Like a boxer coming off the ropes from COVID-19, Europe has gained its second wind and is fighting back.
As citizens watch on – waiting patiently for measures from new tests to a vaccine – companies are driving economic recovery with a remarkable combination of sustainable footwork and digital might.
Such responses can ensure that industry rebounds from the worldwide recessionary pressures caused by the crisis, which European Commission forecasts suggest will shrink the continent’s economy by 8.3%.
The comeback is now underway.
Confined indoors amid the challenges of working from home and supply-chain disruptions, European companies have been working out to tone their competitive muscle.
They have been doubling down on investing in innovation and digital transformation and are targeting investment at creating experiences for increasingly responsible consumers who will cheer on champions that prioritize sustainability and social responsibility.
And when it comes to the color of their boxing gloves, Europe’s are unmistakably green.
As the pandemic accelerates the sustainable revolution, the continent is ahead of the curve on the transition to cleaner energy sources.
Take the World Economic Forum’s Energy Transition Index, which benchmarks countries on their energy system performance and readiness for a fast and effective transition. This shows that all of the top 10 ETI countries, led by Sweden, are from Europe.
This in itself is a remarkable advantage, as Europe aims to become the world’s first climate-neutral continent by 2050 at a cost of 500 billion euros – almost a third of the European Union’s total seven-year budget.
In exchange, we get the chance to develop clean energy resources, stimulate the market for emissions-free mobility and home energy efficiency, and invest in producing clean hydrogen.
But the sustainability revolution is also cultural – transforming the way we live, breathe and think.
One survey reported that 45% of consumers globally said they were making more sustainable choices when shopping. Crucially, they said they would keep these habits going even after the pandemic.
Every branch of industry is now rising to the challenge.
The energy sector is embracing renewables. Consumer goods businesses are being pressed to provide customers with sustainable products. And automotive firms are moving to EVs while lowering their manufacturing emissions.
The financial services sector – which is bankrolling the green transition – increasingly considers ESG (environmental, social, governance) criteria in their investment strategies, and those investments are growing.
Moreover, big-cap mutual funds with higher sustainability ratings are outperforming rivals.
But green gloves only pack a punch if a fighter is match fit – and to survive in the arena today’s companies must pump digital iron.
While 99% of CEOs globally accept that sustainability is important to the future success of their businesses, good intentions, substantial investments and leadership will not succeed without digital momentum.
And as the digital revolution has taught us, transformation is not only about adopting new technology and moving online – it should be rooted in everything a company does, internally and externally, in order to fully pay off.
This explains why sustainability and digitalization must go hand in glove in the strategy companies employ to recover from the bruising endured during the pandemic.
As the CEO of Unilever, Alan Jope, said: “There is no difference between our business strategy and our sustainability strategy…they are totally integrated.”
According to a report from the Exponential Roadmap Initiative published at the World Economic Forum in 2019, when integrated, digital can help slash global carbon emissions by up to 15% – one-third of the 50% reduction required by 2030 to meet the targets set by the European Union – through solutions in energy, manufacturing, agriculture, buildings, services, transportation and traffic management.
Put simply, digital is not only the key to business survival – but to planetary survival.
This approach is vital considering the serious challenge of achieving net-zero emissions across the global energy sector by 2050. But we can get a lot closer than our current trajectory with a pragmatic set of decarbonization actions throughout the energy system.
Companies are not waiting to drive cleaner energy, heeding calls by the International Energy Agency and others for emissions cuts. There are numerous examples of major cloud providers using renewable energy sources to decarbonize electricity supplies, but they also use centers with advanced technologies that use less energy for lighting, cooling, and power conditioning.
Migrating to the public cloud can also drive a 5.9% decrease in total IT emissions or nearly 60 million tons of CO2 globally per year, which is the equivalent of taking 22 million cars off the road.
These savings are not just for cloud providers. For all industries, moving on-premises workloads to the cloud can lower the workload carbon footprint by between 84% and 98%.
Other tactics to fight emissions include climate-smart travel, tree planting and companies’ proprietary carbon-removal solutions, all of which Accenture will use toward its net-zero emissions goal in the next five years while capitalizing on change.
However, companies determined to fight back will not be able to deliver rivals a knockout blow unless they adopt a new fighting style.
Whether it is decarbonizing or using Circular Economy strategies, businesses have barriers to overcome in order to reap the rewards of digital and sustainability. They will need to think on their feet and adopt new tactics if they really want to win.
For example, the lack of structured industrial information and data sharing is a key barrier to manufacturing industries adopting low-emissions solutions. In addition, companies need to strike a balance between competitiveness and achieving demanding sustainability targets.
Fortunately, factors that favor change can make the choices they face easier.
As ESG becomes more important, businesses do not have to choose between sustainability and returns, just as they don’t have to make a choice between digital and its many returns – which most recently include our newfound agility of working from home over the internet.
This is not a zero-sum game.
The returns from embracing social purpose backed by the power of next-generation technology – artificial intelligence, automation, connectivity and the cloud – are driving business value and offering those with vision new opportunities to outperform the market.
European businesses can achieve that ambition. They can become global champions.
They just need to keep punching their way out of the pandemic with the one-two punch of sustainability and digital.