Since the COVID-19 pandemic, the importance of digital transformation for countries and businesses has been increasingly acknowledged, making it a global trend that cannot be ignored. Governments consider digital transformation to foster economic growth, enhance global competitiveness, improve people’s quality of life, and establish a fair and effective administrative system. For businesses, digital transformation aids in optimizing production and business processes, increasing labor productivity, expanding markets, improving customer experience, and adapting swiftly to market changes.
However, the rapid pace of digital transformation has caused some negative effects on the environment. For example, the increased amount of electronic waste and the substantial power consumption by data centers have raised concerns. According to the United Nations Institute for Training and Research (UNITAR), an estimated 62 million tons of electronic waste were generated in 2022, but only about 13.8 million tons were properly collected and recycled. This indicates that government policies and business actions aligned with ESG criteria still need to be expanded and have yet to contribute to sustainable digital transformation.
As a key technology driving innovation in the digital age, Robotic Process Automation (RPA) enables governments and businesses to align their operations with ESG standards by automating energy-intensive and paper-based processes, thereby reducing environmental impact. Numerous studies highlight RPA’s strong link to ESG goals, demonstrating its role in fostering sustainable growth, enhancing economic efficiency, and supporting social responsibility, alongside other environmental objectives.
So, how does the relationship between RPA and ESG contribute to promoting sustainable digital transformation? Let’s explore the details with LTS GDS in the article below!
What is RPA? Benefits for Business?
Robotic Process Automation (RPA) is a software-based technology that enables businesses to automate repetitive, rule-based tasks traditionally carried out by humans. These tasks include data entry, transaction processing, and inventory management.
RPA operates by capturing user actions on a computer and converting them into an executable script in a programming language. This script is then run automatically, allowing businesses to efficiently and accurately manage repetitive tasks.
Read more: RPA – A Revolution for your enterprise
What is ESG? Why Does It Matter for Businesses?
ESG, which stands for Environmental, Social, and Governance, is a set of criteria used to assess a company’s performance beyond financial outcomes, taking into account its impact on the environment, society, and internal governance. The environmental aspect focuses on factors like energy consumption, carbon emissions, waste management, and conservation efforts. The social component evaluates a company’s responsibilities toward its employees, community engagement, and charitable activities. Lastly, the governance factor examines the management structure, business ethics, transparency, and accountability of the board of directors.
In today’s rapidly changing world, companies that integrate ESG factors into their operations are often seen by investors as more sustainable and lower-risk, as they have concrete plans to address challenges like climate change, social crises, and governance issues. Additionally, adherence to ESG standards enables businesses to reduce costs, enhance operational efficiency, and comply with strict environmental and social regulations.
How Does RPA Support ESG Implementation and Sustainable Digital Transformation?
Sustainable digital transformation is a comprehensive process that involves integrating digital technology into a business or organization’s operations. The goal of promoting sustainable digital transformation is not only to enhance efficiency and productivity but also to achieve long-term growth by balancing economic, social, and environmental objectives.
The following summaries will illustrate how businesses can utilize RPA solutions in their operations and integrate this technology to meet ESG criteria, paving the way for sustainable digital transformation in the future.
Environmental Criteria
RPA solutions offer businesses significant operational optimization by streamlining processes and eliminating redundant steps, particularly within the realm of document management. RPA bots, for instance, can extract data from invoices and seamlessly integrate it into accounting systems, thereby eliminating the need for manual data entry and paper-based workflows. Likewise, approval processes for documents, contracts, and forms can be conducted entirely on digital platforms, reducing paper consumption and saving on related costs.
Furthermore, automating repetitive tasks with RPA allows businesses to minimize their dependence on manual labor, which can indirectly contribute to reducing e-waste (personal computers) in the future. Additionally, RPA-driven processes are typically optimized to run during peak performance times, enabling businesses to manage energy consumption and decrease carbon emissions efficiently.
It is not difficult to see the dual benefits of RPA for operational optimization and for the environment. In a very natural way, leveraging RPA helps businesses cultivate a solid reputation and garner trust from stakeholders.
Social Criteria
With the support of RPA, employees can free themselves from time-consuming repetitive tasks, allowing them to concentrate on higher-value activities, such as creative endeavors and urgent problem-solving. This solution enhances employee satisfaction and motivation while fostering a positive work environment where individuals feel valued and supported.
Employees are primarily concerned with fair and accurate compensation, including salaries and benefits. Manual calculations can lead to errors, causing frustration for employees and burdening the accounting department, particularly in large organizations without robust accounting systems. RPA appears to be a cost-effective and practical solution to resolve this problem by automating data collection and calculations, minimizing errors, and ensuring strict adherence to company policies and legal requirements.
The positive social impact of RPA within businesses is evident, contributing to a healthier work environment and fostering greater employee trust in the benefits of sustainable digital transformation.
Governance Criteria
RPA solutions can easily monitor and review the execution process, promoting strict adherence to management standards and identifying errors against predefined rules. This allows businesses to automatically update with new regulations and adjust their operations to comply with legal changes.
A practical example of applying RPA to management criteria is the automation of report processing. When businesses need to prepare periodic reports, RPA bots can automatically collect and track data, then fill in the forms and submit them to the system. This process enhances performance monitoring and saves time for departments, helping businesses promptly intervene and address unexpected problems.
Governance is not merely about process management; it also involves the effective management of human resources, revenue, assets, risks, and various other aspects. While it cannot fully replace an ERP system, it facilitates the smooth and rapid integration of all processes.
ESG Metrics
There are some specific measurements that can be used to calculate the ESG metrics. Optimizing these metrics allows businesses to develop a comprehensive sustainable digital transformation strategy, enhance competitiveness, and contribute to a more sustainable future.
Environmental Metrics
Greenhouse gas emissions: This metric measures the amount of greenhouse gases, such as CO2, CH4, N2O, HFCs, PFCs, and SF6, emitted by businesses during their operations. These gases contribute to the greenhouse effect, leading to global warming and climate change.
Energy consumption: This metric provides a precise measurement of the electricity, heat, or other forms of energy used by a business during its operations. By analyzing these indicators, businesses can evaluate the efficiency of their energy usage, develop reasonable energy usage plans, and support sustainable digital transformation.
Biodiversity impact: This metric assesses the impact of business activities on natural ecosystems, including changes in plant and animal populations, destruction of natural habitats, and pollution of water, soil, and air.
Social Metrics
Labor practices: This metric is utilized to assess factors associated with the work environment and employee benefits, including occupational safety, working hours, salary, benefits, and promotion opportunities. Ensuring these conditions will boost employee morale and contribute to the sustainable digital transformation of the enterprise.
Community impact: This metric evaluates the impact of business activities on the community and society, including job creation, contributions to local economic development, and the implementation of social responsibility programs.
Gender equality and diversity: This metric will assess the level of diversity in the workplace and the fairness of treatment, taking into account factors such as gender, ethnicity, age, status, and social background. By monitoring these indicators, businesses can determine whether they are achieving their goals of creating an equitable work environment, promoting inclusion, and nurturing a positive culture.
Governance Metrics
Board structure: The structure of the BOD reflects the diversity and accountability of a company’s leadership. This encompasses the number of members, their roles, education, experience, expertise, and other relevant attributes. A well-structured board demonstrates transparency in corporate governance, ensuring that strategic decisions are made with a broad base of knowledge and without conflicts of interest.
Business ethics & Legal compliance: Stakeholders can evaluate whether a business operates following ethical principles and legal requirements based on factors such as quality, size, internal controls, fraud prevention effectiveness, or promotion of ethical behavior through policies.
Risk management: Risk management shows how well a business is prepared to handle potential situations that could impact its operations, including finance, legal matters, and operations. A business’s capacity to recognize, evaluate, and manage risks is crucial for reducing losses, safeguarding assets, and ensuring stable operations, especially during periods of sustainable digital transformation.
Industries Leveraging RPA for Sustainable Digital Transformation
Finance – Banking
In the finance and banking industry, businesses apply RPA to automate manual processes such as data entry, transaction processing, risk management, and document handling. Automating these repetitive tasks reduces human errors, shortens task completion times, and minimizes environmental waste. According to McKinsey, 43% of banking processes can be automated, leading to more than $1m in cost savings. This supports businesses in moving closer to the goal of sustainable digital transformation.
Retail
In the retail industry, RPA bots can be programmed to automate tasks such as inventory tracking and updates, invoice data entry, online order processing, shipping status checks, responding to frequently asked customer questions, and handling refund requests. According to Capgemini, the retail industry is estimated to save as much as USD 340 billion annually by implementing RPA solutions, allowing them to optimize resources and focus on long-term objectives.
Energy & Utilities
In energy management, RPA solutions enable businesses to automatically collect data from sensors and measurement systems, allowing the analysis of anomalies and consumption trends. According to research by Capgemini, RPA solutions can help large-scale energy companies save between $200 billion and $800 billion, making RPA one of the top-priority technologies in digital transformation within the industry.
RPA is not a one-size-fits-all solution; it requires meticulous attention and customization for each business, given its unique challenges and operational procedures. Selecting an RPA implementation partner should be done carefully, allowing ample time for testing and evaluation before large-scale deployment. LTS GDS specializes in providing tailor-made RPA solutions and is a trusted partner for numerous domestic and international clients.
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