Digitalization enables enterprises to reach Net Zero

The journey to Net Zero

There is a need to halve global greenhouse gas emissions by 2030 and reach Net Zero emissions by 2050 at the latest. An approach that reduces environmental impact is to decrease material usage. The ICT sector, through digitalization, can facilitate enterprises’ journeys to Net Zero. ICT solutions have the potential to lessen the need for material usage by substituting physical products with digital products and services, within the ICT and other sectors.

Dematerialization of enterprises

Dematerialization can lead to increased value and reduced consumption of natural resources, enabling enterprises to “create more with less”. In fact, an Ericsson report on dematerialization¹ shows that ICT decision-makers agree dematerialized enterprises that are capable of adapting to the evolving needs of customers will be the norm by 2030. (Here, “decision-makers” refers to upper-level managers, including C-level, that have substantial influence or final say on companies’ strategies.) Of the decision-makers surveyed, 68 percent agree that the willingness to transform will be of the utmost importance for the success of companies by 2030.

In the report, “dematerialization front-runner enterprises” have been defined as the top one-third of all surveyed enterprises that have reported the most progress in their dematerialization efforts. As shown in Figure 28, these are more agile and streamlined, more environmentally sustainable but also financially stronger. They also use cloud services to a higher degree and see the need for more remote work in the future.

Therefore, in the future, greater numbers of dematerialized enterprises leveraging cloud, AI and mobile technologies are expected to become more adaptable. Approximately 6 in 10 decision-makers agree the key contributors to dematerialization at their respective enterprises are cloud infrastructure, selling software and services rather than physical products and using online training courses and documents. Nearly half of decision-makers agree that improved productivity and profitability are key benefits of dematerialization and around 40 percent say the same for environmental sustainability. This should be seen as a win–win situation that benefits both enterprises and the environment.

Figure 27: Countries included in the enterprises studies

The mobile workplace

With less work taking place at company premises, enterprises must be able to provide their employees with full access to processes and tools, regardless of the device they use or whether they are at home or out and about. As enterprises become more mobile, cellular and cloud technologies have a pivotal role to play.

Overall, 8 in 10 ICT decision-makers expect significant energy savings due to the usage of multi-cloud solutions by 2030, not only for their own enterprises but for society as a whole.²

Decision-makers and white-collar workers see a need for more immersive online collaboration and meeting tools going forward. In fact, more than 6 in 10 enterprises expect to use 5G devices and almost as many expect to use AR and VR devices by 2030. Over 80 percent of the surveyed enterprise decision-makers have already invested in technologies that allow more flexible remote working. Here, cellular connectivity, such as 5G, is seen as a key enabler.

Connectivity and automation enabling renewable and resilient energy supplies

In addition to increased dematerialization, switching to more renewable energy and energy-efficient solutions, such as cloud architectures, can aid the journey to becoming a Net Zero enterprise. Today, more than half of the surveyed enterprises already use renewable energy for most, if not all, of their electricity needs, for example by installing solar panels. By 2030, this is expected to increase to almost 3 in 4, while only 2 percent think they will not use any renewable energy at all.

In response to a more volatile world and increasing energy prices, enterprises are investing in independent renewable electricity production facilities based on solar or wind energy. More than half of decision-makers say shifting investments to renewable energy could make their companies more resilient against price shocks and energy disruptions. Additionally, 76 percent of decision-makers agree it is essential to have resilient power and electricity supplies since many enterprises are heavily energy-dependent, and electricity is also a core enabler for ICT.

The transition toward renewable energy has its own set of challenges and barriers, with one in four decision-makers expecting those economic barriers will be too significant. Other barriers mentioned by one in five decision-makers were the lack of necessary technology, and the lack of incentives and tax breaks.

When moving in this direction, it is important to have a strategy for handling excess energy. As shown in the report “Bringing 5G to power”, today’s power grids will need to evolve in order to handle the challenges brought about by the more volatile energy supply of tomorrow.³ Connectivity and automation can deliver higher reliability and better protection of the power grid, unleashing high potential values. Cellular communication is therefore an important enabler to support a shift to renewable energy sources and to balance a more volatile energy system.

Investing to achieve harmony between sustainability and resilience

Enterprises have a long journey ahead toward a Net Zero future, and different strategies must be taken by enterprises attempting to become sustainable. In addition, in the “Time to rethink resilience” report, enterprises expect disruptive events to be more frequent and severe in the future.⁴ Four times more decision-makers agree than disagree about this; their concerns include events such as pandemics, military conflicts, and energy crises. This is forcing enterprises to become more prepared and resilient for future events.

The ambitions of enterprises to become more sustainable could face a conflict, especially in times of crisis, as the need to improve resilience increases as well. The resilience report shows that increased exposure of disruptive events makes companies prefer the redundant and more resource-intensive solutions they are familiar with. This contrasts with the sustainability goals of reducing energy consumption and the depletion of natural resources. Thereby, efficiency efforts may be affected by enterprises’ need to build up redundancy solutions. To break the vicious cycle of increased redundancy, energy usage and natural resources, additional focus must be placed on dematerialization through digitalization, and a society-wide focus on long term resilience that can be achieved in harmony with sustainability ambitions. Almost half of enterprises surveyed in the “Time to rethink resilience” report always consider both efficiency and redundancy to find the best trade-off between handling disruptive events and long-term sustainability. Therefore, it is important for enterprises to have strategies in both the short and long term. Investments in digitalization and conscious prioritization between efficiency and redundancy are examples of strategies that help enterprise to improve their resilience and sustainability.

It is evident that dematerialization through digitalization contributes to the journey to Net Zero, but also to decreased costs and higher profitability for enterprises. The role of ICT is undeniable within this context, but it is not clear if this transformation will happen in line with the exponential road map.⁵

1. Ericsson Consumer & IndustryLab, The dematerialization path to profitability and sustainability (Feb 2021).
2. Ericsson Consumer & IndustryLab, The dematerialization path to profitability and sustainability (Feb 2021).
3. Ericsson Consumer & IndustryLab, Bringing 5G to power (March 2020).
4. Ericsson Consumer & IndustryLab, Future of Enterprises #3 – Time to rethink resilience
5. Exponential Roadmap, exponentialroadmap.org (January 2020).