The longevity key for business

In recent years, numerous studies have demonstrated the positive financial impact sustainability can have on companies. Despite this, some argue that businesses must choose between maximising societal and environmental benefits or financial returns, suggesting that achieving both simultaneously is impossible.

This dichotomy often results in sustainability programmes being seen as secondary, rather than integral to business growth. However, the future of sustainability hinges on value creation. CEOs and CFOs must recognise that sustainability is a significant concern for shareholders, investors and customers. Investors are increasingly willing to pay premiums for companies that provide genuine transparency about their sustainability initiatives, driven by stricter regulations and reporting requirements. Consumers also prefer products and services with robust sustainability profiles, creating clear imperatives for businesses.

Our report reveals that AI technologies have the potential to significantly reduce global carbon footprints, cutting gigatons of CO2 emissions annually. Additionally, leveraging data and AI to reduce emissions could save companies hundreds of billions of dollars each year. This preliminary snapshot illustrates how data and AI can cut emissions, reduce costs and enable new sustainable revenue streams across various industries.

Sustainability: the longevity key for business

Sustainability reports have evolved from mere promotional materials into rigorous documents akin to financial reports. For instance, the Corporate Sustainability Reporting Directive (CSRD), the world’s largest and most comprehensive sustainability reporting standard, is now mandatory for approximately 50,000 companies operating in Europe. Companies must significantly expand their sustainability reporting efforts to enhance transparency and accountability.

Collecting and presenting data in line with regulatory expectations involves a high risk of human error, which is problematic as companies are liable for any inaccuracies in their sustainability reports, just as they are for financial reporting errors. The era of relying on spreadsheets for sustainability reporting is over. Data and AI provide opportunities to ensure compliance with increasingly stringent regulations and reporting requirements while positioning businesses as leaders in sustainable transformation. Sustainability impacts every area of business, from human resources (HR) and finance to operations and supply chain management. Consolidating data into a single source allows AI to boost efficiency and sustainable growth.

Solid foundations: there is no AI without data

Research shows sustainability measures can positively impact financial performance by reducing operating costs or lowering equity capital costs. However, most studies focus on the financial benefits of sustainability in isolation, without considering the additional benefits of integrating data from areas such as HR, finance, supply chain, sales, or research and development (R&D). Combining data from all organisational areas establishes a foundation that simplifies compliance with reporting requirements, reduces costs and unlocks new revenue streams.

Fragmented data disrupts sustainability compliance and growth opportunities. Leaders can overcome this by breaking down data silos, unifying various data sources, and integrating existing data systems across their organisations.

Key aspects for data-centric business transformation

1. Data and AI operating models: Companies need well-defined models that embed sustainability governance across business functions and data domains. This might involve a decentralised governance structure that emphasises data collection and analysis.

2. Data and AI tech architecture: Cloud-based platforms create a strong foundation for integrating data from various sources. Migrating data to the cloud can significantly reduce power consumption and CO2 emissions.

3. Data and AI governance: Establishing robust data governance ensures high-quality, reliable data for effective use in sustainability analytics or AI.

4. Data security and privacy: Organisations must maintain public trust by ensuring responsible data use, relying on robust security measures and encryption protocols.

5. People and culture: Establishing a data-centric organisation requires equipping individuals with necessary skills and raising awareness about the importance of data for driving sustainability and business growth.

This is just the beginning

The path to sustainability is clear, driven by rational economic decisions and the positive economic impact of AI. As the world moves towards a sustainable economy, companies must seize opportunities and embrace data and AI to drive financially worthwhile sustainability programmes. The rise of AI is part of a long-term digital transformation, promising numerous sustainable and economic benefits in the future.