The EU Green Deal aims to achieve climate neutrality by 2050 through reduced greenhouse gas emissions, renewable energy, and biodiversity conservation. As companies strive to meet these goals, the role of the CIO is expanding from IT management to becoming a sustainability information provider. This requires ensuring products and services comply with the upcoming Green Deal’s traceability and identification requirements. This Opticos viewpoint examines CIOs’ crucial yet unclear role in driving their companies toward sustainability. But first, let’s look at the background of the EU Green Deal.
The European Green Deal is a flagship project of the European Commission and a holistic approach to addressing the challenges of climate change. Some of the ambitious goals can be seen in the figure below.
The Green Deal includes a variety of measures, such as promoting electric vehicles, enhancing energy efficiency in buildings, and investing in sustainable infrastructure and research and development. The Green Deal covers all sectors of the economy, including transport, energy, agriculture, buildings, and industries such as steel, cement, ICT, textiles, and chemicals. In this context, the Green Deal must deliver legislation and regulations, such as the potential use of Digital Product Passports and different Supply Chain Acts. These legislations will require how the sustainability data of products and services sold on the European market should be measured and made available to consumers, customers, partners, and suppliers.
It is important to note that the EU Green Deal differs from the UN Sustainable Development Goals (SDGs). However, the SDGs and the EU Green Deal are closely related as they promote sustainable development and address global challenges such as climate change. The SDGs provide a global framework for the EU Green Deal, and the EU Green Deal is seen as a tool to achieve the SDGs.
Traditionally, the CIO role has been viewed as a technology expert responsible for managing and implementing IT infrastructure and systems within organizations. They are now becoming key players in helping companies reach their sustainability targets. With increasing pressure on the world to reduce greenhouse gas emissions and address environmental challenges, companies are turning to their CIOs to lead in implementing sustainable technology solutions, often under the digitalization taxonomy. However, this is only part of the story. Going back a couple of years, the introduction of the GDPR law and other privacy legislation had a tremendous impact on the organizational use of privacy data. The EU Green Deal and upcoming legislation could have a similar data challenge impact on companies. This time it’s about how they communicate the sustainability data on their products and services to the public. In the not-so-distant future, a consumer of a product in the EU shall easily understand the full sustainability impact of a product or service they are about to purchase. It could be scanning a QR code in a store when buying a new TV to get the sustainability score, or it could be when buying a vacation journey online. The EU will start with complex products with a high environmental impact, but eventually, it will come to mass-produced products and services.
These legislations aim to make producers compete with sustainability like they already do with price. Sites that compare sustainability scores between similar products will appear in the same way that price comparison sites already exist today. For companies that would like to compete on sustainability, it will probably be a must to be able to provide open data on sustainability scores for their products and services. WatchGuard organizations will scrutinize this data, and cheating on the data will be a business risk, with a magnitude similar to Diesel Gate’s on car emissions a few years back. Additionally, companies that today provide products and services to the public sector will face the challenge of supplying this type of information to at all being able to participate in public procurement.
One thing that makes the demands on data architecture even higher is that it will likely not be sufficient to provide this data on the model or article level. It could be required to provide data on an individual product level, batch, or serial number. Otherwise, it will not be possible to understand the environmental impact of transportation or evaluate the potential use of a product from a second-hand and recycling perspective. It means that new and higher demands on supply-chain-traceability and the possibility of identifying a product in a globally unique way. Many companies using legacy ERPs will realize this the hard way when discovering that meeting these demands is impossible with their current IT systems. Many companies could face costly repercussions if they delay addressing these issues. Similar to the GDPR events a decade ago, it will be more expensive the longer you wait to acknowledge this. Resources to rectify the situation will dwindle and become increasingly scarce and costly.
In the figure below, we provide examples of how CIOs can help provide value to their company’s sustainability strategies.
The scope of the CIO agenda is expanding, and the requirements and opportunities related to sustainability are one primary driver. There is a wide range of aspects to consider that may impact and shape the IT landscape in the future.
At Opticos, we are open to engaging in discussions around this topic and providing assistance to help clarify requirements, identify opportunities, and assist in forming the change agenda going forward for your business and specific needs.