Kiwi firms are outpaced by Asia-Pacific peers in leveraging digital assets to address sustainability challenges, writes Professor Ilan Oshri.
Opinion: The past decade has seen unprecedented digital transformation across the world as more businesses and organisations harness cutting-edge technology to improve sustainability and decrease negative environmental impacts.
Here in Aotearoa New Zealand, however, progress has lagged.
For the past three years, the Centre of Digital Enterprise (Code) at the University of Auckland Business School has been examining how firms can become top performers in digital sustainability.
The centre consequently developed a Digital Sustainability Index in partnership with Tata Consultancy Services, to track the adoption and leverage of digital technologies by enterprises, along with their social and environmental objectives.
It also evaluates and uncovers the factors critical to pursuing sustainable digital solutions.
The index allowed us to study 195 companies with an annual turnover from US$151 million ($248m) to over US$10 billion across 12 sectors and 10 markets in the Asia-Pacific region (Australia, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam).
We surveyed business leaders across the region, targeting C-level executives such as the sustainability officer, chief technology officer and chief digital officer, as well as other key decision-makers responsible for digital, sustainability and strategy functions.
In the Asia-Pacific region as a whole, our Digital Sustainability Index survey showed good news in terms of some overall findings: when factoring in all of the 195 businesses, more than 85 percent of the C-level executives surveyed agreed digital sustainability could deliver a competitive advantage and that it’s a central value of their companies.
Most respondents (80 percent) also believed their corporate reputation in the market had improved because of the digital sustainability initiatives they implemented. Similarly, decision-makers see the regulator and the board as the strongest drivers of change towards digital sustainability. However, lack of clear return on investment and lack of in-house knowledge have been pointed out as key inhibitors to the adoption of digital sustainability.
Unfortunately, we found Kiwi enterprises fall behind many Apac counterparts in utilising the digital assets needed to solve current and future sustainability challenges.
The Digital Sustainability Index looks at four key capabilities:
Digital maturity – the organisation’s ability to create value through digital assets.
Partnership – the ability to partner with other organisations, such as service providers, to access unique capabilities not available in-house.
Governance – the maturity of the practices, processes and rules that the organisation puts in place to bring together the digital unit (previously known as the IT department) with the business units.
Orientation – the firm’s effort to raise awareness internally towards sustainability objectives.
The index also allowed us to identify four types of performers in digital sustainability, starting with top performers, aka market leaders, and then the strategic players, explorers and finally, experimenters.
Top performers exhibit strong capabilities in the four areas; experimenters lack strong capabilities in three or four areas.
None of the 11 New Zealand firms in the study were classified a market leader, which puts the country at an international disadvantage.
The vast majority of the New Zealand firms that responded lack strong capabilities in both digital maturity and partnership, areas critical for the acquisition and deployment of tech solutions that address sustainability challenges. We also learned Australian businesses are doing far better than Kiwi businesses in terms of regular interactions between the digital and sustainability unit, as well as with familiarity of the entire organisation with the firm’s sustainability objectives.
To become leaders in digital sustainability, our businesses need to partner with both tech and specialist service providers.
Although the current situation is disappointing, we are on the way to making progress.
For one, the Government and businesses are now well aware of the critical challenges associated with sustainability and have accepted it’s a major concern for humanity. While there has been an emphasis on carbon emissions, other aspects of sustainability have also been on the agenda, such as environmental degradation, resource depletion, inequality and digital exclusion.
Furthermore, there has been growing pressure from regulators, customers and investors, all signalling that businesses need to do more on this front.
We need to see our companies using more technology in their sustainability operations – around achieving net zero targets, waste reduction, water conservation or energy consumption.
To become leaders in digital sustainability, our businesses need to partner with both tech and specialist service providers to advance the country’s digital landscape and its ability to deploy digital assets towards sustainability targets.
Another hope regarding the future of digital sustainability in New Zealand lies in our Cleantech sector, in which high-tech businesses develop solutions that help solve environmental problems.
The Cleantech sector has great potential, with some CleanTech companies demonstrating creativity and exceptional approaches to innovation and commercialisation at a global level (eg Allbirds, CoGo and CarbonClick). However, what hinders this sector is under-investment. New Zealand’s investment in this area falls significantly short compared to the amounts invested by governments and investors in similar economies around the world.
A partnership approach between government, businesses, professional associations, tech leaders and academia is needed to develop and incorporate technology to address the many challenges the planet is facing and to create talent, opportunities, investment and resources to drive New Zealand’s CleanTech sector.
Professor Ilan Oshri is director of the Centre of Digital Enterprise at the University of Auckland Business School.
This opinion piece was first published in the New Zealand Herald’s Dynamic Business Report. The opinions are those of the author and not necessarily of the University of Auckland.
