Software-driven innovation is critical to driving the transformation needed for a competitive and climate-secure future. Here are five predictions about how progress on this front will accelerate sustainability across industry in the next five years.
1. Organisations will adopt circular economy business models
To build a competitive global circular economy that produces no waste, companies must adapt their business models to maximise resource efficiency, develop recyclable products and repurpose waste. A crucial part of this is creating digital business ecosystems that enable effective decision-making and action.
Vodafone in the UK, for example, refurbishes or resells 97 per cent of returned phones, the remaining 3 per cent being recycled. Though the resource being recycled is hardware, at the heart of this approach is a software-defined supply chain powered by automation and machine learning.
One of the biggest challenges of moving to a circular economy is collecting and sharing data about a product throughout its entire life cycle. Digital product passports (DPPs) offer that capability and promise to act as a transparent record of a product’s sustainability, environmental and recyclability attributes. By enabling traceability through software, DPPs can help businesses improve product management across the supply chain, which can also drive cost savings. Some companies are already using these processes, but DPPs aren’t expected to become a requirement in most regions of the world for a couple of years. The European Union is positioning itself as a first-mover in the space and expects most products in the region to be covered by DPP regulation by 2030.
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2. AI will help manage natural resources
According to one Sustainable Futures report, AI has become important for tackling most environmental sustainability issues including biodiversity, energy, transportation and the management of agro-ecosystems. In agriculture, AI can produce insight and increase automation to improve environmental stewardship and detect diseases and potential infestations before crops or livestock are threatened. Technology not only impacts individual farms’ output, but data generates valuable insights that can positively influence policy decisions at the local or national level.
For example, DXC is partnering with the Ministry of Agriculture, Fisheries and Food (Mapa) in Spain to transform the country’s agricultural sector through data analytics and AI. One project uses AI algorithms to accurately predict forest fires by evaluating environmental data sources collected by Mapa and its partners. Elsewhere, AI helps farmers make more informed decisions about what crops to plant and where.
AI is also at the centre of efforts to reduce waste and improve cost-effectiveness and sustainability of water operations in agriculture, which accounts for 70 per cent of freshwater use globally. AI systems can monitor groundwater levels while assessing crop needs to strategically guide sprinkler systems to optimal locations.
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3. AI will increase the viability of renewable energy
McKinsey estimates that by 2026, global renewable electricity capacity will rise more than 80 percent from 2020 levels. For example, Europe will add approximately 36 million renewable-class assets, such as solar panels, electric vehicles (EVs) and energy storage, to the grid in 2025, and 89 million by 2030. Millions of individual devices uploading and downloading electricity is rewriting the fundamentals of how electric grids perform. Automation and data analytics can help manage decentralised energy sources, direct excess electricity and flag potential weak points in the grid before they become significant issues, and help utilities redirect power to where it’s needed in real time.
To enable this, legacy utility giants will need to reassess their operating models and invest in modern cloud-based IT infrastructures that enable data to be managed effectively and analysed across the whole organisation.
4. There will be a major shift to software-defined EVs in the next decade
As countries work to achieve net zero emissions by 2050, the decarbonisation of transport has taken on greater importance. US and European regulators are reviewing policy and implementing laws to limit the sale of new gas and diesel cars. As a result, 18 of the world’s largest automakers have switched or pledged to switch, either completely or significantly, to EV-manufacturing in the coming years.
EVs will be software-defined vehicles (SDVs), with automated capabilities to manage the car more efficiently, with particular attention to environmental sensitivities. SDVs have smart routing and energy optimisation that can mitigate problems with charging capacity and range. (For greater insight on this topic, see the article “Five automotive trends that will reshape our relationship with cars in the next five years.)
5. Finance systems will be re-engineered to consume less energy
Transitioning to more environmentally sustainable operations is a top priority for banks and financial services organisations. More sustainable software, more efficient algorithms and better data-processing are key to these efforts. The global green finance market has thus grown from $5.2bn in 2012 to more than $540bn in 2021.
More than 120 banks have already joined the industry-led and UN-convened Net-Zero Banking Alliance, and are committed to aligning their investment and lending portfolios with net zero emissions by 2050. In addition to growing environmentally conscious portfolios, the financial services sector is significantly reducing its energy consumption by enabling efficiencies in data centres. Upgrades include data deduplications and compression, which can improve data storage layout and storage efficiency while slashing energy usage.
Beyond the traditional financial sector, new approaches are helping to increase the sustainability of the cryptocurrency-mining process. Leading cryptocurrencies are transitioning from the proof-of-work system, which is slow and requires a significant amount of computing power, to the proof-of-stake (PoS) system. PoS enables faster transactions, provides more scalability and has a much smaller environmental impact. For example, one of the most popular cryptocurrencies, Ethereum, transitioned to PoS in 2022, a move which it claims will reduce its global energy usage by 99.95 per cent.
Organisations must build sustainability into their system architectures and templates, make sustainability a non-functional requirement in bids, and require sustainability targets in service-level agreements.
As architects, engineers, project managers and software delivery staff herald this change, teams will seamlessly transition to using code to support sustainability while maintaining and even improving competitiveness and profitability. We can all look forward to the day when sustainability is the new standard, and software will be at the heart of helping us create a climate-secure, and competitive, future.
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