In October 2020, the government made the Carbon Neutral Declaration, which aims to achieve zero emissions of greenhouse gases such as carbon dioxide and methane by 2050 and realize a carbon-free society. In line with this, the government is also providing support to companies considering carbon-free management.
At first glance, there may not be any connection, but in fact, achieving digital transformation is essential for carbon-free management. In this article, we will explain the relationship between carbon-free and digital transformation, the importance of companies working on both, and specific ways to approach this issue.
The relationship between decarbonization and digital transformation
Before explaining the relationship between decarbonization and DX, let me first give a brief overview of each.
Overview of Decarbonization and Digital Transformation
- What is decarbonization?
Decarbonization is an effort to reduce emissions of greenhouse gases such as carbon dioxide and methane, which are the causes of global warming, to zero.
One of the main reasons for the need for decarbonization is to reduce the risks of climate change, such as sea level rise, droughts, and floods caused by global warming. Another reason is that most energy resources essential to economic activity, such as coal, oil, and natural gas, are finite resources and are expected to run out eventually. As a
means of solving these issues, decarbonization efforts are being made not only in Japan but all over the world. - What is DX?
DX is an abbreviation for digital transformation. Specifically, it refers to the digitalization of operations, the development of new products and services, and the creation of new businesses in order to respond to changes in customers and the market, and to establish an advantage over competitors.
The main reason for the demand for DX is to improve productivity by preventing operations from becoming black boxes due to the aging of existing systems, and by resolving the labor shortage caused by the declining birthrate and aging population. It is an essential measure for survival by responding to various changes in the environment and increasing a company's competitiveness.
The relationship between decarbonization and digital transformation
Decarbonization is not just a trend, but is becoming established as one of the paths that companies should aim for. This is because corporate efforts are essential to achieving the government's declared carbon neutrality by 2050.
Generally, one might think that only manufacturing companies, which have a high carbon dioxide emission, are eligible for decarbonization. However, in the future, not only manufacturing companies, but also companies that do not work on decarbonization may find it difficult to obtain loans and may have to pay extra taxes. Therefore, the key point is digitalization and the use of data.
For example, efficient energy management, reducing the use of exhaustible resources by going paperless, and new business initiatives such as electric vehicles and plastic-free will lead to decarbonization.
In June 2021, the Cabinet Secretariat and various ministries and agencies jointly announced the "Green Growth Strategy for Carbon Neutrality in 2050." In this document, it is stated that "carbon neutrality is premised on an electrified society," and "the green growth strategy is supported by a robust digital infrastructure, and green and digital are the two wheels of a car."
Reference: Green Growth Strategy for Carbon Neutrality by 2050 | Cabinet Secretariat and other ministries and agencies
In other words, DX plays an important role as part of decarbonized management, and promoting DX will ultimately lead to zero greenhouse gas emissions.
Benefits of working on decarbonization and digital transformation
As mentioned above, DX will have a major impact on decarbonization. So, what benefits will companies gain from working on decarbonization and DX in the future? Here we will explain the main benefits.
- Now that it is easier to receive investment
, ESG investment, investment in companies that emphasize the environment, social and governance, is becoming a trend around the world. Therefore, if you promote digital transformation and implement decarbonization management, you will have a higher chance of receiving loans from investors. - A major American company has stated that it will not procure parts or materials from companies that are not working to reduce greenhouse gas emissions. This means that proactively working on digital transformation and decarbonization is likely to increase not only existing transactions, but also new business partners and trading volume.
- In Japan, where tax payments can be reduced, a "tax for global warming countermeasures" was introduced in October 2012. In February 2023, a "growth-oriented carbon pricing initiative" was launched for "carbon pricing," including a "carbon tax" and "emissions trading." Therefore, it is expected that tax payments will be reduced in the future by promoting digital transformation and decarbonization.
Specific steps to achieve decarbonization through digital transformation
There are many benefits for companies in achieving decarbonization through the promotion of DX, but what specific efforts are required? Here we will explain the main efforts and the effects they can bring.
- This is an initiative to realize efficient management by visualizing energy
usage and monitoring it in real time using smart meters and sensor networks. This will enable peak consumption suppression, reuse of surplus energy, and reduction in electricity waste. - Initiatives to stimulate data utilization through AI and IoTThis
initiative aims to optimize energy usage in manufacturing processes and supply chains through big data analysis by collecting data using AI and IoT. Based on the results of data analysis, inefficient areas and room for improvement can be identified, preventing energy waste. - Initiatives to realize diverse working styles
These are initiatives to realize diverse working styles such as working from home, remote working, and reduced working hours. This will lead to paperless operations and reduced business trips, which will lead to reduced traffic volume and energy consumption.
Examples of companies working on decarbonization and digital transformation
Here is an example of the NTT Group, which is working to achieve decarbonization through the promotion of digital transformation.
The NTT Group (hereinafter referred to as the Group), which includes NTT Docomo, NTT Communications, NTT East, NTT West, and NTT Data Group, formulated the "Environmental Energy Vision" in May 2020 and declared that it would increase its renewable energy usage rate to 30% or more by 2030.
In September 2021, it formulated "NTT Green Innovation toward 2040," aiming to achieve carbon neutrality by fiscal year 2040.
Specific efforts to achieve carbon neutrality include expanding the use of renewable energy and reducing power consumption through the IOWN (Innovative Optical and Wireless Network) initiative. Through these measures, the Group aims to reduce greenhouse gas emissions by 45% each. Specific efforts include the creation of innovative environmental energy technologies such as greening genome editing application technology and lightning charging.
The Group is also implementing measures to reduce the environmental burden on society by accelerating digital transformation, such as photonics-electronics convergence technology to achieve low power consumption and the creation of decentralization technology.
It is important to promote DX from a decarbonization perspective
Traditionally, the main purpose of DX was to develop new products and create new businesses by digitizing a company's own operations. Of course, that remains the case today, but at the same time, it has also become one of the external measures, such as contributing to society and protecting the environment. The most prominent example of this is decarbonization, which we introduced this time.
In order to realize the carbon neutral declaration set by the government, which aims to achieve zero greenhouse gas emissions by 2050, the contribution of companies is essential. For companies to achieve this goal, it is important to advance digitalization and realize DX.
In the future, when companies promote DX, it is important to consider whether it will lead to decarbonization, and it can be said that this is an essential point for survival.
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What is the relationship between the SDGs and carbon neutrality? Explaining the challenges and efforts to achieve them | Stratus Blog
