The future will be digital and green but how quickly we can get there remains in question. How are companies balancing sustainability with revenue goals?
Technology adoption has accelerated during the pandemic, but it has happened largely because business leaders have not had a choice. When companies are profitable, they are not very motivated to change. The pandemic has forced companies to turn to new processes and technologies in order to protect and boost their bottom lines.
Similarly, corporate sustainability goals tend to be aligned with a clear financial benefit. We have not seen many boards of directors say yes to making ESG-related changes to their supply chains in the absence of a clear benefit to their P&L, for example. If that financial benefit is not evident, they might do it for a while, but then they stop.
Sustainability benefits need to be combined with economic ones if we want measures to be maintained for long periods of time.
What is your advice for companies trying to align their environmental and financial benefits?
Both outcomes actually get along very well. In supply chains, for example, there are four stages: planning, buying resources, transforming them into products, and delivering them. In all four phases, there are technologies and new processes that can be introduced that lead to both environmental and financial benefits: by using data analytics or artificial intelligence, for instance, companies can drastically reduce their waste by purchasing only commodities they can resell. Humans do not have this level of precision, but AI does - avoiding waste saves money and protects the environment. Another example is farming, where sensors can reveal how much water you actually need, which reduces your operating cost while saving resources. When economic benefits can be coupled with environmental ones, there is no limit to the adoption of technology.
As we gear towards decarbonization, we rely on prototypes or technologies that do not yet exist. Are companies and governments increasing their R&D spend?
R&D spending has increased, but much of the technology we need is already available. It's just a matter of adopting and combining multiple, existing technologies to create something new. Driverless cars, for instance, depend on other technologies like batteries and sensors. Another example is ride sharing. Ridesharing companies did not create a completely new technology, but they created apps that relied on technologies like cell phones and mobile networks to revolutionize transportation. I think this is the hard part - not adopting one particular technology, but rather combining the right technologies at the right time.
In terms of technology adoption, are there any stand-out industries that are paving the way for others to follow?
Earlier, I noted that companies accelerate when they have no choice, and agribusiness has reached this point. Supply chains have been disrupted during the pandemic and some parts of the world are facing food shortages, so they’ve needed to come up with new ways of doing business. I would say, the same goes for logistics companies.
What is PwC doing to reduce its own carbon footprint?
We started measuring our carbon footprint in 2007 and committed to achieving net-zero emissions by 2030. Due to the nature of our business, we are managing our climate impact by reducing air travel – which has historically contributed the bulk of our emissions – improving energy efficiency in our offices, using renewable energy sources, and purchasing carbon offsets.
