Digital Transformation and Sustainability Transformation – An interlinked way forward in a post-Covid 19 world?

"Only if digital change and the transformation towards sustainability are constructively interlinked can we make progress with environmental protection, climate-change mitigation and human development." - German Advisory Council on Global...

“Only if digital change and the transformation towards sustainability are constructively interlinked can we make progress with environmental protection, climate-change mitigation and human development.”

– German Advisory Council on Global Change

The post-Covid 19 world will be different not only thanks to the hard lessons we have learned, but also because of the new opportunities that we have seen. We have, more deeply than ever, seen and felt the interdependence between the health of nature and the health humanity. At the same time, we have more often and naturally than ever used digital technologies in our Covid-19-stricken working and daily life. So how will the post-Covid 19 recovery lead us to a different life and world, i.e. heathier, safer and better?

Fortunately, we hear encouraging voices both in Europe and in China on a green recovery. For instance, the EU parliament has called on the Commission to propose a recovery and reconstruction package that “should have at its core the Green Deal and the digital transformation in order to kick start the economy.” In China, Premier Li Keqiang declared in the government’s work report at the ongoing  National People’s Congress  that, “while carrying out regular covid-19 control, China will apply the new development philosophy, pursue supply-side structural reform and draw momentum from reform and opening up to promote high-quality development…”

China’s real economy transformation in a post-Covid 19 era through a lens of digitalisation and sustainability…

In a Chinese (and global) context, a green recovery is not only highly desirable, but also absolutely necessary – given the speed, the scale and the effectiveness of a sustainable transformation that needs to be in place, soon.

It is also increasingly clear that, among other things, new urbanisation, domestic consumption and smart industries are expected to be three key drivers for China’s post-Covid 19 recovery and future economic transformation. At the same time, China will invest heavily and strategically in  digital technologies and digital infrastructure through  5G, “IoT +” and “new infrastructure”  to support and integrate with the real economy transformation for jobs and for growth. However, at the moment, the current development in these three areas represent both challenges and opportunities, more specifically:

  • Urbanisation:  Given China’s high ambition in “the global race toward building an intelligent and data-driven society”, smart city development has become a top policy agenda. More than 100 pilot projects on “new-type smart cities” are being carried out, having transportation, public services, public safety, education, healthcare, and environmental protection as focus areas. Can smart and sustainable cities and communities create new dynamics in the new urbanisation in the near future? Or even more progressive and ambitious, can an “eco-civilisation centred new urbanisation” become China’s new-new urbanisation soon?[1]        
  • Domestic consumption: Since 2011, consumption has become a dominant driving force for China’s economic growth, accounting for 54% of China’s GDP in 2017.[2] At the same time, China’s consumption has become one of the most critical sources of environmental pollution,  greenhouse gases (GHGs) emissions and wastes. As one example, the amount of household waste generated in Beijing in 2015 has overtaken that of the industrial waste as the largest source of municipal solid waste (MSW). E-commerce played a significant role here. While domestic consumption will be the key driver for economic recovery, can it be done both smartly and sustainably?  
  • Smart industry: China has a high ambition in upgrading and transforming its industry sector through digital transformation.  A key question is, beyond the anticipated efficiency gains, how  to explore and develop the sustainability potential of the Chinese version of “Industry 4.0” or “society 5.0”? Particularly when it comes to the potential of integrated physical and digital networks within industrial production processes for achieving sustainability transformation as well as the transformation towards the integration of sustainable production and sustainable consumption? 

Digital transformation and sustainability transformation – an evolving process from supportive to interlinked…  

Key digital technologies, particularly IoT, Big Data, AI, Digital Twins and cybersecurity offer new possibilities for collecting data needed to develop understanding of problems as well as for improved monitoring, evaluation and management, governance and decision-making processes. To prevent and minimise risks as well as to turn challenges into opportunities, we need a better understanding of how digital technologies can responsibly, constructively and innovatively support and enhance the real economy transformation. Following the policy studies by the German Advisory Council on Global Change, the enabling and transforming capacity of digital technologies can be summarised in the following 5 aspects:[3]

Let us take “sustainable digitalised consumption” as an example, which will be a key issue and a key driver for China’s post-Covid-19 recovery and growth in the years to come (See Figure below[4]).

To integrate digital transformation and sustainability transformation to transform our real economy is an evolving process from a supportive to interlinked relationship (See Figure below[5]).

It is important to highlight that, while this evolving process is leading us towards transformative and sustainable outcomes, there are also intended and unintended disruptions and consequences that affect our human society and nature. Therefore, policymaking, business operation and societal activities all need to be equipped with a systemic understanding of innovation, innovation leadership and innovation process, which are not only about technologies, but also about social change and governance.

Promising initiatives on an interlinked transformation to watch in Sweden and in China

Being aware of both transformational challenges as well as disruptive opportunities, both in Sweden and in China, we see interesting examples and initiatives for exploring a combined and enhanced digital and sustainable transformation.  For instance:

On the Chinese side, not least in the intensive policy debates on strategies for the Covid-19 recovery, a few policy initiatives are particularly interesting and inspiring. For instance:

  • Data centers consumed more than 120TWh of electricity in China in 2017 and energy consumption for Internet data centers (IDC) is estimated to grow by 30% annually [6]. The Ministry of Industry and Information Technology (MIIT) and the National Energy Administration (NEA) have launched new guidelines on “ Strengthening construction and operation of green data center” in 2019.    

To summarise, inspired by the potential and power embedded in the digital transformation, let us look at the future sustainability transformation through a digital lens. What could we see and what do we want to see? Yes, a sustainable transformation, which will be faster, deeper and disruptive. Having a sustainability-empowered mindset and leadership, let us look at the future digital transformation through a sustainability lens, what could we see and what do we want to see? Yes, a digital transformation, which will be more resource- and climate efficient, more human-centred and more trustworthy. Maybe it will be, and need to be, part of the essences of China’s transformation towards an innovation-driven high-quality growth?

Nannan Lundin & Linnea Yang

[1] For more detail, see CCICED 2019 Special Policy Study on Accelerating Green Urbanization in China Based on Eco-Civilization.

[2] For more detail, see CCICED 2019 Special Policy Study on Green Transition and Sustainable Social Governance.

[3] Modified base on the conceptual classifications from WBGU – German Advisory Council on Global Change (2019): Towards Our Common Digital Future, page 87.

[4] The conceptual model on “sustainable economic activities and the environment” from WBGU – German Advisory Council on Global Change (2019): Towards Our Common Digital Future, page 157.

[5] Inspired by the conceptual model from WBGU – German Advisory Council on Global Change (2019): Towards Our Common Digital Future (page 87) and implied and modified by the Beijing ISO-office.