When I was a child, I dreamt of a world where war did not exist; nobody was poor or sick, food and water supply were abundant, humans co-shared the planet responsibly while thriving in life. I expected nothing but positive progress ahead.
This childhood vision of how the world ought to look like came to my mind a short while ago, when I participated in a panel discussion on the fifth industrial revolution. One of the frst questions was what other measures of success, other than profit, will companies need to consider in helping create a more sustainable future.
To me, the answer is clear: More than ever before, sustainability is an indisputable top priority for all the world’s biggest corporations. The world we live in today has been turned upside down. Everything has been impacted by the global pandemic. While we are at the beginning of recovery from this crisis, there is a rare opportunity to start afresh and build a world we would be happy and proud to call home. Today, companies in any industry or vertical are concerned about their social, environmental and economic footprints - as opposed to focusing only on their monetary business profits. This has nothing to do with charity. It’s all about securing a pathway towards a sustainable and value-creating business. The customers demand to find a more harmonious balance between prosperity and responsibility. To keep and attract talent – purpose and sustainability must permeate every aspect of our business. Therefore, maximizing the triple bottom line theory, where profit, people, and the planet are defining success, is what drives the decision-making of the world’s top brands. Meaning: apart from profit, companies also need to consider the social and environmental impact of their business if they want to attract customers and talent – and stay fighting fit in the long run.
Gone are the days when “Corporate Social Responsibility” was purely a philanthropic or marketing tool, or even a corporate word mainly used to polish the company logo. In the year of 2021, no company with the plan to remain in the game can afford to underestimate the importance of having sustainability integrated into their business model. Every company must be ready to show the public exactly what social, environmental, and economic footprint their business leaves behind.
Consequently, it is pivotal for companies to operate with a purpose beyond simply profit. This new era of purpose-driven businesses, in combination with a shift in the global policy response to fight greenhouse gas emissions, is a fantastic force to drive positive change. The creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk. Between January and November 2020, investors in mutual funds and exchange-traded funds invested USD 288 billion globally in sustainable assets, a 96 percent increase over the whole of 2019. Earlier this year, BlackRock chairman and CEO Larry Fink wrote in his annual letter to CEOs that the climate transition presents a historic investment opportunity. He also warned that companies that are not quickly preparing themselves with a “net-zero” transition plan will see their businesses and valuations suffer. Stakeholders will lose confidence in the companies’ ability to adapt their business models to the dramatic changes that are coming. According to the latest news reports, President Joe Biden will pledge to cut US greenhouse gas emissions by at least half by 2030 – a proposal requiring dramatic changes in the power and transportation sectors. This includes significant increases in renewable energy such as wind and solar power and steep cuts in emissions from fossil fuels such as coal and oil.
This is a very powerful message and something that should spark encouragement and hope. I recently came across a fascinating example of how this type of transition that Mr. Fink talks about could look like in the steel industry – a sector that is the largest industrial consumer of coal, as it provides around 75 percent of its energy demand. Last year, Swedish company H2 Green Steel was established to produce steel using a fossil-free manufacturing process, which it expects to sell into the automotive, transportation, construction, pipeline, and white goods markets, among others. The company, headed up by the former CEO of truck-maker Scania, and backed by investors including Spotify founder Daniel Ek, is investing around USD 3 billion to build a steel production facility in northern Sweden powered by what is described as the world’s largest green hydrogen plant. The company will start its production of steel in 2024, and by 2030, the aim is to have the capacity to produce 5 million tons of high-quality zero-emissions steel per year. The project is just one of many innovative and encouraging examples of the increased appetite major investors show for decarbonization initiatives.
There is a lot of focus on technology these days and what type of technological solutions that companies can come up with to solve real-world problems. In fact, digital technology may be the most powerful, scalable tool the world has to tackle climate change. As an accelerator, it has the potential to reduce global emissions by up to 15 percent by 2030, ten times the digital technology industry’s own carbon footprint, which is 1.4 percent of global emissions. Investing in technology that can accelerate the reduction of greenhouse gas emissions is consequently a key success factor.
For example, did you know that 5G technologies led to over 8 percent reduction in CO2 emissions at the port of Livorno in Italy? Imagine the positive CO2 impact that can be achieved if all of the world’s 2,000 ports adopt cellular technology to scale smarter port operations.
On the other side of the globe, another inspiring example demonstrates how digital technology can help deliver on the triple bottom line. Earlier this year, Ericsson’s 5G smart factory in Texas was recognized by the World Economic Forum as one of the world’s lighthouse factories, meaning: manufacturing sites that serve as role models to the rest of the world in creating profitable economic growth without increasing its environmental footprint. This factory in Texas that primarily serves Ericsson 5G customers in North America is designed to reduce energy consumption by 24 percent, indoor water usage by 75 percent, and the factory runs on 100 percent renewable electricity. Due to the closeness to their US customers, the factory also helps to reduce emissions from product transportation – which is key to deliver on Ericsson’s global goal to cut airborne supply from 30 to max 10 percent.
As digital banking services are vital to reduce poverty in the developing world, this is an area where the mobile operators, can make an impact through a mobile financial services platform that is easy and secure to use. In Africa, for example, 57 percent of the population lack any form of a bank account. Poor access to finance services hinders growth because it limits opportunities to start and grow a business, create jobs, and gain access to skills and knowledge. One way to overcome the problem is by expanding branchless and digital banking and financial services. To increase access to finance for the unbanked and underbanked, promoting financial inclusion is vital to improve prosperity around the globe. Leveraging technology to enhance outreach and facilitate digital payments can enable this to happen.
Another goal that I feel very special about is the zero hunger goal. To have a reliable food supply, it is crucial for farmers to have access to sustainable energy and reliable, clean water. One of the challenges here, related to the technology , is access to clean water in a cost-effective way. In India, Ericsson’s technology helps replace unreliable energy sources to power water pumps and finds ways of removing costly maintenance of water pumps for millions of farmers. This is done through solar-powered connected water pumps, managed over mobile networks by Deutsche Telekom IoT and Ericsson IoT Accelerator, to provide remote monitoring of pumps and consistent water supply all year round. The outcome? Sustainable energy and reliable, clean water allowing farmers to harvest up to three crops per year and earn extra incomes by selling excess solar energy to the government, which gather insights to set new policies.
Related to the zero hunger goal is the clean water and sanitation goal. In this area, the lack of easy access to purified drinking water and economic inefficiency and pollution caused by transportation of pre-packaged glass and plastic bottles pose a challenge. In partnership with mobile operator Telenor Connexion and Wayout, a company that makes sustainable beverage micro-factories, IoT platform has facilitated the local production of clean, filtered water and other beverages in East Africa. So far, the project has had an encouraging impact: by eliminating bottling, each micro-factory filters 70,000 liters of water per month, removing 200,000 plastic bottles, and avoids greenhouse gas emissions in the process. Just imagine the magnitude of the impact if these types of solutions could scale!
So, let’s use all our different skills and experiences to innovate together with our respective customers and partners across the world. Let’s ramp up our combined efforts to make our planet a better and more inclusive place to live on – to benefit all of us. We should never leave behind the ambition that our childhood dreams hold but continue to strive to make them a reality.