# The Root of All Good: Sustainability’s role in Digital Transformation
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-13
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Digital Transformation and Sustainability in Finance Sector
Meta Description: Discover how the finance sector is adapting to digital transformation, with a focus on sustainability to meet consumer expectations and drive meaningful impact.
URL: https://financedigest.com/the-root-of-all-good-sustainabilitys-role-in-digital-transformationhtml

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_By **Ross Sleight,** Chief Strategy Officer at Somo, a global digital product agency_

Digital transformation is accelerating. When businesses take on the challenge of becoming digital first to respond to consumer expectations they need to reinvent themselves. The finance sector in particular has seen a significant push towards becoming digital, leaving legacy processes behind to [create new Products](https://www.financedigest.com/4-tips-for-creating-a-calm-workspace-to-boost-productivity.html "4 tips for creating a calm workspace to boost productivity") and Services  that are more impactful and meaningful to customers. While there’s no one way to do this, the Harvard Business Review [recently published an article](https://hbr.org/2021/11/how-to-navigate-the-ambiguity-of-a-digital-transformation) on navigating the ambiguity of digital transformation through three principles; acting ahead of the phase transition, amplifying learning and adaptation, and investing in capabilities, not competencies.

However, with the role some businesses play in our lives as customers and employees, their effect on the world, society and the environment, and the communities we live in, there is a fourth principle that demands to be a central tenet of any  [digital transformation](https://www.financedigest.com/3-reasons-why-businesses-get-stuck-at-the-starting-gate-of-digital-transformation.html "3 Reasons Why Businesses Get Stuck At The Starting Gate Of Digital Transformation") strategy: Sustainability.

As a whole, the finance sector has been slower than others to embrace sustainability in their [digital transformation](https://www.financedigest.com/redefining-the-human-touch-with-data-driven-digital-transformation.html "Redefining the human touch with data-driven digital transformation"). This is mostly due to [businesses themselves being slower to shift towards sustainability](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?") and meeting this wider stakeholder demand than simply focusing all efforts on financial returns for shareholders.

**A ubiquitous feature for businesses**

When it comes to ESG (Environmental, Social and Corporate Governance and often underpinned by [UN Sustainability Goal](https://sdgs.un.org/goals)) commitments, made by a business there is a need for them to cascade, as a whole, down into their digital transformation strategies. With ESG and digital transformation, as [PwC detailed in a report earlier this year](https://www.pwc.com/gx/en/issues/reinventing-the-future/take-on-tomorrow/esg-transformation.html), these areas need to touch every single action a business does, in order for their true potential to be realised. If a business is not pursuing a positive ESG agenda as a core part of its proposition, its reason for being, then we cannot expect [digital transformation](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution") to have optimum sustainability. Of course, a digital transformation strategy can implement and measure ESG goals, and in itself, can be accountable and sustainable in its practices and implementation, but it can only [run as fast as a business’s](https://www.financedigest.com/4-signs-you-have-what-it-takes-to-run-a-business.html "4 Signs You Have What It Takes to Run a Business") total commitment to sustainability. For example, specialist investment companies, like Clim8, have strong digital propositions underpinned by company-wide sustainability.

In practice this can take many different forms. This can be helping to measure, improve, and develop customers’ digital literacy, like Lloyds Bank has done with their [Essential Digital Skills Report](https://www.lloydsbank.com/assets/media/pdfs/banking_with_us/whats-happening/211109-lloyds-essential-digital-skills-report-2021.pdf), to ensure no one is left behind because of digital transformation. Digital transformation has also led to [bank branch closures](https://www.independent.co.uk/news/business/news/lloyds-last-branch-isles-of-scilly-b1944690.html) that in theory make economic sense by creating cost efficiencies, increasing returns to financial shareholders, but this strategy ignored the needs of a key stakeholder within a sustainability agenda: the communities these branches operated in. Internally, it can mean ensuring that [product development is meeting sustainable](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") best practices, with the  technology being used not just because it was the best price, but because it’s the most environmentally sound as well.

Digital transformation should also act as a [way of measuring the impact of business](https://www.financedigest.com/5-simple-ways-in-which-your-business-can-save-water.html "5 simple ways in which your business can save water"). It should facilitate and measure supply chain audits, work to develop [carbon footprinting measurements](https://www.financedigest.com/playground-xyz-study-finds-carbon-emissions-from-digital-ads-fall-by-63-on-average-when-measured-and-optimized-for-attention-time.html "Playground xyz study finds carbon emissions from digital ads fall by 63% on average when measured and optimized for attention time") and wrap around the core business to provide insight on this and other data. The goal is then to action all of this to further a [business’s](https://www.financedigest.com/how-to-create-financial-goals-for-your-business-in-2021.html "How To Create Financial Goals For Your Business In 2021") sustainability goals. Transparency can be built in these cases for the supply chain around core [digital platforms](https://www.financedigest.com/seenthis-launches-creative-platform-to-boost-performance-and-reduce-co2-emissions-in-digital-advertising.html "SeenThis launches Creative Platform to boost performance and reduce CO2 emissions in digital advertising") such as blockchain or distributed ledgers.

**The challenges: behaviour and investment**

One of, if not the, biggest barriers for [digital transformation](https://www.financedigest.com/how-digital-is-transforming-finance-in-2023.html "How Digital Is Transforming Finance in 2023") comes with customers and behaviour change. Digital [transformation based around improved and sustainable customer experience has created](https://www.financedigest.com/world-class-finance-digital-transformation-and-analytics-based-decision-making-among-key-imperatives-for-creating-finance-agility.html "World-Class Finance: Digital Transformation and Analytics-Based Decision Making Among Key Imperatives for Creating Finance Agility") a shift from traditional channels of service t such as phone to digital channels for self-service. For customers that are used to undertaking certain tasks in a particular way, we cannot expect them to [change these tasks immediately and embrace digital](https://www.financedigest.com/why-the-time-is-right-for-finance-to-embrace-digital-change.html "Why the time is right for finance to embrace digital change"). This behaviour change needs to be motivated and incentivised from trial through to the [development of a digital](https://www.financedigest.com/going-cashless-the-developing-digital-economy.html "Going Cashless — The Developing Digital Economy") first habit.

Another [obstacle in sustainable digital transformation is the additional investment](https://www.financedigest.com/brexit-no-obstacle-as-chinese-overseas-property-investment-doubles.html "Brexit no obstacle as Chinese overseas property investment doubles") that is required. Features such as greater accessibility in a front-end user experience, or providing [services in a different form will all require investment](https://www.financedigest.com/hermes-bolsters-sme-service-with-significant-investment.html "HERMES BOLSTERS SME SERVICE WITH SIGNIFICANT INVESTMENT"). Investment opportunities in [companies with sustainable](https://www.financedigest.com/italys-eni-sets-up-sustainable-transport-services-company.html "Italy’s Eni sets up sustainable transport services company") digital transformation may be overlooked for ones that the market provides a better return on.

**Making the juice worth the squeeze**

Despite the challenges of implementing a sustainable digital transformation, the fruits of that labour will yield a positive [differentiation as a brand](https://www.financedigest.com/how-music-sound-can-help-financial-brands-differentiate-in-a-competitive-world.html "How Music & Sound Can Help Financial Brands Differentiate in a Competitive World") for customers, and provide them with a more inclusive experience that will promote greater loyalty. The general public is more aware of how [businesses conduct themselves around sustainability](https://www.financedigest.com/nfts-live-streams-sustainable-businesses-and-social-shopping-what-to-prioritise-in-commerce-this-year.html "NFTs, live streams, sustainable businesses and social shopping – what to prioritise in commerce this year") and want to be with a company that in their eyes is doing the right thing for all stakeholders.

Internally, [companies will see a more engaged employee and partner base that will promote longer tenure and engagement because of a commitment to a sustainability](https://www.financedigest.com/green-cloud-one-way-your-company-can-commit-to-sustainability.html "Green Cloud: one way your company can commit to sustainability") agenda.

Implementing a [digital transformation that is rooted in sustainability means](https://www.financedigest.com/making-sure-that-finservs-digital-transformation-doesnt-mean-digital-exclusion.html "Making sure that FinServ’s digital transformation doesn’t mean digital exclusion") wider engagement across all stakeholders, from the customers and employees, to the financial shareholders as well. Those that seek this more inclusive, [sustainable approach will develop new engagement strategies to fund and advance their digital](https://www.financedigest.com/miq-partners-with-seenthis-to-advance-sustainability-in-digital-advertising.html "MiQ Partners with SeenThis to Advance Sustainability in Digital Advertising") transformation, thus creating an experience that is continuously improving for its customers.


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