How to create business value through digital sustainability

Amid regulatory changes and uncertainty, reducing carbon emissions remains a concern for many organizations. While sustainability is a cost of doing business for many companies today, new research from MIT shows that it is also an opportunity for realizing business value.

However, companies achieve that value only when they embed sustainability goals into company strategy and then develop capabilities to advance their goals, according to a new research briefing by the MIT Center for Information Systems Research.

A 2024 survey by CISR and the Institute of Technology Management at the University of St. Gallen, as well as earlier qualitative research from the year prior, found that  companies that practiced “digital sustainability” demonstrated improvement in overall sustainability.

Digital sustainability is the use of digital technologies and data to measure, track, and reduce carbon emissions across an organization’s operations, products, and partner ecosystem.

Specifically, the CISR researchers call for the use of digital technologies and accurate, granular data to do the following:

• Track and optimize technology emissions, which they call “green IT.”
• Track and optimize product emissions (“green products”).
• Develop digital offerings that that have lower carbon footprints or that help suppliers, partners, and customers track and manage their emissions (“green digital offerings”).

Now, the new briefing from MIT CISR examines how to generate value from these digital sustainability efforts. Organizations achieve this by embedding sustainability goals into company strategy and then developing an enterprise capability for digital sustainability to advance those goals.

In studying 360 Swiss manufacturing companies, CISR researchers Ina M. Sebastian, Stephanie L. Woerner, and Peter Weill, and University of St. Gallen researcher Daniel Woerner, identified four strategic sustainability goals, along with different digital sustainability approaches for achieving them that had varying degrees of impact:

• A compliance and efficiency goal, with sustainability efforts driven largely by regulatory requirements and risk minimization. This “table stakes” work did little to differentiate a company on sustainability improvement or business value.
• A customer and investor reputation goal, with sustainability efforts driven by customer demand, investor requirements, and attractiveness to talent. In addition to seeing improvements in sustainability, the top quartile of companies (those that highly valued this goal) achieved 17% greater earnings before interest and taxes than companies that considered this goal to be of low importance (i.e., those in the bottom quartile).
• A new-revenue goal, with sustainability efforts driven by innovation and competitiveness. In this category, companies in the top quartile (those that highly valued this goal) had 53% more revenue from innovation, as well as greater improvement in sustainability, compared with those in the bottom quartile, along with 12% more innovative capacity.
• A company purpose goal, with the underlying goals of demonstrating social responsibility and improving corporate image. That focus resulted in a 13% greater improvement in customer experience and 22% higher performance on implementing circularity principles (broadly defined as eliminating waste, recirculating products, and regenerating nature), in addition to greater improvement in sustainability, compared with bottom-quartile companies.

No matter which strategic sustainability goal or goals companies prioritized, businesses in the top quartile for placing importance on them scored significantly higher on green IT.

But companies that prioritized customer and investor reputation, new revenue, and company purpose as important drivers of their sustainability initiatives also implemented significantly greater digital sustainability in green products and green digital offerings.

To highlight digital sustainability in action, CISR offered a case study on international healthcare company Bupa. The company’s sustainability missions recognize that digitizing products and services serves the greater goal of reducing carbon emissions and improving human health.

Bupa is demonstrating progress on all three types of digital sustainability initiatives.

• Green IT efforts include shifting to the cloud (from 41% of systems in 2022 to 88% in 2024) and transitioning its IT spending to suppliers with similar net-zero ambitions (from 31% of spending in 2022 to 71% in 2024).
• Green product initiatives include reducing emissions associated with anesthetic gases across its global businesses and expanding sustainable procurement practices to the entire supply chain.
• Green digital offerings aim to increase people’s access to health care services without requiring them to travel to a hospital or clinic. In mid-2024, Bupa reported a 24% year-over-year increase in customers using its mobile app, Blua.

A key lesson from Bupa’s efforts, the researchers conclude, is that the company is achieving value because it has embedded sustainability goals into company strategy.

“Improving sustainability capabilities to satisfy customer or investor demands, to build innovation and competitiveness, or to become a socially responsible enterprise is linked to real business value,” the researchers write. “Be clear about your goals and then develop sustainability capabilities to advance these goals.”

Read next: How AI-empowered ‘citizen developers’ help drive digital transformation