad - for advancing ESG masters. Or lose control of it, just like how we lost control over social media (cue Netflix’s The Social Dilemma documentary).
We can only wait to find out.
