Lighthouses unlock sustainability through 4IR technologies

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The manufacturers of the Global Lighthouse Network (GLN) have established themselves as beacons of the Fourth Industrial Revolution (4IR), adapting to four durable shifts toward agility and customer centricity, supply-chain resilience, speed and productivity, and eco-efficiency. Eco-efficiency, in particular, has emerged at the vanguard, fueled by increased global concern for the environmental impact of human activities. United Nations Secretary-General Antonio Guterres called the August 2021 report by the Intergovernmental Panel on Climate Change (IPCC) a “code red for humanity.”

We challenge the notion that environmental responsibility is inherently at odds with productivity and, by extension, profitability. Instead, 4IR transformations based on digital and analytics tools can augment not only green technology but also current production methods by bolstering efficiency. By embracing 4IR-driven transformation, a viable kind of eco-efficiency is possible, where sustainability and competitive excellence are not only compatible, but interwoven.

Eco-efficiency is the outcome of 4IR technologies that, when directed to solve business problems, simultaneously boost productivity and sustainability. This concept of efficiency has three dimensions. First, it involves digital technology that enables data-informed actions across production and the end-to-end value chain. Second, it demonstrates measurable improvements across performance indicators including cost, agility, convenience, and quality. Finally, it drives sustainability gains by reducing consumption, resource waste, and emissions.

Organizations must first understand the impact potential that lies with eco-efficiency in order to realize it. If companies aren’t looking for it—let alone measuring it—they might not fully realize the unclaimed sustainability opportunities hidden in the midst of their 4IR transformations. Opportunities are there: data collected since the beginning of this project show that more than three-fifths of lighthouses report sustainability impact as part of their achievements enabled by 4IR transformation.

It’s difficult to imagine how “code red for humanity” can be addressed unless companies make sustainability part of their business agendas. Moreover, the lighthouses’ experiences show the synergy that develops among technology, productivity, and sustainability efforts across different industries—and how other companies can accelerate their digitization efforts.

Companies that make a true commitment to environmental stewardship through pledges and corresponding action are setting the bar for sustainability. Those coupling that commitment with the full power of 4IR transformation—achieving step-change levels of impact—are leading by example and earning the new designation of “sustainability lighthouses.”

The Global Lighthouse Network recognizes industrial leaders

Launched in 2018, the Global Lighthouse Network is a World Economic Forum initiative in collaboration with McKinsey & Company. The frontrunner companies that comprise this network continue to demonstrate the true potential of 4IR technologies to transform the very nature of manufacturing. The 90th lighthouse has recently been recognized, marking more than a fivefold increase since the launch of the network (Exhibit 1).

The Global Lighthouse Network includes 90 sites as September 27, 2021.

The power of the network has grown through thousands of hours of site visits, both virtual and in person. The site visits unlock the mystery behind each of the 450 advanced use cases in action shared to date. In-depth demonstrations of enablers and commentary from the shop floor have offered an end-to-end view of these digital transformations. At the site level and across value chains, lighthouses show what is possible when companies combine bold vision, imaginative leadership, and agile working modes to maximize the power of emerging digital technologies.

As the network continues to grow, it becomes increasingly clear that 4IR transformation is possible across geographies and across industries. Moreover, the evidence accumulates, bolstering the understanding that the durable shifts are playing out across a diverse set of contexts. These are today’s trends—companies from vastly different industries that do very different work are adapting to the same shifts. As they do so, leading companies are showing what lies at the heart of success.

The Global Lighthouse Network

A detailed look at lighthouse success cases reveals that organizations investing in 4IR technology are realizing improvements in productivity, sustainability, operating cost, customization, and speed to market. Companies that drive competitive efficiency through digital transformation can make every kilowatt-hour count and every natural resource matter, using every machine and square foot of production space to its fullest, optimized potential.

The Fourth Industrial Revolution enhances sustainability and productivity

The Paris Agreement seeks to stave off global temperature rise this century, limiting it to less than 2°C above preindustrial levels; moreover, it compels efforts to limit the increase even more ambitiously to less than 1.5°C. By 2020, 83 countries and the European Union had reported a total of 700 policies related to sustainable consumption and production in order to achieve these goals.

By contrast, however, by 2020 only 40 countries had reported on sustainable public-procurement policies or action plans that would encourage environmentally efficient products, promote more socially responsible purchasing practices, and increase the sustainability of supply chains. It’s this disparity that puts eco-efficiency at the vanguard of the durable shifts (Exhibit 2).

Eco-efficiency is a core to the fourth industrial revolution journey.

As they respond to this urgent call to action, manufacturers can take heart in learning that alongside more immediately recognizable green initiatives like renewable energy sourcing, the same digital transformation efforts that yield positive ROI also introduce a range of sustainability benefits. For example, one oil and gas company’s deployment of AI-powered process controls reduced the energy intensity of the process by more than 10 percent. And as industrials get better and more efficient at the work they undertake, they can discover a win–win: they can achieve greater operational performance while simultaneously making good on commitments to environmental stewardship.

With pressure from climate change increasing year by year, an encouraging lesson has emerged. While the greatest environmental benefits come from core green sustainability initiatives (such as commitments to renewable energy), 4IR technologies make being sustainable easier. Companies that can solve business problems while simultaneously reducing environmental detractors like waste, consumption, and emissions are therefore on the leading edge of sustainability in the Fourth Industrial Revolution.

Most lighthouses report that their 4IR transformations improve sustainability

Almost two-thirds, or 64 percent, of lighthouses report sustainability impact as part of their 4IR transformation, deriving either from direct use cases—those designed to achieve sustainability impact—or from indirect use cases, meaning those designed for other purposes that achieved sustainability results (Exhibit 3). For example, among the 14 lighthouses in process industries, 29 percent report sustainability gains from direct use cases, such as the deployment of digital twins of sustainability—advanced models of the sustainability of an entire operation—and 50 percent report sustainability gains from indirect use cases, including use of advanced-analytics tools to increase output quality and reduce waste due to scrap.

Fourth industrial revolution digital transformations bring opportunities to businesses to drive both sustainability and operational performance.

Similarly, 25 percent of the 12 consumer-packaged-goods (CPG) lighthouses cite sustainability impact from direct use cases. Digital twins of sustainability have shown significant impact in this sector as well, reducing energy consumption by more than one-third and water use by more than one-quarter. And 50 percent of CPG lighthouses report impact stemming from indirect use cases—meaning 4IR efforts aimed at solving business problems, such as reducing defect rates with AI-powered process controls, which also reduce waste. We therefore conclude that 4IR efforts—both those directly aimed at impacting sustainability and those aimed at entirely different purposes—are having positive effects for the environment.

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Of course, achieving either sustainability impact alone, or efficiency alone, does not equate to achieving eco-efficiency. To truly address our “code red for humanity” the combination is a must. To achieve it, companies must make sustainability a driving force of their business agendas. Lighthouses again show that this is happening among leaders.

The eco-efficiency pacesetters: Sustainability lighthouses

The GLN was established to light the way for 4IR transformation across the manufacturing sector, and its 90 frontrunner sites have already set new benchmarks when it comes to successful 4IR transformation at scale. These leading companies are also positioned to lead a next-level drive toward sustainability.

At the World Economic Forum Annual Meeting 2020, leaders from industrial companies charged the GLN with the task of uncovering how sites and end-to-end value chains could make themselves more sustainable through technology. Additionally, the network was encouraged to identify member organizations that especially exemplified sustainability impact—and could serve as aspirational models for other companies.

The new designation of “sustainability lighthouse” has been created to recognize these leaders. Sustainability lighthouses, in addition to achieving the impressive level of 4IR maturity characteristic of other lighthouses, have demonstrated exemplary commitment to environmental sustainability through intent, impact, and scale of deployed advanced use cases.

The identification of sustainability lighthouses was based on preexisting information shared as part of the lighthouses’ initial applications. This close examination of available data from the 90 member sites helped determine which among them might best inspire future lighthouses on sustainability. With 64 percent reporting sustainability impact, further analysis was needed to identify the true frontrunners. Sixteen lighthouses highlighted dedicated advanced use cases aimed at enabling sustainability impact, but three emerged from an independent panel of experts for their use of 4IR technology and step-change impact in environmental categories: Ericsson (Lewisville, Texas, USA), Henkel (Düsseldorf, Germany), and Schneider Electric (Lexington, Kentucky, USA) (Exhibit 4). And all members of the network—whether newly recognized or existing—are eligible to be considered for designation as sustainability lighthouses in the future.

A 'sustainability lighthouse' designation highlights digital pacesetters enabling sustainability impact.

Sustainability lighthouses are pursuing ambitious impacts on environmental sustainability and realizing highly notable achievements in return. They have been explicit about incorporating sustainability goals with specific timelines as part of their 4IR journey. The results they have achieved fall into multiple environmental categories and reach the level of step-change improvement.

The global mandate for climate action is clear. Meeting it will take innovation, resolve, and cooperation—and the strength of the Global Lighthouse Network lies in just these characteristics. Lighthouses share insights and learn from each other as they continue their 4IR journeys, all the while inspiring other companies. This collaborative relationship creates a slipstream effect of innovation, enabling aspiring lighthouses to follow in their path and accelerate their transformations.

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