Digital transformation (DT) and ESG are two highly talked & high priority topics in the business community globally. While first one focuses on technology right from shop floor to smarter business outcomes, the other one Environmental, Social and Governance (ESG) refers to a collection of corporate performance evaluation criteria that assess the robustness of a company’s governance mechanisms and its ability to effectively manage its environmental and social impacts.

With digitization, companies can clearly define key metrics in ESG reporting, including targeting, managing, measuring, and reporting sustainability performance. This helps businesses improve accountability and transparency in reporting ESG performance.

The goal of DT is to use technology not only for the controls, monitoring & optimization of the various process parameters but to become enabler for more informed business decisions. As Deloitte has published -Our world faces a number of global challenges: climate change, transitioning from a linear economy to a circular one, increasing inequality, balancing economic needs with societal needs. Investors, regulators, as well as consumers and employees are now increasingly demanding that companies should not only be good stewards of capital but also of natural and social capital and have the necessary governance framework in place to support this. More and more investors are incorporating ESG elements into their investment decision making process, making ESG increasingly important from the perspective of securing capital, both debt and equity.

Looking at above, DT & ESG has to go hand in hand for achieving the goals. In COP26, sustainability goals are: Encouraging healthy living. Ensure a safe and secure atmosphere. Encourage more sustainable behaviour. Promote the use of responsible sources and responsible use of resources throughout the supply chain. Global efforts are on for Zero Carbon Emissions for which various Automation & Digital Technologies are helping industries to achieve their Net Zero goals.

Current Scenario

As the World Economic Forum says: In the Information and Communications Technology (ICT) world, customers increasingly cite ESG as part of the criteria for selecting vendors. "New IT", which includes innovations such as edge computing, can make ESG more effective and efficient, while ESG goals can be embedded in New IT now as it develops.

Of the three pillars of ESG, Automation & DT plays a vital role in Environmental. Negative environmental impact can be reduced by three popular Rs : Reduce, Reuse & Recycle

1. Reduce. Reducing the amount of waste created

2. Reuse. Give waste a second life by reusing it or donating it to be used by someone else, circular economy.

3. Recycle. Enable the materials thrown away to be used again by making them into new

Reduce: With the use of technology, raw material consumption can be optimized like fuel for production of energy (coal, biomass etc.) with the use of smarter combustion controls. With the use of digital tools process parameters deviation assessment can be done & then same can be optimized to run process more closely to the set point. It will not only reduce consumption of raw material but also energy to produce same amount of the product. It is not that these are not known but the ways the data are used to predict and maintain have been enabled by the technology. With the use of Advance Process Controls (APC) which sits over normal DCS controls enables to plant to operate with narrow band of deviation and thus reduces waste. By way of close monitoring of KPIs & their real time correlation through dashboards, which rest only in control rooms, can be brought online using technology and thus relevant stakeholders can advise plant operators for better controls resulting in reduction of water, air, gas, energy & steam (WAGES).

Reuse: As newer & newer technology is coming up; it has become essential to refurbish or reuse the equipment rather than discarding them. Though it is currently on lower scale but industries are doing this. There are industries that repair the costly DCS, PLC modules / cards etc. to put them back in use and save money on account of new procurement. With the use of advance technology, faulty components are identified and replaced to make system healthy. Likewise combining the defective instruments, one can be made healthy by using the components from each other. This thus results in saving environment from the e-waste. Even with the use of technology for segregation, this e-waste is deposited back into the stores for further recycling. Likewise, low grade heat which goes into the environment is used in technology like VAM, ORC. for cooling, HVAC etc.

Similarly, in power industries, people are making modifications in boilers to take biomass also as fuel and reducing carbon footprints. Turbines are being refurbished to reduce heat rate thus avoiding procurement of new ones. Here also using feed forward controls, optimum heat rate is achieved. Similarly, cooling tower outlet is being recycled for other uses. Even air-cooled cooling towers with better controls are being used to stop using high volumes of water. Similarly, recycling boiler economizers and air heaters fly ash back into the boiler with proper controls leads to reduction of un-burnt carbon loss, resulting in energy savings.

Recycle: This last R has vital role in saving environment. Using technology in Zero Liquid Discharge (ZLD), plants do not discharge the effluent but rather recycle in the system. This helps in reduction in water usage. There are various examples where effluent after proper treatment using technology is recycling back for use.

 Some of the solutions with the automation & digitalization are:

Optimize energy: Measure energy of each motor, compressor etc. & using technology compare their running data with identical ones & also design data. This will enable the concerned maintenance department to take corrective actions. Today sensor are available which measure vibration, RPM, flux etc. in one single sensor & provide online data to know where is the problem to avoid secondary damages thus saving energy. Use of Variable Frequency Drives (VFDs) with motors & then with DCS /PLC controls, energy is saved. With the use of smart modules, one can monitor the performance of compressors & motors on mobiles / computers, get alerts & even with cloud expert advice is taken.

Use circular economy: In the integrated plants, output of one plant is used as the input in the other plant & thus wastage is reduced & resources are utilized to great extent. With Digitalization, this balance cam be monitored.

Internet of things (IoT): Companies utilizing IoT solutions to track, analyze and deliver data in real-time can make sound decisions more quickly and efficiently. A report from the World Economic Forum states that 84% of IoT deployments are currently addressing or have the potential to address the UN’s Sustainable Development Goals (SDGs), which can assist businesses in their ESG plans. With advanced IoT tools and sensors, companies not only can have the capability to monitor data, but they’ll also be able to respond to demand and make necessary changes to their respective environment. For example, some midstream companies are using sensor technology to monitor pressure, gas flow, and other variables to predict pipeline leaks. This real-time leak detection and alert system could lead to a reduction in costs and prevent environmental damage. Therefore, this type of technology could help companies accelerate their respective ESG policies.

Artificial Intelligence (AI): Modern technology has also given companies the capability to use AI to their advantage in ESG investing. For example, using AI enables a company to better detect and reduce the amount of emissions. Much of AI’s potential comes from its capability to carry out data analysis and algorithms that allow computers to analyze data and identify key information that can be referenced when making business decisions.

Digital Twins: The concept of digital twin technology is to create a virtual environment that replicates real-world processes or services to collect data and predict how they will perform. Digital twins coincide with features and characteristics found in IoT and AI, which use sensors and algorithms to enhance data analytics to aid in business strategy and risk prevention. This advanced technology benefits the “E” in ESG by detecting cost-saving solutions in certain areas of a process or service that would otherwise be seen as wasteful.

Automation & DT play important role in Social also. Under the Social Pillar companies report on how they manage their employee safety, development and labour practices & surrounding environment. Production is changed to Productivity i.e. how safely you have done production with minimum energy. While companies have been looking for their own employees & labour working inside, the Social aspect of ESG has forced them to look out to the surrounding community as well.

Automation & DT help companies in various ways:

1. With the use of advance sensors, safe operation of machines can be ensured & thus no incidents.

2. With the use of advance wearable, an employee can be tracked for his movements in unauthorised areas, buzzer / alarm in case he is trapped and need immediate support.

3. Use of helmet mounted tablets help not only in hands free operation but also online meeting, guidance from subject matter experts etc.

4. With online dashboard plant heads & concerned Environment Expert can monitor the Continuous Emission Monitoring System (CEMS) & Continuous Effluent Quality Monitoring System (EQMS) and take corrective actions immediately. With the use of Artificial Intelligence & Machine Learning software, one can predict emissions in real time help understanding how operations relate to emissions & provide a testing ground for operational changes. This is all possible using digital technologies.

5. With use of AI embedded software, CCTV is used for monitoring of violation of safety protocols & initiate immediate necessary actions. It was very useful during Covid times when social distancing was of prime importance. Now also it is widely used.

6. With the use of electronic Safety Passes, one can find out the actual time a labour has spent at site to improve productivity, behaviour & track movement.

7. With wireless / wired boundary line sensors, release of toxic gases can be monitored on real time basis & help in evacuating the surrounding population as deemed. A central control room in the industries is used for this purpose.

8. With online Apps, Near Miss/ Unsafe Act/ Unsafe Condition are reported immediately helping in stopping of any incident.

9. It also helps in Digital Skilling of the employees & relieving them of monotonous work. Machines get depreciated while employees get appreciated with their experience. Digital technologies help in building intelligent systems with the expertise earned by long serving employees & help new comers to learn the system quickly.  

Automation & DT play also help in Governance aspect as well.

Digitalization enables leaders to work more efficiently, with more efficient processes and relevant data, enabling faster decision making and taking advantage of new opportunities with the help of adequate technology. Thereby, achieving better and more efficient corporate governance processes. With Digitalization data related to ESG are no more siloed but available to interested parties. Thus Accountability & Transparency both are achieved through Digitalization. It helps top officials of the companies to take informed & fast decisions.

For example, Monitoring, Reporting & Tracking of Legal Compliances are possible through Digital Tools available in the market which keeps companies up to date & dependency on manual work is eliminated. Similarly, Engagement platforms such as e-Suvidha App, WhatsApp Groups, Teleconferencing etc. support the stakeholders.

With the use of Artificial Intelligence (AI) & Machine Learning (ML), predictions can be made for potential areas of concern for speedy actions. 

With the use of Digitization, data about skill required can be monitored & suitable up-skilling can be planned.

ESG solutions serve to collect the relevant data, calculate key metrics, set and track ESG KPIs, and preview data in interactive dashboards from across all entities within a company. These tools would also facilitate the reporting process by ensuring consistent calculations while keeping ESG data safe and accessible from a single repository. This will help businesses to be compliant with ESG regulations, share their data with stakeholders and strategically manage ESG performance. Dashboards can provide management with the required level of transparency, enabling and improving strategic sustainability management by C-level management.

To summarise we can say incorporating the right tools and establishing the required integrations across different data sources will help organisations avoid costly mistakes when it comes to meeting their ESG reporting needs, as these continue to increase. Companies will also be able to bring added value to their businesses and derive further insights on data once their Digital Transformation and ESG strategies align. It is sure that companies who give due importance to ESG & work upon will be able to face competition in the future for which Digital Transformation will play a vital role.

The G in the ESG is on its way to bigger G-Green which is the need of the hour!!