Digital transformation and the green transition: a winning tandem

7 July, 2023

Twin transition refers to a transformation that goes beyond business models, value chain processes or technologies. It is a holistic approach that involves taking ESG criteria into account in the company’s decision-making and strategic plans leveraging digitalisation as the main accelerator.

This idea has been used by the European Commission to describe the EU’s strategy for a future based on digitalisation and sustainability; two policy priorities that will shape our long-term future. This transformation, with two interconnected transitions, is seen as necessary to achieve a more competitive, sustainable and resilient economy; and consequently, higher social welfare.

Hybrid transition is necessary to achieve a more competitive, sustainable and resilient economy; and consequently, higher social welfare

Both the energy transition and the digital transition are a desired goal for many countries and organisations around the world. And although they have become popular in recent years separately, the true potential is realised when they are considered as two sides of the same coin, because digital amplifies sustainability and vice versa:

• The ecological transition seeks a better relationship with the natural environment, something in which technology can help (renewable energies, measurement of emissions, more efficient use of resources, etc.).
• In addition, within sustainability, there are other criteria such as social and good governance, which imply preparing Europe for new challenges, and that through legislation, transparent and just growth opportunities are created for all.
• The digital transition refers to the adoption of technologies that enable greater efficiency, productivity and competitiveness, as well as greater equity and social justice. These targets cannot be achieved if the methods for doing so do not consider the impact on the environment.

The two transitions can sometimes clash, as digitisation uses energy and many technologies are energy intensive, as well as wasteful. This is why it is essential to have twin transition strategies that enable sustainable and responsible technology growth.

The twin transition of the energy sector

The energy sector is a paradigmatic example of twin transition, as it is an area undergoing a transformation process to meet climate neutrality and sustainable digitalisation commitments. Energy companies are therefore effectively adapting to the changes brought about by the energy transition and the technological revolution.

The energy sector is a paradigmatic example of twin transition

Digital technologies enable them to better understand the status of their assets, infrastructures and distribution networks, while integrating different types of supply and helping users save energy.

Innovation in predictive maintenance, data analysis or real-time data capture, as well as monitoring at all times, are becoming increasingly important for the success of new sustainable energy projects.

In addition, for example, artificial intelligence, with predictive models or digital twins, which are technologies that help to model future scenarios taking into account different variables. This helps to implement initiatives in real-life contexts in a more agile way.

In short, all technological innovations have great potential to transform processes in the energy sector to make it more sustainable and efficient, from automation to cybersecurity, including artificial intelligence, the deployment of sensors to capture industrial data, big data and collaborative robotics.

Potential for organisations

Digital and sustainable strategies can (and must) be developed as a package. By following a defined roadmap, organisations can reduce their environmental impact, improve their digital offering and contribute to the goal of leaving no one behind and to a sustainable, not just financial, growth legacy for future generations.

In addition, the twin transition has a high potential to transform organisations and make them more competitive, ESG criteria (environmental, social and corporate governance) throughout the value chain. By integrating these criteria into business strategies, a more balanced, sustainable and socially responsible transition is promoted.

Digital and sustainable strategies drive a more balanced, sustainable and socially responsible transition

Digitalisation has a high impact, for example, on the reporting of any organisation’s financial results; but it also serves to improve sustainability, social responsibility and corporate governance. For example, blockchain technology is of great help in improving the security, transparency and traceability of the supply chain.
We are facing a decisive moment for climate action, and digitalisation has a decisive role to play if we want to commit to sustainable development.