The recently endorsed COP29 declaration on Green Digital Action has once again highlighted the critical role of digitalisation in climate action. Now more than ever, the need for technology to accelerate climate action is evident. However, it is saddening that digital adaptation of climate solutions has been slow and secluded.
Though available, at-scale deployment of digital solutions has yet to become a reality. According to the World Economic Forum, digital solutions can reduce global emissions by 20%. However, to make this a reality, upscaling digital infrastructure and ensuring their adoption at the grassroots level remains the need of the hour.
Digitalisation for sustainability-proofing
Economies globally are maturing, and sustainability is serving as a catalyst. More and more government policies, boardroom decisions, and business operations are being guided by sustainability. International trade policies are also being crafted to limit the production and movement of emission-intense products to pave the way for low-carbon economies. The most recent example of this is the world’s first carbon tax by the EU, the Carbon Border Adjustment Mechanism (CBAM), to be imposed on cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. It is speculated that non-compliance of CBAM can lead to a tax burden equivalent to 0.05% of India’s GDP.
Since its launch, CBAM has been a topic of contention, with developing countries labelling it as exclusionary and disadvantageous to developing economies. However, we need to wake up to the reality that going forward, we can expect newer formulations and variations of CBAM-like policies. This means enterprises and governments need to start working towards equipping themselves with the right digital tools to be prepared for new-age sustainability compliances. In the absence of adequate digitalisation, sustainability compliances will lead to business anxieties.
Making sustainability more inclusive
Technology plays a key role in making sustainability more inclusive for enterprises and entrepreneurs. With new regulations and compliances emerging, businesses without access to the right technology will fall behind in crucial steps like carbon footprinting, emission management and ESG practices. For example, COP29’s agreed-upon global carbon market will serve as a unilateral trade measure for setting consistent carbon pricing across borders, impacting product costs and reshaping economies. Businesses lacking the digital infrastructure to track, measure, report and reduce their carbon footprint will face higher tariffs and lose their competitive edge globally. As a result, they will be excluded from participating in mature economies that demand only the entry of sustainable products and services.
A key to global market access
A NetZero economy calls for a shift towards digital adoption, which is essential for creating a level playing field for businesses worldwide to meet compliance standards effectively. For instance, a steel bolt producer in rural Rajasthan can remain competitive in the EU market, as digital solutions enable them to align with global standards for carbon transparency and compliance and help in keeping his manufacturing clean.
This digital alignment not only mitigates potential trade disruptions but also facilitates easier, faster, and more consistent documentation, helping exporters meet international buyers’ expectations with minimal friction. By bridging regulatory gaps, digital adoption empowers businesses of all sizes to access global markets confidently, fostering inclusive trade and a resilient, interconnected economy.
A bridge for climate action
Grassroots-level penetration of digital solutions through coordinated efforts is critical. The recently declared Green Digital Action at COP29 is only a stepping stone. Stakeholders like governments, trade associations, and technology providers need to champion awareness and accessibility, offering training and resources that help smaller businesses get on board with sustainable practices and in using digital solutions. Climate action, after all, calls for global ambition and local execution. Digitalisation is the essential bridge between these two sides.
As we move towards a NetZero future, digital tools are more than facilitators—they are catalysts for accessible and inclusive sustainability. They empower every business to contribute to climate solutions by transforming sustainability from a regulatory requirement into a shared global commitment.