Design And Application Of A Twin Transition Assessment Framework For The Sustainable Digitalization Of SMEs

Arjen Van de Walle^1,*, Geoffrey Aerts¹

¹Business Development Academy (BUDA), Vrije Universiteit Brussel, Pleinlaan 5, 1050 Elsene

*[email protected]

Extended abstract

When aiming for sustainable development, societies must overcome the intensifying effects of climate change, rapid urbanization and resource depletion (World Economic Forum, 2021). As business activities form a major cause of - and a potential solution to - these global pressures, it can be expected that companies will increasingly face a customer pull (through a growing public interest in sustainable business) and a policy and market push (through increasingly ambitious policy and higher carbon prices) towards sustainability (Glynn & Cooper, 2022; University of Cambridge Institute for Sustainability Leadership [CISL], 2020; Wade & Rekker, 2020). Indeed, the green transition towards sustainable business operations is seen as a crucial societal objective.

Moreso, a second major business transition currently being witnessed is the digitalization of business activities, more specifically through the recent increase of Artificial Intelligence (AI) applications. This transition brings about both challenges (e.g. e-wastes and the high energy consumption of AI training) and opportunities (e.g. efficiency increases in production and digitalization of polluting industries) to sustainability (Muench et al., 2022). The European Commission (EC) urged for the “twinning” of both business transitions, increasing the capacity of the green and digital transitions to reinforce one another. Moreso, the EC notes that the successful participation of small- and medium-sized companies (SMEs) is crucial for the outcome of this twin transition to be successful (EC, 2022). Indeed, next to being a crucial economic driver and source of employment, SMEs amount to more than half of industrial carbon emissions globally (Denicolai et al., 2021).

Over the past years, an abundance of supportive tools for business sustainability management has been released. These tools aim at, amongst others, aiding companies with legal compliance, decision support and operationalization of sustainable development strategies (Johnson & Schaltegger, 2016; Jonker & Faber, 2021). However, SME representatives often receive such tools with limited awareness of both the tool’s purpose and the general benefits of moving towards sustainability, next to the time and financial concerns typical for small businesses. Indeed, it has been noted that there is a strong research need on the application and barriers to the application of sustainability management tools for SMEs (Johnson & Schaltegger, 2016). The purpose of this research is to develop a comprehensive framework for the assessment of the sustainable digitalization of SMEs in the Brussels Capital Region in Belgium, through a process of co-creation between two Brussels’ based universities (Vrije Universiteit Brussel and Université Libre de Bruxelles), Brussels SMEs and the regional government, and apply the framework on SME members of the local European Digital Innovation Hub.

A practice-based approach to the development of this framework will be applied, in which sustainability assessments will be conducted on the digitalisation of SME members of the European Digital Innovation Hub in the Brussels region. Sustainability will be considered from a triple bottom line perspective (incorporating environmental, social and economic considerations). A co-creation process between universities, these businesses and the regional government (triple helix) will allow for the growth of an initial theoretical framework constructed at the university into a comprehensive assessment framework, that finally will be turned into an online dashboarding tool (Leydesdorff & Etzkowitz, 1998). After a number of in-depth interviews, the assessment of approximately 100 SMEs in the Brussels Capital Region will take place in the period leading up to the New Business Models International Conference. Next to triple bottom line sustainability considerations, additional emphases will be put on problem-structuring with relevant stakeholders, value incorporation through materiality analyses (and the extent to which this is feasible) and connecting the resulting framework with common sustainability reporting frameworks and the United Nation’s Sustainable Development Goals.

This research aims at obtaining a comprehensive assessment framework for the sustainable digitalization of SMEs and providing a methodological understanding of the co-creation of such frameworks by academia, businesses, and public organizations. Insights will be gained on the challenges and opportunities for the sustainable implementation of digital technologies in SMEs and the influence of SME business models on the transition. Finally, this research will provide policy recommendations to the regional, national, and European governments on the sustainable digital transformation of businesses and act as a strong basis for future research on the matter.

Keywords 

Sustainable digitalization, business innovation, sustainable business models, SMEs. 

References 

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