Sustainability is a revolution in the making. If there is one lesson to learn from the digital revolution, it’s this: act fast on long-term trends. This is much more important than the right timing, because the best time to act is always now. The disruptive potential of digital (network, internet) technology was hard to grasp in the early days, but at least we could view it as a technology like the steam engine, electricity and information technology.

This led to the concept of the fourth industrial revolution, which substantially underestimated the range and depth of change. With sustainability, it’s even harder to overestimate it. The range and depth of change will be – and a growing number of people are saying: must be – ginormous. Like the digital revolution and the coronavirus pandemic, it will be an exponential revolution. Meaning, gradually and then suddenly.

When riding an exponential curve, timing is pointless as long as the numbers are on the rise. We always need to act now. As long as the digital revolution continues, invest in it. As long as coronavirus infections are rising, push harder to get the numbers down. The same is true for the sustainability revolution: as long as your business isn’t sustainable in the long run, act now and pivot towards sustainability.

Investors are starting to realise that unsustainable businesses are worthless, at least in the long run. And what’s more: when comparing two seemingly identical businesses (according to KPIs of your choice), the sustainable business will be worth significantly more than its unsustainable counterpart. Any sustainable business plays the infinite game (Simon Sinek) – it will still be worth at least something at the time when an unsustainable company goes out of business.

Two interconnected revolutions

Adding to the pressure, regulation has already shifted towards sustainability and will continue to do so. Consumers are increasingly aware of sustainability. The same is true for talent – unsustainable companies will find it hard to attract new employees. And some will even lose current ones.

Over the next few decades, the digital revolution and the sustainability revolution will be interconnected: we’ll put digital technology in place to achieve sustainability. The usual suspects, like big data, artificial intelligence, or the internet of things, will all do their bit here. Many companies will need to answer the dual challenge of the digital and the sustainability revolution with a dual strategy combining both.

Because there’s not enough time left to address these challenges one after the other.

It’s already clear that certain industries will face headwinds during the dual revolution, while others enjoy tailwinds. Research by our mothership Accenture reveals the top 6 European industries in both categories.

Top 6 industries with a high share of Tomorrow’s Leaders (>30%)

• Health
• Pharma, Biotech, Life Sciences
• Software & Platforms
• Communications & Media
• Consumer Goods & Services
• High Tech

Top 6 industries with a high share of Falling Angels (>25%)

• Retail
• Capital Markets
• Energy
• Natural Resources
• Automotive
• Airline, Travel, Transport

If you think about it, this list isn’t really surprising. Especially if we include the aftermath of the pandemic. For example, while retail is struggling with structural changes (i.e. the seminal shift to e-commerce), consumer goods are profiting from direct-to-consumer (DTC). Energy is under pressure to decarbonise and airlines are hit hard by the pandemic.

But don’t take this list as gospel. For example, we’ll still need energy in the foreseeable future. Huge investments will be necessary to reach carbon-free power generation, but the pay-off could be massive. For Germany, the Federation of German Industries (BDI) estimates additional investments of up to €2.3 trillion to reach carbon-neutrality in all sectors by 2050. With optimal political implementation, the macroeconomic impacts of the climate pathways considered could nevertheless be neutral.

So is carbon-neutrality just swings and roundabouts? Not if we consider that we would be creating a sustainable economy. Such an economy would be worth infinitely more than the current, unsustainable one. We can view the vast investments as costs of doing business, or, perhaps more realistically, as investments with a huge, long-term pay-off.

The politics of the sustainability revolution

Since the optimal political implementation is anything but a given, we’ll see a lot of debate about regulation and other kinds of political intervention in the years to come. It’s clear that the sustainability revolution won’t take off without a proper regulatory framework. And someone has to foot the bill.

Germany’s GDP was €3.3 trillion in 2020. Additional investments of €2.3 trillion over a 30-year period amount to 2.3% of GDP per year, which sounds feasible, but is still substantial. Of course, it’s an oversimplification to assume spreading investments smoothly over three decades. It will be closer to a Gaussian curve, with a significant peak a few years down the road.

However, the savings of private households in Germany reached a record high of roughly 10% of GDP last year. Less than a quarter of this amount would be sufficient to reach the investment goal – not even counting the investments that companies and the government have to make. Immense sums of money will flow into ESG companies anyway, further easing the load. And then there is Germany’s export orientation.

Even faster than the digital revolution

Every climate-friendly technology that’s invented and brought to market in Germany will be most likely exported abroad as the global demand will be huge. If and when the entire planet or at least significant parts of it will join the quest for a sustainable, carbon-free future. This is a huge bet, and some people will surely say that we’re betting the farm away. But maybe we’ll even find a decent business model for a sustainable future.

Sustainability is not a one-off goal, but something that we need to adjust at regular intervals. The digital revolution wasn’t carried out in one day either, but has kept us busy for almost three decades so far – and is still way off crossing the finish line. Given current timeframes of the Paris Agreement, the European Green Deal, or Germany’s Federal Climate Protection Act, the sustainability revolution is scheduled to blast off even faster than the digital revolution did.

Photo by ev on Unsplash