AMPLIFY VOL. 37, NO. 11
Managing the twin transition — the digital transformation and decarbonization of our economy — is one of the greatest challenges business and policy leaders face today. As discussed in our first of this two-part Amplify series,1 we cannot manage one (i.e., decarbonization) without the other (i.e., digital transformation) — and must leverage synergies.
For instance, AI offers many opportunities to optimize emission-intensive processes and reduce emissions, but its computational requirement leads to a sharp rise in energy demand for data centers. Similarly, smart sensors and drones can replace traditional carbon-intensive processes but can intensify demand for computer chips and rare materials.
This second Amplify installment builds on insights from academic research on digital sustainability. Much of the literature, including my work on digitally enabled and digital-first innovation for net zero published in the Academy of Management Perspectives (with Ann-Kristin Zobel, Youngjin Yoo, and Christopher Tucci),2 highlights the potential of digital innovation for tackling climate change. However, more cautious voices are emerging. René Bohnsack, Christina M. Bidmon, and Jonatan Pinkse, contributors to our first issue, point to the unintended consequences of using digital innovation to tackle climate change.3 Accordingly, they warn us to steer clear of unbridled tech optimism and the “butterfly effect” of AI.
However, the previous Amplify issue powerfully demonstrates that digital innovation, if managed correctly and with the right talent, can be the key to climate transformation. For instance, it is an important cornerstone for the e-mobility and energy transition and for implementing mission-driven policies. Given the potential for digital innovation to facilitate progress on climate change, the vast risks of unintended consequences, and the staggering energy demands of a digital sustainability approach, we need clear, actionable advice for managers and policymakers.
This issue offers another set of insightful articles from leading researchers and practitioners working on digital innovation for climate action. They reiterate the core message of this Amplify series: digital innovation can accelerate climate action if managed correctly. Of course, it will lead us directly to climate disaster if used irresponsibly. Applying the carefully crafted frameworks presented in this double issue can help us avoid the latter and enable the former.
In This Issue
We begin with a deep dive into the potential of digital innovation to decarbonize one of the highest contributors to climate change: the construction industry. Diaa Shalghin, an emerging thought leader on building information management (BIM) in Germany and currently senior BIM manager at DEGES, teams up with Winfried Heusler of the Detmold School of Design, Germany, previously senior VP of engineering and building excellence at Schüco.
The authors apply a digitally enabled, digital-first framework to explore the opportunity of enhancing lifecycle assessment through digital innovation and present three takeaways: (1) implement a digital-first sustainability strategy for improved environmental simulation and modeling through BIM; (2) leverage digitally enabled sustainability for environmental data collection and analysis through the Internet of Things; and (3) combine digitally enabled and digital-first sustainability strategies for continuous optimization through AI.
These strategies allow companies to reduce their environmental footprint/costs and improve regulatory compliance and reporting. Importantly, this approach helps companies extend their lifecycle thinking beyond the operational phase, allowing end-of-life considerations. Industry practitioners will be happy to find a comprehensive overview of the challenges that emerge in their approach and a clear roadmap for overcoming them and “building” a sustainable future.
Our second article, from a high-profile research team at one of the world’s leading universities in engineering and construction, TU Delft in the Netherlands, focuses on leveraging AI to create a circular built environment. Drawing from their rich expertise in real estate, housing management, urban planning, and innovation, Brian van Laar, Angela Greco, Hilde Remøy, Vincent Gruis, and Mohammad Hamida explore the concept of adaptive reuse, which involves repurposing buildings to extend their lifespan and can drastically cut emissions in the built environment.
However, implementing and scaling adaptive reuse is challenging. The decision-making process is often top-down and fails to capture relevant voices and make compromises acceptable to all stakeholders. AI might come to the rescue as it enables new visualization tools to unite stakeholders. AI visualization tools can accelerate the early design process in adaptive reuse projects. They also enhance stakeholder participation and allow teams to visualize potential pathways to align their wants and needs collaboratively. Finally, AI visualization tools help partners envision the future, quantify contradictions, and develop a more participatory and heuristic decision-making process for adaptive reuse projects that reduces human bias.
Next, Angela Greco, assistant professor of innovation management at TU Delft, and Andrea Kerstens, a TNO scientist and PhD candidate in innovation management at TU Delft, draw on their experience with Syn.ikia, an EU-funded Innovation Living Lab for positive-energy building districts that leverage energy efficiency and renewable energy sources. Digital innovations like digital twins have been essential to unlocking positive-energy districts. For instance, digital twins that combine physical models of buildings and AI models of user behavior allow building districts to predict and optimize usage of excess solar energy.
Their article presents three lessons learned from the project. First, ethical data management is key, as well as functioning AI prediction models (these need large amounts of personal user behavior data that can only be accessed if ethical data management procedures are in place). Second, even the most advanced AI models for digital twins are of limited use if the digital twins are not designed with the end user in mind. Finally, because the building industry is notoriously fragmented, digital twins must become real-time learning and collaboration tools to be value chain–proof.
Next, Armand Smits, an assistant professor of organizational change and design at Radboud University, the Netherlands, tackles one of the most pressing issues in digital sustainability: the rising energy and environmental cost of data centers. As illustrated by the first three articles, digital sustainability approaches and AI rely on large amounts of data that are increasing exponentially and must be stored and processed in data centers. Smits provides a deep dive into the Climate Neutral Data Centre Pact (CNDCP) to help managers and policymakers understand how to limit the environmental impact of data centers.
CNDCP focuses on target setting and monitoring of energy efficiency, clean energy, water, and the circular economy. However, this type of self-regulating pact can only be effective if it enables collective action and mandates three best practices. First, new relationships must be forged: the CNDCP emerged through a collaboration of the European Data Centre Association (EUDCA) and the Cloud Infrastructure Services Providers in Europe (CISPE). Second, it must leverage existing templates. CNDCP could, for example, build on the power-usage effective ratio to concretize the area of energy efficiency and many other environmental standards. Finally, it requires advanced, inclusive audit frameworks that incorporate the local climatic conditions in which data centers are built.
The issue closes with a fascinating story about the climate and digital transformation of a region traditionally reliant on coal. Led by Hamdy Abdelaty, a high-profile team of researchers at the Lusastia Energy Innovation Center (EIZ) at Brandenburg University of Technology, Cottbus-Senftenberg, Germany, shares insights about the role of digital innovation in facilitating energy innovation.
As part of EIZ’s strategic focus on sector coupling (e.g., heat and electricity) and the intelligent digital operation of complex energy systems, the authors present five insights: (1) the power-to-X-to-power energy storage system requires advanced digital simulation to enable efficient carbon-free storage and renewable energy retrieval; (2) advanced stochastic models for real-time prediction of unsteady wind velocities can significantly enhance grid stability; (3) adaptive digital monitoring and control tools are essential for managing sector-coupled energy systems as they enable robust testing of solutions in real-world scenarios; (4) new technologies such as virtual reality offer immersive experiences that can significantly improve the acceptance of renewable energy transformations; and (5) transformative innovation projects like the EIZ require streamlined bureaucratic processes, funding agility, and collaborative frameworks.
The five articles in this issue deepen our understanding of digital innovation for climate action. They include three in-depth case studies, insights into managing the environmental impact of data centers through collective action, and an examination of how digital innovation can facilitate sustainability transformations of an entire region. Together with the first part of this Amplify series, these articles provide clear insights for managers and policymakers on successfully achieving the twin transition.
References
1 Falcke, Lukas (ed.). “The Twin Transition: Digital Innovation & Climate Action.” Amplify, Vol. 37, No. 10, 2024.
2 Falcke, Lukas, et al. “Digital Sustainability Strategies: Digitally Enabled and Digital-First Innovation for Net Zero.” Academy of Management Perspectives, 18 March 2024.
3 Bohnsack, René, Christina M. Bidmon, and Jonatan Pinkse. “Sustainability in the Digital Age: Intended and Unintended Consequences of Digital Technologies for Sustainable Development.” Business Strategy and the Environment, Vol. 31, No. 2, February 2022.
