Digital Technologies Open Up New Strategies in Environmental ManagementPublished: August 15, 2001 in Knowledge@Wharton
Although the dot-com meltdown has tempered some of the more extravagant claims about the Internet’s abilty to bring about change, the potential for information technology breakthroughs to positively affect the environment remains significant.
That was the theme of the 2001 Bell Conference on "Digital Technologies and the Environment: New Challenges and Pathways to Sustainability." The conference, held July 19-21 in Philadelphia, was organized by the World Resources Institute and Wharton’s Environmental Management Program. Participants, including more than 200 representatives from business and academia worldwide, explored how business schools could prepare future managers to pursue strategies related to emerging digital technologies and the natural environment.
"It was a great opportunity for key figures in the environmental management field to discuss how digital technology will affect business strategies for sustainability and environmental regulation," said Eric Orts, who directs Wharton’s environmental management program.
The topics addressed at the conference included, among others, using information as a weapon in the fight against environmental hazards, the growing importance of remanufacturing and new initiatives to achieve energy efficiency.
Information as a weapon:
Technology constantly improves the capacity to gather, sort, analyze, store and retrieve data. Beyond the extraordinary advances in the area of information processing, progress is also being made in related technologies such as sensors and telecommunications as well as in computer modeling and statistical analysis. Such developments make it easier to spot environmental problems, assess their scope and seriousness and understand their implications. For example, researchers have recently been able to trace a significant portion of the air pollution in the northeastern United States to emissions from upwind mid-western states.
Technology and data also help analyze the complexities of broad environmental phenomena and the interconnections among different environmental risks. Such advances have now made it possible, for instance, to know that radon exposure represents a much greater threat to smokers than to those who do not smoke.
Improved information technology also makes it easier to identify better response strategies. Both corporate and public decision makers are today able to compare policy options quickly and cost-effectively, obtain detailed information on experiences from elsewhere, and determine which interventions have been most successful. Environmental decisions can now be made with more data-driven and analytically rigorous underpinnings.
Although recycling has been around for years, a major area of focus in the near future could be remanufacturing, or the recovery of spare parts that haven’t expired to produce reusable products. Notable examples include the single-use cameras marketed by Kodak, Fuji and other film companies, furniture recycling and refurbished computers. Information technology can help streamline product design and manufacturing to incorporate remanufacturing concepts.
Paul R. Kleindorfer, co-director of Wharton’s Risk Management and Decision Processes Center and the author of numerous papers on environmental management and operations (OEM), noted that remanufacturing can be both environmentally-friendly and efficient. "Remanufacturing presents not only a new source of profits but also a way to address the problem of how to convert product return/recycling into a viable business opportunity," he said.
According to Nabil Nasr, director of the National Center for Remanufacturing and Resource Recovery, "the ratio of total energy used in the original production as compared to the energy required to remanufacture is approximately six to one." Nasr, who presented a paper on remanufacturing titled Second Industrial Revolution, suggested that remanufactured products should perform as well as or better than new products, but because they "incorporate as much as seven pounds of old material for [a pound of] new, they cost less, require less energy and raw materials to make, and generate less pollution and hazardous waste."
For real change to occur, Nasr added, "industry must capitalize on remanufacturing’s economic and environmental benefits by designing products for remanufacture from the very start. Sustainable design – designing products so that they can be effectively reused, recycled or remanufactured – has become an increasingly popular focus for companies looking to incorporate product trade-in as a part of their company operations. With sustainable design, many companies are decreasing waste and energy while enhancing profit potential and customer relations."
Emerging digital technology can also positively affect the environment by providing more power-efficient technology. An example is improved motors that use less energy. Computers have already helped to refine product design and manufacturing, and in combination with progress in metallurgy and polymers, have reduced the material requirements for products ranging from cars to soft-drink containers. In fact, a mid-sized car today weighs about 660 pounds less than it did 25 years ago. New "smart" appliances, like computerized thermostats that turn down the heat when people are out of the house or asleep, are already helping to reduce environmental pressures.
One of the biggest possible growth areas in the near future, according to John Buckley, director, corporate environment health & safety at Duke Energy, is the field of regenerable fuel cells. "Storage cell technology makes it possible for us to harness solar and wind power, which means that using these sources of energy no longer depends on whether it’s sunny or windy." Buckley believes such advances will change the definition of best practices followed in the industry by making environmentally friendly energy sources more accessible.
Easy flow of information
Easy access to data helps the world become a more transparent place where comparisons are simple to make. The continuous tracking and reporting of pollution levels and natural resource stocks highlights opportunities to adopt better practices and technologies. Armed with readily available data, environmental lobbies, community organizations and members of the media can more easily make their case before government agencies and businesses.
At one point, Orts, whose research encompasses alternative regulatory frameworks, discussed the global climate debate in which a proposal exists to require companies and perhaps institutions such as universities to report how much CO2 and other greenhouse gases they emit. Even if regulatory caps are not imposed, Orts said, the very fact of reporting the information "might lead businesses to take steps that would reduce these emissions."
Meanwhile, new rating companies have begun to develop parameters and algorithms to rate corporate environmental performance as a function of profitability. Frank Dixon, managing director of research and development at Innovest, a corporate environmental performance rating company, said that "improvements in terms of sustainability and eco-efficiency can positively affect the triple bottom line because investors and consumers these days are so much more environmentally aware. ... We are constantly progressing towards making these improvements tangibly measurable from a ratings perspective."
Obstacles and challenges
Advances in information technology and information-driven innovation present challenges as well as opportunities in terms of the environment. Improved productivity and economic growth from digital technologies can fuel increased consumption, resulting in more pollution. For example: Will emissions per car fall fast enough to keep up with the growing number of cars?
The Internet can also facilitate the dissemination of bad ideas and disinformation. Moreover, the availability of information does not guarantee its proper use, and public choice distortions can still occur. Finding ways to share information on best practices and technologies while limiting information overload and disinformation, are important challenges. Overcoming apathy and institutional obstacles to change will also require creative solutions.
Despite the downsides, the potential for environmental gains from digital technology remains great. The process of applying digital technology to the challenges of pollution control and natural resource management has just begun. As Mary Kathryn Campbell, Internet and publications director at the Center for Renewable Energy and Sustainable Technology, says, "Information technology may not solve all our environmental problems, but it can help bring about a change in collective attitudes, which is the beginning of all great revolutions."