Twin transition: how digital transformation can boost sustainability
In the report The Global Risk Report, drafted in Davos in 2023, the World Economic Forum identified that 8 of the top 10 long-term risks to the global economy are environmental and social risks.
In this scenario, organizations face double pressure: adapt to an increasingly digitalized environment and respond urgently to the climate crisis.
As explained by the Royal Schiphol Group and PA Consulting, at the intersection of these two agendas an optimal point (or “sweet spot”) is generated, where Digitalization amplifies and accelerates sustainability.
That is to say, the solution is not to choose one of these paths, but to explore them in an integrated way.
From this need arises the concept of twin transition, also known as double transition or twin transition.
Twin transition proposes a synergy between digital transformation and ecological transition to generate a more sustainable, competitive and resilient development model.
This approach is changing the rules of the game in sectors such as manufacturing, agriculture, telecommunications, retail, and the financial sector. But it is especially challenging for the technology industry, offering the opportunity to rethink how we produce, consume and manage resources.
In this article, we explore what the twin transition is, how it emerged, and its connection to decarbonization in the digital age.
We also analyze the opportunities and challenges it poses, and address the importance of greening technology and the 10 principles for technological sustainability.
What is twin transition?
The twin transition is the parallel and complementary transformation toward a digital and sustainable economy.
It is based on the principle that digitalization—through technologies such as artificial intelligence, IoT, big data, automation, and blockchain—can accelerate and enhance environmental goals.
Among them, the reduction of carbon emissions, energy efficiency or circular resource management.
Far from being independent processes, Technological innovation and environmental sustainability reinforce each other.
For example:
- Connected sensors allow real-time monitoring of an industrial plant's energy consumption.
- AI algorithms can optimize logistics routes to reduce carbon footprints.
- Circular economy models are viable on a large scale thanks to digital platforms.
The Twin Transition is not just a technological evolution or an ecological response: it's a comprehensive strategy that redefines the future of business, cities, and public policy.
How the concept emerged: the European Green Deal
The term began to consolidate from 2019, when the European Commission launched the European Green Deal (European Green Deal).
This initiative set the goal of making Europe the first climate-neutral continent by 2050.
To achieve this, a series of public policies were proposed focused on reducing emissions, the efficient use of resources, and the promotion of clean energy.
But the Green Deal also recognized that digital transformation was a key factor in achieving these goals. Thus, a twin transition was proposed, where Digitalization not only boosts competitiveness and innovation, but also serves sustainability..
Since then, the twin transition has been incorporated into strategic investment plans, regulations, and government agendas, not only in Europe but also in other regions seeking to lead the shift toward more inclusive and sustainable development.
What aspirations does the Twin transition raise?
As the discussion document explains First approach to dual transition in Mexico, prepared by the German Cooperation for Sustainable Development (GIZ) with authorship of Hummingbird and 3 Vectors, through the twin transition we can aspire to achieve the following objectives:
1Decarbonization processes for economies that effectively contribute to mitigating climate change.
2Promote a digital transformation with a sustainability focus, leveraging digital technologies for sustainability agendas and fostering their social adoption.
3More circular economic and production models.
4. Reduce social inequalities.
5. Boost economic benefits.
6. Reduce energy consumption.
7. Contribute to the creation of a resilient and competitive growth model.
8. Create job and knowledge opportunities.
9. Streamline processes and resource use.
10Strengthen security and monitoring systems.
11. Improve information traceability and data transparency.
In practice, according to the survey Three-Part Game Plan for Delivering Sustainability Digitally, developed by Bain & Company and the World Economic Forum, 40% of executives from various industries and regions, perceive that Digital technologies are having a positive impact on their sustainability goals.
Decarbonization in the era of Industry 4.0
The fourth industrial revolution, or Industry 4.0, is marked by connectivity, automation, and the intelligence of production systems.
In this context, the twin transition offers powerful tools for achieving effective decarbonization of the economy.
The twin transition is the parallel and complementary transformation toward a digital and sustainable economy.
He Strategic Foresight Report 2022 of the European Commission mentions some applications of technology and its benefits to enhance sustainability in a harmonious manner.
These include robotics and the Internet of Things, blockchain, digital technologies, and quantum computing.
At a practical level, some examples are as follows:
- IoT and smart sensors: allow monitoring of energy consumption and emissions in real time, enabling data-driven decision-making.
- Digital platforms: improve the traceability of products and materials, and enable circular economy models.
- Digital twins (digital twins): allow industrial processes to be simulated before implementation, reducing waste and optimizing resources.
- AI algorithms They help predict consumption and behavior patterns, allowing us to anticipate energy demand or avoid unnecessary use of resources.
All this translates into more efficient processes, cleaner value chains and products with lower environmental impact.
Digitalization not only optimizes what exists, but opens new possibilities to transform carbon-intensive sectors, such as energy, construction, transportation or agriculture.
Opportunities presented by the twin transition
The integration of digital and green creates a number of significant opportunities for organizations:
Innovation and competitiveness
Companies that adopt sustainable and digital technologies gain efficiency, reduce operating costs, and improve their positioning among environmentally conscious consumers.
New business models
The twin transition gives rise to proposals such as resource sharing (collaborative economy), reuse platforms, and services based on environmental data, among others.
These models are more sustainable and have high scalability potential.
Job creation and new professional profiles
New occupations are emerging that combine technological skills with sustainability knowledge. These include specialists in environmental data analysis, digital energy efficiency, and those developing green solutions, among others.
Greater organizational resilience
Digital technologies allow us to anticipate risks, adapt processes, and respond quickly to crises such as natural disasters or logistical disruptions. A digitalized and sustainable company is better able to cope with uncertainty.
Regulatory compliance and access to financing
Adopting sustainable practices supported by technology facilitates compliance with environmental regulations and opens doors to financing sources aligned with ESG (environmental, social, and governance) criteria.
Challenges presented by the twin transition
Several environmental, social and ecosystem challenges can be identified in the twin transition.
Environmental challenges
Many people often think that digital is inherently sustainable.
However, while digitalization brings significant benefits, it also has an associated environmental impact, primarily a carbon cost from the energy consumption it entails.
The reflection arises from the document published by GIZ, which warns that Unless digital technologies become more energy-efficient, their widespread use will increase energy consumption. and, with it, emissions.
Along these lines, according to the European Commission's 2022 Strategic Foresight Report, "information and communication technologies (ICT) are responsible for 5.91% of global electricity consumption and around 31% of greenhouse gas emissions."
According to the report, To date, there is no agreed framework for measuring the environmental impact of digitalization., so its measurement causes significant variations in these estimates.
Energy consumption will also continue to increase due to the increased use of online platforms, search engines, virtual reality concepts (such as the metaverse), and music and video streaming platforms.”
Based on these indicators, the document prepared by Kolibri and 3 Vectors for GIZ, maintains that any strategy aimed at promoting sustainable development must take into account and address, from a systemic perspective, both the positive and negative aspects of digital technology.
Therefore, they affirm that it is of utmost importance to measure the digital carbon footprint, mitigate GHG emissions, and offset them in order to neutralize them and move toward a net-zero emissions economy.
Social challenges
Among the potential social effects of the twin transition, the GIZ report identifies the following:
- Occupational risk of automation.
- Low technological adoption (perception of complexity in technology).
- Possibility of exclusion of vulnerable groups.
- Vulnerability of low-income groups and small businesses to price increases.
- Gender dimension of the digital transition (risk of widening the gender gap).
- Widening inequality between developed and developing countries.
Challenges in local ecosystems
The twin transition presupposes coordinated work between two spheres that do not usually communicate naturally: the digital and the sustainable.
Therefore, for the transition to be effective it will be essential:
- Coordination of key players in local digital ecosystems and the value chain.
- The associated governance structure. Despite opportunities for collaboration, for example in corporate settings, digital and sustainability teams are not accustomed to working together.
- Governments also face challenges such as low citizen confidence in their ability to respond to challenges of this magnitude.
Green technology and twin transition
“Greening” technology and giving it a clearer purpose that puts the planet and people at the center can have a positive impact that ensures a sustainable future without leaving anyone behind.
This is expressed in the "First Approach to the Dual Transition in Mexico," prepared by the German Cooperation for Sustainable Development (GIZ).
Within the spectrum of green technologies, we can identify the following:
- Green software: refers to computer systems and applications that are developed, implemented and used with the aim of minimising their impact on the environment and ensuring their social impact is high.
- Green code: consists of the Software development practices and methodologies that seek to minimize the environmental impact of software, optimize resource use, and reduce energy consumption.
Their goal is to create efficient applications that fulfill their specific functions while being environmentally sustainable.
- Sustainable IT infrastructure: involves the creation, management and operation of technological systems and resources in a way that minimize your environmental impact and promote energy efficiency.
A goal that can be achieved through optimizing resource use and reducing carbon emissions. The concept ranges from managing more efficient data centers to manufacturing devices with recyclable, low-environmental-impact materials.
10 principles for technological sustainability
At IT Patagonia, we have been clear for years that We are not indifferent to the way we do business.
The Ten principles that define our purpose They aim to Promote the sustainable development of current and future generations in the technology industry, the country, and the world.
- Support, respect, not violate and guarantee human rights.
- Collaborate in building a society free from discrimination, completely diverse and inclusive.
- Promote education and help reduce the gap in access to vocational training.
- To enhance and increase opportunities for access to a first quality and sustainable job, providing technological tools that guarantee inclusion in an increasingly competitive world.
- Generate social awareness and work collaboratively with our stakeholders to achieve a more responsible, fair and integrated society.
- Collaborate in reducing the gender gap that our industry currently suffers, promoting the empowerment of women and their leadership.
- Develop good practices that promote the care of the environment and natural resources.
- Generate a business culture, putting people at the center and working, every day, on their human and professional development.
- Cultivate ethical business and transparent corporate governance.
- Promote strategic alliances that help us co-create solutions that have a positive impact on the community and/or the environment.
The companies that are certified as Company B We are committed to continuous improvement and place our socio-environmental business purpose at the heart of our business model.
Are companies legally required to consider the impact of our decisions on employees, the community, the environment and our shareholders.
As explained from B Systems, B Companies are characterized by be committed to an economic system that benefits the planet and all people.
We measure our social and environmental impact and we commit ourselves personally, institutionally and legally to making decisions that consider the long-term consequences of our actions on the community and the environment.
Likewise, we assume with responsibility and pride to belong to a global movement of companies that want to make a change.
We use market power to solve social and environmental problems and build a new, more sustainable and inclusive economy.
A path to the future
The twin transition is not a passing fad, but a structural response to the major challenges of the 21st century.
In a world where resources are finite, climate change is a real threat, and digitalization redefines the limits of what is possible.
Moving towards sustainable production and consumption models supported by technology is a necessity.
Organizations that understand this logic and act with vision will be the ones to lead the transformation, inspire trust in their stakeholders, and generate long-term economic, social, and environmental value.
The question is no longer whether to move toward the twin transition, but rather how to do so strategically and collaboratively.
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