What is Sustainable Digitalisation?

Strengthening Europe’s digital sovereignty by enabling the twin transitions of our economy

Sustainability is most often associated with the environment. The general meaning, however, can be applied to other issues as well. In the UN’s Sustainable Development Goals, for instance, several goals for societal sustainability are outlined.

At DIGITAL SME, we propose a new application for the term: sustainable digitalisation. Also known as sustainable digital transformation, the concept refers to the process of digitalising the economy in a long-lasting, green, and organic way. Sustainable digitalisation aims to support and enable Europe’s twin transitions to a green and digital economy by building on its key strength: innovative SMEs and their business ecosystems.

In the long term, the goal of sustainable digitalisation is to strengthen European digital sovereignty.

As with all matters of sustainability, the issue is simple in theory but complex in practice. We believe that sustainable digitalisation fundamentally rests on three pillars:

  1. Sustainable B2B digitalisation
  2. Green(er) technologies and a circular economy
  3. An innovation-enabling policy- and regulatory framework

1.    Sustainable B2B Digitalisation

When explaining the concept of sustainable B2B digitalisation, it is useful to start by contrasting it with its opposite: unsustainable “short-term” digitalisation. Imagine a traditional brick-and-mortar business which uses its COVID-19 liquidity support to purchase a Zoom subscription—and stops its digitalisation process there. This company has effectively transformed itself from a non-digital company to a minimally skilled end-user of other companies’ digital products. This short-term-oriented process will not lead to that business becoming a digital frontrunner.

Extrapolated to the European level, such an unsustainable, short-term approach to digital transformation would mean that the continent continues to lag behind in the digital race.

“Sustainable B2B digitalisation is a long-term process of symbiotic business-to-business relationships that result in non-digital companies becoming digital frontrunners. The companies which enable this process are often SMEs. We call them ‘digital enablers’.”

— DIGITAL SME President Dr Oliver Grün

“Sustainable B2B digitalisation starts when a traditional business approaches an ICT enterprise to acquire specialised software solutions to transform their business model from analogue to digital. The process will take time. But in the end, the traditional enterprise acquires digital skills, completely reconstructs their operations, and can become a true digital innovator itself. The companies which facilitate this process are often SMEs. We call these SMEs ‘digital enablers’”, explains DIGITAL SME President Dr Oliver Grün.

A prerequisite for SMEs and startups to digitalise sustainably are talent and skills. Going beyond learning to simply use digital tools, employees in different sectors need to be trained to develop and innovate in emerging technologies. Only by closing the digital skills gap of over 1.000.000 missing workers in ICT will Europe’s businesses be able to transform themselves into digital frontrunners.

If Europe wants digital sovereignty, we must use the fertile ground of our strong digital ecosystems to foster sustainable B2B digitalisation. When innovative SMEs and startups work together with universities, clusters, and large enterprises, they can systematically digitalise Europe’s whole economy.

2.    Green(er) Technologies and a Circular Economy

Europe is leading the world in its ambitious climate goals. To reach these goals, the digital sector has to contribute its share and embrace sustainability in all its facets: circular economy models for hardware, climate-neutral CPUs and server centres, software advancements to reduce energy consumption, and many more.

The fourth industrial (digital) revolution has the power to dramatically reduce resource-use and pollution. It can do so by making processes more efficient, as in big data analysis, or by simply replacing physical supply chains altogether, as in the case of additive manufacturing, (aka 3D printing). Digital technologies such as artificial intelligence, 5G, and blockchain can also accelerate and maximise the effects of environmental measures. A thriving digital ecosystem can bring forth the innovative green companies that will tackle the climate crisis.

At the same time, existing physical supply chains have to become more circular. One of the main elements of a circular economy is the repairability of products. Repairing hardware is sustainable in three major ways: environmentally, since it combats the “throwaway economy”; economically, by enabling a vibrant repair sector which mainly consists of small businesses and creates jobs; and societally, since it helps people save money.

Why, then, don’t we have a much more circular economy already? Well, as it turns out, not every product can be legally repaired. This is where policymakers and regulators come into play.

3.    An innovation-enabling policy and regulatory framework

European policymakers have to allow businesses to use circular economy models and innovate in green(er) technologies. For instance, small businesses will only be able to offer hardware repair services if they can access the data and information needed to perform repairs. The so-called right to repairis crucial to enable innovation, resource-saving, and save money for citizens.

Repairability also dovetails into software- and hardware openness. Open-source software, for instance, emphasises the common good and fosters innovation by allowing tech-savvy players to access and improve technology for free.

Open hardware does the same for physical products; if electronic devices are unlocked for third-party software, businesses can compete and develop better applications to run on them. European regulators should support openness in software and hardware alike, for example by reducing liability issues in case of a software malfunction on a third-party device.

Interoperability, often supported by ICT standards, is another facet of sustainable digitalisation and openness. It is one of the requirements to unleash Europe’s data economy. To develop and refine the technologies of tomorrow, innovative SMEs and startups need large datasets. Vast amounts of precious data are produced in Europe, but businesses too often don’t know how to access, use, or create value from it. By fostering ICT standards and interoperability through smart policy and regulatory measures, EU policymakers can increase SMEs’ access to data and help advance the continent’s sustainable digital transformation.

Sustainable Digitalisation leads to European Digital Sovereignty

Investing in Europe’s sustainable and innovative prowess is the basic requirement to support the twin transitions to a green and digital economy — and SMEs are at the centre of this process.

The current wave of digitalisation due to COVID-19 is a double-edged sword. We have to make sure that measures aimed at supporting digital transformation do so in a sustainable way — avoiding short-term thinking in investments and programmes. Regulatory initiatives need to be planned and implemented with a holistic view. Legislative files like the General Product Safety Legislation, the Radio Equipment Directive, and the new Digital Services Act transcend policy areas. They touch on sensitive issues at the intersection of topics like competition, intellectual property, market openness, and liability.

If Europe wants digital sovereignty, we need to understand and enable sustainable digitalisation. By investing in symbiotic B2B relationships, green(er) technologies, and smart policy, we can enable Europe to become a leading force in the digital age. A force that doesn’t just buy technology from abroad but develops and sells it to the rest of the world.

Through careful consideration of the thematic complex, which has SMEs at its heart, Europe can unleash its innovative and green business ecosystems and successfully complete its twin transition to a fully green and digital economy.