ESG + Digital Transformation + Metaverse Convergence

ESG + Digital Transformation + Metaverse
ESG + Digital Transformation + Metaverse
Convergence
Convergence
July 14 2022
July 14 2022
July 14, 2022
July 14, 2022
Alex G. Lee
Alex G. Lee
©2022 TechIPm, LLC All Rights Reserved www.techipm.com
e G ee
e G ee

Speaker
Alex G. Lee, Ph.D., Esq., CLP (https://www.linkedin.com/in/alexgeunholee/), is
an emerging IT/digital technology innovation, IP development, and sustainable
b i t t t ith 30 i i th Hi h T h i d t
business strategy expert with 30 years experience in the High Tech industry.
He is a CEO and principal consultant at TechIPm, LLC, partner at Vincula
Group, a chief evangelist at Fame Universe, a New York State attorney, US
patent attorney He is a founder of the Enterprise/Industrial Metaverse Forum :
patent attorney. He is a founder of the Enterprise/Industrial Metaverse Forum :
Digital Twins+AI+Blockchain+IoT+XR Convergence and ESG+Digital
Transformation (ESGDX). Alex holds a Ph.D. from the Johns Hopkins
University a J D from the Suffolk University Law School and an executive
University, a J.D. from the Suffolk University Law School, and an executive
certificate in strategy and innovation from MIT Sloan School of Management.
©2022 TechIPm, LLC All Rights Reserved

I. Digital ESG & ESG + Digital Integrated Transformation
ESG/Sustainability Imperative
Agenda
ESG Factors/Considerations
ESG Management Consideration Core Factors
ESG Measurement of What – Input/Outcome/Impact?
Sustainable Finance
Financial Decision-Making: Trade-Off v. Balancing
Impact Investing
Digital for ESG Management
ESG/Sustainability Reporting Frameworks & Guidelines
Digital for ESG Performance Assessment
Next Generation ESG Digital Solution/Platform
B fit f St t ESG I l t ti
Benefits of Startup ESG Implementation
Benefits of VC ESG Implementation
Climate Change Risks & GHG Emission
TCFD Climate Change Risk Management One Page Summary
g g g y
SBTi Net-Zero Standard Transition Target Setting Steps
Digital for Climate Risk & Net-Zero Management Automation
Digital Decarbonization Benefits

Balancing Sustainability and Profitability
ESG Di it l T f ti f P fit bl S t i bl B i
Agenda
ESG + Digital Transformation for Profitably Sustainable Business
ESG/Sustainability Conundrum
Purpose and Triple Bottom Line
Value Innovation for Sustainable Economic Growth
Sustainability Business Case
Sustainability Balanced Scorecard (SBSC)
ESG + Digital Integrated Transformation (ESGDX) Imperative
Busines Model Innovation for Sustainable Economic Growth
ESGDX Framework for Profitably Sustainable Business
Sustainable Digital Business Model (SDBM)
Sustainability Digital Competency Engineering Methodology
Profitable Decarbonization

II. Metaverse + ESG Convergence
Metaverse Revolution Imperatives
Agenda
p
Metaverse Present and Future Infographics
Metaverse Industry Applications
Metaver System Architecture + Business Ecosystem
Metaverse Enterprise Platform
Metaverse User Experiences (MUXs)
Metaverse Business Model Innovation
Metaverse Economic System Architecture
Metaverse Economic System Architecture
Metaverse Renewable Energy System Management
Metaverse Store for Sustainable Products
Metaverse Factory for Sustainable Manufacturing/Supply Chain
Metaverse Factory for Sustainable Manufacturing/Supply Chain
Metaverse for Sustainable Smart City Development
Metaverse Impact on Environment
Metaverse Impact on People/Society
Metaverse Impact on People/Society
Designing Sustainable Metaverse Experiences
Metaverse NFT/DeFi Based Sustainable Financing
Impact Investing for the ESG and Metaverse Convergence
Metaverse/Web3 Based Fashion Ecosystem Building Platform/Solutions
AutoXML: Metaverse Spatial Web Global Standard

Digital ESG
Digital ESG
&
&
&
&
ESG + Digital Integrated Transformation
ESG + Digital Integrated Transformation
ESG Digital Integrated Transformation
ESG Digital Integrated Transformation
©2022 TechIPm, LLC All Rights Reserved www.techipm.com

ESG Factors/Considerations
/
Source. What is ESG Investing? https://bestpathforward.com/what-is-esg-investing/

Reference: ESG Topics Knowledge Map

ESG Management Consideration Core Factors
Impacts (Value Creation)
increase positive impact
limit negative impact
g p
Opportunities (Return) Risks (Cost)
universal risks
(e.g., climate change)
industry specific risks
b i ifi i k
market competitiveness
better placed to win investment
rise of company value
return on reputation business specific risks
ESG issue specific risks
(e.g., Environmental
physical/transition/liability
return on reputation
employees' better performance
regulation compliance
business resiliency
Source: Bradley, Brendan. ESG Investing For Dummies, Wiley (2021)
physical/transition/liability
risks)
circular business model

Reference: ESG Strategic Planning and Program Management

Reference: SDG-SASB-GRI-WEF SDG/ESG Measurement Metrics Mapping

Many ESG measures already very effectively capture inputs, but they presume causality
— that adding women to top management teams, say, will produce better outcomes. But
ESG Measurement of What – Input/Outcome/Impact?
g p g , y, p
measures that capture inputs (such as the numbers of women on those teams) don’t
capture outcomes (such as decision-making that reflects diverse perspectives) and
impacts (such as the social value created by such decisions).
Three ways that can widen a company’s focus to capture information not just about inputs but also about the
processes and systems governing outcomes and impacts.
1. Zoom in to develop insights on processes
To grasp underlying processes, companies should focus on deeply understanding a handful of issues most
germane to their core activities. Through this, they stand a greater chance of deeply understanding the causal
threads that enable improved impact, and ultimately directing sufficient resources to act on these.
2 Zoom out to see broader systems
2. Zoom out to see broader systems
Zooming out brings a longer term and broader perspective on issues that demand deep insight. Beginning with the
end state and soliciting diverse stakeholder inputs are two approaches to understanding systems and one’s role
within them.
3 V l i it d l i
3. Value curiosity and learning
Many people are calling for firms to articulate a purpose beyond profit maximization, so that they can better serve
societal values. But purpose is empty without the capacity to execute on it. Getting started with focused “doing” is
a more grounded — and potentially complementary — approach that can leverage existing capabilities and talent.
Source. HBR(https://hbr.org/2021/01/esg-impact-is-hard-to-measure-but-its-not-
impossible?fbclid=IwAR2PAJaIjEC9GNaX2ZUDclWZGa0rjbV7UE5NWyqj4b1vtPkUyTJW4krcLRM)

UN SDG IMPACT STANDARDS Enterprises: Integrating impact management
’
Reference: Sustainability Impacts Management
into Enterprises’ decision-making to optimize their contribution to sustainable
development and the SDGs
UN SDG IMPACT STANDARDS Private Equity Funds: Impact management
UN SDG IMPACT STANDARDS Private Equity Funds: Impact management
for Private Equity, Debt and Venture Capital Funds committed to contributing
positively to sustainable development and achieving the SDGs
UN SDG IMPACT STANDARDS Bond Issuers: Integrating impact
management into Bond Issuers’ decision-making to optimize their contribution
to sustainable develop
p

Reference: SDG Sustainability Impacts Assessments

Sustainable finance refers to the process of taking ESG considerations into
account when making investment decisions in the financial sector leading to
Sustainable Finance
account when making investment decisions in the financial sector, leading to
more long-term investments in sustainable economic activities and projects.
- European Commission
Sustainable finance refers to the process of incorporating ESG factors into
financial decision-making.
- IOSCO (International Organization of Securities Commissions)
Sustainable finance is defined as investment decisions that take into account
ESG factors of an economic activity or project.
- Harvard University
Key Terms to Explore:
Investment
Investment
ESG factors/considerations
Financial decision-making

Investing in ESG assets comes with certain trade-offs for investors, where on
Financial Decision-Making: Trade-Off v. Balancing
one side are return on the sustainability value creations, and on the other side
are taking lower financial returns or higher risks.

Impact investing is targeting directly at creating a positive environmental or
social impact by investing in innovations that identifying and solving a particular
Impact Investing
social impact by investing in innovations that identifying and solving a particular
environmental or social problem (a company and project that uncovering
promising new business opportunities and undervalued assets).
Impact investments pursue a longer-term financial return on their capital that
range from below-market to risk-adjusted market rate (two-thirds of the capital
for impact investment seeks risk-adjusted market rates) and can be made
across asset classes, including cash equivalents, fixed income (green bonds),
venture capital, and private equity.
I t i t d t th i l d i t l f
Impact investors measure and report the social and environmental performance
and progress of underlying investments.
Reference: Alan S. Gutterman, Sustainable Finance and Impact Investing, Business
Expert Press.

Reference

Real-time informed decision-makings regarding the management of
t t i d t i l ESG i b
strategic and material ESG issues by:
Integrated and centralized ESG data management for transparency
Continuous tracking/improvement of ESG management performance KPIs
Continuous assessments of ESG management performance
Continuous assessments of ESG management performance
Scenario analyses for identifying and reducing exposure to ESG risks and
assessments of ESG impacts
p
Implementation of virtual collaboration tools
Visibility/traceability across the value/supply chain

International Accounting Standards Board (IASB) issued exposure drafts of
global standards for climate and sustainability disclosures consolidating the
ESG/Sustainability Reporting Frameworks & Guidelines
global standards for climate and sustainability disclosures, consolidating the
work of SASB, the IIRC and the CDSB, as well as the TCFD and the WEF’ IBC.
Carbon Disclosure Project (CDP): www.cdp.net/en
Climate Disclosure Standards Board (CDSB): www.cdsb.net
Global Reporting Initiative (GRI): www.globalreporting.org
International Financial Reporting Standards (IFRS) Foundation https://www.ifrs.org/
International Integrated Reporting Council (IIRC): https://integratedreporting.org
Sustainability Accounting Standards Board (SASB): www sasb org
Sustainability Accounting Standards Board (SASB): www.sasb.org
Task Force on Climate-related Financial Disclosures (TCFD): www.fsb-tcfd.org
United Nations Sustainable Development Goals (SDGs): https://sdgs.un.org
United Nations System of Environmental Economic Accounting (UNSEEA): https://seea.un.org
World Business Council For Sustainable Development (WBCSD) ESG Disclosure Handbook
https://www.wbcsd.org
p g
World Economic Forum (WEF) ESG Reporting Metrics and Disclosure Standards https://www.weforum.org

Digital for ESG Performance Assessment (S&P 500 High-Tech Industry)

Reference: FinScience ESG AI Solution Details

Next Generation ESG Digital Solution/Platform
Management Platform Assessment Platform
Integrated Platform
modular based flexible component solutions
development
-data management solution
modular based flexible component solutions
development
-data management solution
AI & big data analytics-driven automatic real-
time data capture, processing, and storing
standardized analytically rigorous metrics
AI & big data analytics-driven automatic real-
time data capture, processing, and storing
g
g
-data analysis solution
-performance management solution
- ...
data governance solution for data
g
-data analysis solution
-performance management solution
- ...
measurement ways to ensure consistency and
comparability
capture business/industry/jurisdiction-specific
dynamic and time-sensitive material ESG
measurement ways to ensure consistency and
comparability
capture business/industry/jurisdiction-specific
dynamic and time-sensitive material ESG
Linking Solution
availability/visibility/transparency and quality control
-end to end data flow management with advanced
search capabilities
assessment solution for ESG sustainability-related
availability/visibility/transparency and quality control
-end to end data flow management with advanced
search capabilities
assessment solution for ESG sustainability-related
dynamic and time sensitive material ESG
sustainability considerations based on double
materiality approach
provide a reliable foundation for cross-company
comparisons
dynamic and time sensitive material ESG
sustainability considerations based on double
materiality approach
provide a reliable foundation for cross-company
comparisons
blockchain
based
secure and
assessment solution for ESG sustainability related
risks, opportunities, real-world impacts
-development of new metrics that can represent the
processes and systems governing outcomes and
impacts
assessment solution for ESG sustainability related
risks, opportunities, real-world impacts
-development of new metrics that can represent the
processes and systems governing outcomes and
impacts
comparisons
use of right framework to evaluate ESG
sustainability-related information critically and
appropriately
comparisons
use of right framework to evaluate ESG
sustainability-related information critically and
appropriately
credible data
sharing
solution for maturity evaluation
-forward-looking analytic tools for assessing likely
future performance
solution for tracking the ROI of ESG sustainability
solution for maturity evaluation
-forward-looking analytic tools for assessing likely
future performance
capture matters that potentially significant,
monetary implications over time
link between a company’s management in ESG
sustainability related risks opportunities and
capture matters that potentially significant,
monetary implications over time
link between a company’s management in ESG
sustainability related risks opportunities and
management efforts across enterprise
management efforts across enterprise
sustainability-related risks, opportunities and
impacts and its financial performance over time
sustainability-related risks, opportunities and
impacts and its financial performance over time

Reference: ESG Sustainability Management/Assessment Issues & Challenges & Solutions

Reference: The Sustainable Business Handbook (Kogan Page) One Page Book Summary
Edited by Alex G. Lee (https://www.linkedin.com/in/alexgeunholee/)
Steps to becoming a purpose
Steps to becoming a purpose-
-led business:
led business:
Step 1: Review corporate assets (mission, vision) and history
Step 2: Engaging stakeholders internally and externally
Step 3: Craft the purpose statement
Step 4: Ensure core business strategy is aligned to the purpose
Steps to becoming a purpose
Steps to becoming a purpose-
-led business:
led business:
Materiality allows you to identify
and understand ESG issues
Materiality is a potent way to
engage stakeholders
engage stakeholders
Materiality analysis can help for
engage stakeholders
engage stakeholders
How to do it:
How to do it:
Step 1: Define board approach to
governance and to sustainability
How to do it:
How to do it:
A collaborative relationship
focused on sustainability
outcomes
outcomes
outcomes
outcomes
Advocacy is a
Advocacy is a
strategic part of
strategic part of
corporate
corporate
Advocacy is a
Advocacy is a
strategic part of
strategic part of
corporate
corporate
12. Partnering
12. Partnering
13. Advocacy
13. Advocacy
Corporate purpose is to produce ‘profitable solutions to the
problems of people and planet and not to profit from producing
problems for people or planet’
Step 5: Socialize and communicate the purpose
Step 6: Measure outcomes and impacts
stronger performance
Materiality can improve reporting
and disclosure
and disclosure
Materiality is a valuable input into
sustainability strategy
development
development
and disclosure
and disclosure
development
development
Materiality Analysis:
Materiality Analysis: business case for
business case for
business case for
business case for
g y
g y
Step 2: Shift the board’s mindset
Step 3: Choose the most appropriate
governance model for the business
Step 4: Ensuring sustainability
expertise on the board
Step 5: Ensure board is truly diverse
Step 6: Ensure the rest of the
g y
g y
Stakeholder engagement is the
systematic identification,
l i l i d
l i l i d
l i l i d
l i l i d
It is about building belief and
recognition and momentum for
its sustainability leadership
p
p
sustainability
sustainability
leadership
leadership
p
p
sustainability
sustainability
leadership
leadership
1. Purpose
1. Purpose
3. Business case
3. Business case
2. Materiality
2. Materiality 10. Engagement
10. Engagement
11. Communications
11. Communications
Step 1: Understand the operating
context to inform the process
Step 2: Engage your
Step 2: Engage your
stakeholders
stakeholders
Step 3: Define the dimensions of
your materiality matrix
prioritization.
prioritization.
Step 2: Engage your
Step 2: Engage your
stakeholders
stakeholders
prioritization.
prioritization.
business case for
business case for
sustainability means
addressing short
addressing short-
- and long
and long-
-
term risks and opportunities
in ways that minimize harm
and maximize social,
environmental and
environmental and
economic value
economic value
business case for
business case for
addressing short
addressing short-
- and long
and long-
-
environmental and
environmental and
economic value
economic value
Board is responsible for success of sustainability
management
management
management
management
How to do it:
How to do it:
Step 1: Clarify some basic
How to do it:
How to do it:
board’s structures and processes
reinforce the commitment to
sustainability
sustainability
Step 7: How the board can keep
S.C.O.R.E. on sustainability
sustainability
sustainability
analysis, planning and
implementation of actions
designed to allow a company to
interact effectively with
stakeholders
stakeholders
stakeholders
stakeholders
4. Strategy
4. Strategy
8. Reporting
8. Reporting
9. Governance
9. Governance
7. Leadership
7. Leadership
prioritization.
prioritization.
Step 4: Prioritize and plot the
issues
issues
Step 5: Socialize and validate
materiality
materiality
prioritization.
prioritization.
issues
issues
materiality
materiality
economic value
economic value
economic value
economic value
Reporting improves transparency
and visibility, support
development and helps satisfy
regulatory requirements
Business Case Development:
Step 1: Apply existing, external
data and evidence
data and evidence
data and evidence
data and evidence
Sustainability strategy is a
prioritized set of actions and
commitments designed to
manage ESG impacts, in
order to optimize value to the
business and to society by
Sustainability leadership
demands setting strategies and
reporting questions
reporting questions
Step 2: Study and choose
preferred options from among
the major reporting guidelines
and frameworks
and frameworks
Step 3: Collect the data
Step 4: Report and make full
f d t
f d t
reporting questions
reporting questions
and frameworks
and frameworks
f d t
f d t
5 Operationalizing
5 Operationalizing
6. Culture
6. Culture
How to do it:
How to do it:
Step 1: Increase internal alignment
Step 2: Reduce costs and eliminate waste
Step 3: Review the product and service portfolio
Step 4: Consider sustainability in competitive
benchmarking, risk identification, research and
How to do it:
How to do it:
p
p
Putting sustainability strategy and
commitments into action throughout
the business and systematically
integrating sustainability thinking in
Dimensions of sustainable
culture:
culture:
Engaging and empowering
culture:
culture:
data and evidence
data and evidence
Examine company
Examine company-
-specific
specific
evidence and benchmark your
peers
peers
Step 3: Create cross
Step 3: Create cross-
-functional
functional
teams to provide relevant
business case data to different
stakeholders
stakeholders
data and evidence
data and evidence
Examine company
Examine company-
-specific
specific
peers
peers
Step 3: Create cross
Step 3: Create cross-
-functional
functional
stakeholders
stakeholders
minimizing negative impacts
and maximizing positive ones
delivering results that meet the
triple bottom line of
sustainability performance
How to build a sustainable leadership:
Step 1: Define the mindsets and
use of data
use of data
Step 5: Learn from process and
innovative further
innovative further
Step 6: Be prepare for more
reporting requirements
use of data
use of data
innovative further
innovative further
g, ,
g, ,
development, and innovation processes
Step 5: Partner with suppliers
Step 6: Rethink business models
g, ,
g, ,
Sustainability Strategy Development :
Phase I: Ideation
Phase I: Ideation
STEP 1: STOCKTAKE
STEP 1: STOCKTAKE –
– ASSESS WHAT THE BUSINESS IS DOING ALREADY
ASSESS WHAT THE BUSINESS IS DOING ALREADY
STEP 2: REALITY CHECK
STEP 2: REALITY CHECK –
– CONDUCT A GAP ANALYSIS BETWEEN CURRENT STATE AND SUSTAINABILITY
CONDUCT A GAP ANALYSIS BETWEEN CURRENT STATE AND SUSTAINABILITY
Phase II: Prioritization and refinement
STEP 3: BENCHMARK
STEP 3: BENCHMARK –
– MAP YOUR EMERGING STRATEGY AGAINST LEADING BUSINESSES AND ESTABLISHED
MAP YOUR EMERGING STRATEGY AGAINST LEADING BUSINESSES AND ESTABLISHED
SUSTAINABILITY FRAMEWORKS
Phase I: Ideation
Phase I: Ideation
STEP 1: STOCKTAKE
STEP 1: STOCKTAKE –
– ASSESS WHAT THE BUSINESS IS DOING ALREADY
ASSESS WHAT THE BUSINESS IS DOING ALREADY
STEP 2: REALITY CHECK
STEP 2: REALITY CHECK –
– CONDUCT A GAP ANALYSIS BETWEEN CURRENT STATE AND SUSTAINABILITY
CONDUCT A GAP ANALYSIS BETWEEN CURRENT STATE AND SUSTAINABILITY
STEP 3: BENCHMARK
STEP 3: BENCHMARK –
– MAP YOUR EMERGING STRATEGY AGAINST LEADING BUSINESSES AND ESTABLISHED
MAP YOUR EMERGING STRATEGY AGAINST LEADING BUSINESSES AND ESTABLISHED
how the organization is run
Responsible and ethical
Transparent and accountable
Open and innovative
Open and innovative
Open and innovative
Open and innovative
stakeholders
stakeholders
stakeholders
stakeholders
How to build a sustainable culture:
Step 1: Understand the current culture
St 2 D fi th d i d f t lt
leadership competencies required
Step 2: Audit current sustainability
leadership ability and the
sustainability content in existing
leadership development program
Step 3: Develop an action plan to
increase sustainability leadership
it
it
it
it
STEP 4: TEST
STEP 4: TEST –
– ENSURE PROPOSED SUSTAINABILITY STRATEGY IS RESILIENT AGAINST FUTURE SHOCKS
ENSURE PROPOSED SUSTAINABILITY STRATEGY IS RESILIENT AGAINST FUTURE SHOCKS
STEP 5: STRETCH
STEP 5: STRETCH –
– SET AMBITIOUS SUSTAINABILITY GOALS THAT THE BUSINESS CAN COALESCE AROUND
SET AMBITIOUS SUSTAINABILITY GOALS THAT THE BUSINESS CAN COALESCE AROUND
Phase III: Promotion
STEP 6: COMMUNICATE
STEP 6: COMMUNICATE –
– DEVELOP A COMPELLING NARRATIVE
DEVELOP A COMPELLING NARRATIVE
SREP 7; ADAPT AND MAINTAIN
SREP 7; ADAPT AND MAINTAIN-
-BE ALERT TO THE NEED FOR MID
BE ALERT TO THE NEED FOR MID-
-COURCE CORRECTIONS AND ENDURE
COURCE CORRECTIONS AND ENDURE
ALIGNMENT WITH OVERAL CORPORATE STRATEGY
STEP 4: TEST
STEP 4: TEST –
– ENSURE PROPOSED SUSTAINABILITY STRATEGY IS RESILIENT AGAINST FUTURE SHOCKS
ENSURE PROPOSED SUSTAINABILITY STRATEGY IS RESILIENT AGAINST FUTURE SHOCKS
STEP 5: STRETCH
STEP 5: STRETCH –
– SET AMBITIOUS SUSTAINABILITY GOALS THAT THE BUSINESS CAN COALESCE AROUND
SET AMBITIOUS SUSTAINABILITY GOALS THAT THE BUSINESS CAN COALESCE AROUND
STEP 6: COMMUNICATE
STEP 6: COMMUNICATE –
– DEVELOP A COMPELLING NARRATIVE
DEVELOP A COMPELLING NARRATIVE
SREP 7; ADAPT AND MAINTAIN
SREP 7; ADAPT AND MAINTAIN-
-BE ALERT TO THE NEED FOR MID
BE ALERT TO THE NEED FOR MID-
-COURCE CORRECTIONS AND ENDURE
COURCE CORRECTIONS AND ENDURE
Step 2: Define the desired future culture
Step 3: Map actual versus desired culture
and agree an action plan to achieve this
new culture
new culture
Step 4: Implement action plan
Step 5: Regularly review culture and adjust
as appropriate
as appropriate
new culture
new culture
as appropriate
as appropriate
capacity
capacity
Step 4: Review what further policies
and processes need to change to help
embed sustainability at all levels
Step 5: Consider what additional
initiatives could emphasize
sustainability leadership
capacity
capacity

Startups that implement ESG business practices and mitigate (leverage) ESG
risks (opportunities) can:
Benefits of Startup ESG Implementation
risks (opportunities) can:
Attract more customer
Attract more investment
Earn more revenue
Reduce employee turnover
Get better reputation
(more trust and respect)
R i h d f l ti
Remain ahead of regulation
Source. What does ESG mean for Venture Capital?
https://www.ventureesg.com/academic-research

VCs that implement ESG consideration for portfolio investing can:
Benefits of VC ESG Implementation
Mitigate risks of portfolio at each stage of the investment cycle
Get more funds from impact/responsible investing LPs
Get more funds from impact/responsible investing LPs
Create more portfolio values through higher exit valuation
Remain ahead of potential regulation
Influence portfolio business practices positively

Reference: ESG Management Integration for VCs

Climate Change Risks & GHG Emission

TCFD Climate Change Risk Management
The objective of the scenario analysis is to evaluate the impacts of climate change
The objective of the scenario analysis is to evaluate the impacts of climate change-
-related risks and
related risks and
opportunities on business and examine the resilience of current climate change
opportunities on business and examine the resilience of current climate change-
-related strategy.
related strategy.
The scenario analysis is used as an essential tool for organization’s strategic plans or risk management
processes
processes
The objective of the scenario analysis is to evaluate the impacts of climate change
The objective of the scenario analysis is to evaluate the impacts of climate change-
-related risks and
related risks and
opportunities on business and examine the resilience of current climate change
opportunities on business and examine the resilience of current climate change-
-related strategy.
related strategy.
processes
processes
The scope of analysis can
include value/supply chain
beyond direct operations, to
achieve a more comprehensive
The identified time frames are short (2030),
medium (2040) and long term (2050).
•Identify core problem
(leadership/stakeholders)
•Define scope/boundary and level of
analysis
•Set time horizon
•Identify core problem
(leadership/stakeholders)
•Define scope/boundary and level of
analysis
•Set time horizon
processes.
processes.
processes.
processes.
understanding of the possible
indirect impacts of change
indirect impacts of change-
-
related risks and opportunities
on business. After familiar with
the qualitative scenario
analysis, a data
analysis, a data-
-driven
driven
quantitative analysis can be
indirect impacts of change
indirect impacts of change-
-
analysis, a data
analysis, a data-
-driven
driven
Acquire information to predict trends/uncertainties in
environmental and socio
environmental and socio-
-economic conditions such as changes
economic conditions such as changes
in policies/regulations, market/technology/investment shifts,
energy supply/demand, changes in population/ GDP.
environmental and socio
environmental and socio-
-economic conditions such as changes
economic conditions such as changes
Material risks include climate
Material risks include climate-
-related risks (transition and physical risks).
related risks (transition and physical risks).
Material risks include climate
Material risks include climate-
-related risks (transition and physical risks).
related risks (transition and physical risks).
Specify plan to decrease greenhouse gas
(GHG) emission (e.g., halve GHG
emissions by 2030 for Scope 1/2/3
1. GOAL AND
SCOPE
DEFINITION
2. ANALYZE
EXTERNAL
5 STRATEGIC
added to further develop the
possible pathways to the
scenarios. The scope of impact
can extend to the impact of a
company’s activities to climate
change (financial v. ES
materiality).
materiality).
materiality).
materiality). •Identify the key forces and uncertainties
•Identify the key forces and uncertainties
Specifically, transition risks include climate change
Specifically, transition risks include climate change-
-related policy and regulation,
related policy and regulation,
technology development, and reputation. Physical risks include chronic longer
technology development, and reputation. Physical risks include chronic longer-
-term
term
climate shifts, such as sustained higher temperatures, sea level rise and acute
event
event-
-driven extreme weather, such as heat waves, water stress, wild fires, floods,
driven extreme weather, such as heat waves, water stress, wild fires, floods,
drought, and hurricanes.
Specifically, transition risks include climate change
Specifically, transition risks include climate change-
-related policy and regulation,
related policy and regulation,
technology development, and reputation. Physical risks include chronic longer
technology development, and reputation. Physical risks include chronic longer-
-term
term
event
event-
-driven extreme weather, such as heat waves, water stress, wild fires, floods,
driven extreme weather, such as heat waves, water stress, wild fires, floods,
•Implement net-zero strategy
•Derive action plan
M it d l t
•Implement net-zero strategy
•Derive action plan
M it d l t
y p
y p
emission) and implement the net zero
roadmap to achieve net zero by 2050.
y p
y p
EXTERNAL
AND INTERNAL
ENVIRONMENT
5. STRATEGIC
RESPONSES
•Identify material risks
•Identify opportunities
•Identify material risks
•Identify opportunities
Climate change
Climate change-
-related opportunities include resource efficiency,
related opportunities include resource efficiency,
energy source, new products and services, markets, revenue
generation, and resilience.
Climate change
Climate change-
-related opportunities include resource efficiency,
related opportunities include resource efficiency,
Commonly used reference scenarios are the physical scenarios, such as the
•Monitor developments
•Sustainability reporting
•Monitor developments
•Sustainability reporting
3. SCENARIO
BUILDING
4.
ASSESSMENTS
Intergovernmental Panel on Climate Change (IPCC) scenarios and the transition
scenarios, such as the International Energy Agency (IEA) scenarios. Other
publicly available climate change scenarios include the International Renewable
Energy Agency (IRENA) scenarios and the Network for Greening the Financial
Systems’ (NGFS) Transition scenarios.
•Evaluate impacts of each
identified risk/opportunity on
business for each scenario
•Evaluate impacts of each
identified risk/opportunity on
•Select the right public scenarios
•Develop scenarios through internal modeling
under key uncertainties
•Select the right public scenarios
•Develop scenarios through internal modeling
under key uncertainties
per defined time flame
(scenario analysis outcomes)
per defined time flame
(scenario analysis outcomes)
To assess a risk/opportunity until a
time frame, a selection of relevant
external variables can be used to
i l t i Th i bl
i l t i Th i bl
i l t i Th i bl
i l t i Th i bl
Climate change scenarios are can be developed using
projections of what can happen by creating plausible,
coherent and internally consistent descriptions of possible
climate change pathways towards certain goals such as
the Paris Agreement targets of 2
the Paris Agreement targets of 2°
°C (or less) of global
C (or less) of global
temperature warming.
the Paris Agreement targets of 2
the Paris Agreement targets of 2°
°C (or less) of global
C (or less) of global
simulate a scenario. These variables
can include carbon pricing and
sectoral carbon intensities.
For example, for a policy transition
risk, carbon price of around 2$ per ton
by 2025 with low financial impacts
was expected.
was expected.
was expected.
was expected.

SBTi Net-Zero Standard Transition Target Setting Steps
Key elements of the Net
Key elements of the Net-
-Zero Standard
Zero Standard
Key elements of the Net
Key elements of the Net-
-Zero Standard
Zero Standard
• Scope 1, 2, and 3 emissions data should be accurate and verifiable.
• Base year emissions should be representative of a company’s typical GHG profile. Companies may use a multi
• Base year emissions should be representative of a company’s typical GHG profile. Companies may use a multi-
-year average base y
year average base year approach, as
ear approach, as
described in Chapter 5 of the Greenhouse Gas Protocol Corporate Standard
• The base year should be chosen such that targets have sufficient forward
• The base year should be chosen such that targets have sufficient forward-
-looking ambition.
looking ambition.
• Base year emissions should be representative of a company’s typical GHG profile. Companies may use a multi
• Base year emissions should be representative of a company’s typical GHG profile. Companies may use a multi-
-year average base y
year average base year approach, as
ear approach, as
• The base year should be chosen such that targets have sufficient forward
• The base year should be chosen such that targets have sufficient forward-
-looking ambition.
looking ambition.
Companies need to establish a base year to track emissions performance consistently
and meaningfully over the target period. Companies that have already set near-term
science-based targets must use the same base year for their long-term science-based
target.
Companies need to establish a base year to track emissions performance consistently
and meaningfully over the target period. Companies that have already set near-term
science-based targets must use the same base year for their long-term science-based
target.
• The base year must be no earlier than 2015.
• Ensure the target boundary is aligned with the GHG Inventory boundary
1. SELECT A
BASE YEAR
2. CALCULATE
YOUR
5 CALCULATE
Companies must set near-term targets with
Companies must set near-term targets with
• Determine how to treat subsidiaries
• Exclude the use of carbon credits
• Exclude avoided emissions
• Include all mandatory scope 3 emissions
• Determine how to treat indirect use
• Determine how to treat indirect use-
-phase emissions
phase emissions
• Review any sector
• Review any sector-
-specific guidance
specific guidance
• Determine how to treat indirect use
• Determine how to treat indirect use-
-phase emissions
phase emissions
• Review any sector
• Review any sector-
-specific guidance
specific guidance
Ambition ranges for target classification of
near
near-
-term science
term science-
-based targets
based targets
near
near-
-term science
term science-
-based targets
based targets
YOUR
COMPANY’S
EMISSIONS
5. CALCULATE
TARGETS Companies are required to have a thorough
emissions inventory that covers at least 95%
of company-wide scope 1 and 2 GHG
emissions and a complete scope 3 screening.
Companies are required to calculate
emissions that are reported separately from
the GHG inventory.
Companies are required to have a thorough
emissions inventory that covers at least 95%
of company-wide scope 1 and 2 GHG
emissions and a complete scope 3 screening.
Companies are required to calculate
emissions that are reported separately from
the GHG inventory.
a minimum ambition of 1.5°C for scopes 1
and 2 and a minimum ambition of well-below
2°C for scope 3. Long-term targets must
have a minimum ambition of 1.5°C across
scopes.
a minimum ambition of 1.5°C for scopes 1
and 2 and a minimum ambition of well-below
2°C for scope 3. Long-term targets must
have a minimum ambition of 1.5°C across
scopes.
Calculation Methods
Calculation Methods
Eligible for scopes 1+2 (both near
Eligible for scopes 1+2 (both near-
-term and long
term and long-
-term science
term science-
-based targets)
based targets)
Calculation Methods
Calculation Methods
-term and long
term and long-
-term science
term science-
-based targets)
based targets)
3. SET TARGET
BOUNDARIES
4. CHOOSE A
TARGET YEAR
Near-term science-based targets must cover at least
95% of company-wide scope 1 and 2 emissions.
Long-term science-based targets must cover at least
95% of company-wide scope 1 and 2 emissions and
90% of scope 3 emissions.
Consider additional required science-based target
coverage
Near-term science-based targets must cover at least
95% of company-wide scope 1 and 2 emissions.
Long-term science-based targets must cover at least
95% of company-wide scope 1 and 2 emissions and
90% of scope 3 emissions.
Consider additional required science-based target
coverage
-term and long
term and long-
-term science
term science-
-based targets)
based targets)
• Absolute contraction
• Physical intensity convergence
• Renewable electricity (scope 2 only)
Eligible for scope 3 (both near
Eligible for scope 3 (both near-
-term and long
term and long-
-term targets)
term targets)
• Physical intensity contraction
• Economic intensity
Eligible for near
Eligible for near-
-term scope 3 targets only
term scope 3 targets only
-term and long
term and long-
-term science
term science-
-based targets)
based targets)
Eligible for scope 3 (both near
Eligible for scope 3 (both near-
-term and long
term and long-
-term targets)
term targets)
Eligible for near
Eligible for near-
-term scope 3 targets only
term scope 3 targets only coverage.
Companies often set several targets that collectively
meet the boundary requirements.
coverage.
Companies often set several targets that collectively
meet the boundary requirements.
Near-term targets must have a target year 5-
10 years from the date of submission to the
SBTi, while long-term targets must have a
target year of 2050 or sooner (2040 for
i i th t )
Near-term targets must have a target year 5-
10 years from the date of submission to the
SBTi, while long-term targets must have a
target year of 2050 or sooner (2040 for
i i th t )
Eligible for near
Eligible for near term scope 3 targets only
• Engagement targets (scope 3 near
• Engagement targets (scope 3 near-
-term targets only)
term targets only)
Eligible for near
Eligible for near term scope 3 targets only
• Engagement targets (scope 3 near
• Engagement targets (scope 3 near-
-term targets only)
term targets only)
companies in the power sector).
Target methods are used to calculate near-
term and long-term targets based on a
mitigation pathway and company inputs.
Companies may choose from the following
science-based target methods to calculate
their targets.
companies in the power sector).
Target methods are used to calculate near-
term and long-term targets based on a
mitigation pathway and company inputs.
Companies may choose from the following
science-based target methods to calculate
their targets.

Digital for Climate Risk & Net-Zero Management Automation
Internal/External Environment Analysis: AI/big data analytics can search, access, capture, process,
y g y , , p , p ,
transform, classify, extract context automatically – Mareana Manufacturing Data Hub.
Climate Scenario Building: AI in collaboration with domain experts can help to generate diverse alternate
(“what if”) scenarios of the future – IBM Scenario Planning Advisor.
Risk Management: Business/financial digital twins can help for risk/opportunity quantification and financial
impact assessment/response (mitigation) automation Risilience Quantitative Risk Management Solution
impact assessment/response (mitigation) automation - Risilience Quantitative Risk Management Solution.
GHG Inventory Management: AI can automate data integration and tracking, calculation of carbon
footprint (metrics) based on GHG Protocol standards within organization and across value/supply chain.
Blockchain can provide transparent and secure data repository - Persefoni Carbon Accounting Platform.
Decarbonization/Net-Zero Transition Management: Industrial digital twins can monitor, measure, control,
and report for carbon emission/energy use reduction – Mareana Adaptive Digital Twin Solution; DTO can
manage decarbonization processes - BusinessOptix DTO/BPM Solution.

Digital Decarbonization Benefits
Digital Twins CO2e emissions reductions/Cost savings
between 2020 and 2030
B ildi /C t ti 6 9Gt/$288B
Buildings/Construction 6.9Gt/$288B
Transportation 229Mt/$690B
Consumer Packaged Goods 281Mt/$137B
Life Sciences 61Mt/$106B
Electrical and Electronics 36Mt/$73B
Total 7.5Gt/$1.29T

Balancing Sustainability and Profitability
ESG/Sustainability Imperative vs. Conundrum Profitable and Sustainable Business
CEOs usually tend to give weight to the shorter-term financial metrics
in trade-offs between financial and ESG/sustainability performance.
This may explain why it is challenging to fully integrate
ESG/sustainability considerations into business practices.
CEOs usually tend to give weight to the shorter-term financial metrics
in trade-offs between financial and ESG/sustainability performance.
This may explain why it is challenging to fully integrate
ESG/sustainability considerations into business practices.
y p
y p

ESG/Sustainability Conundrum
CEOs usually tend to give weight to the shorter-term financial metrics in
CEOs usually tend to give weight to the shorter-term financial metrics in
trade-offs between financial and ESG/sustainability performance. This
may explain why it is challenging to fully integrate ESG/sustainability
considerations into business practices.
trade-offs between financial and ESG/sustainability performance. This
may explain why it is challenging to fully integrate ESG/sustainability
considerations into business practices.

Purpose and Triple Bottom Line
Corporate purpose is to produce
‘profitable solutions to the
p o tab e so ut o s to t e
problems of people and planet
and not to profit from producing
problems for people or planet’.
Triple bottom line (TBL) means that
companies should commit to focusing
companies should commit to focusing
as much on social and environmental
issues as they do on profits.
Source. https://www.sustainablebd.com/what-does-a-sustainable-business-look-like

Value Innovation for Sustainable Economic Growth
*Pareto Frontier in Yossi Sheffi, Balancing Green, MIT Press

Sustainability Business Case
A sustainability business case provides justification for undertaking a
A sustainability business case provides justification for undertaking a
sustainable business practice that can be fully embedded into every aspect of
the business.
the business.
A sustainability business case evaluates the benefits, opportunities, costs and
risks of alternative options (future potential scenario) and provides a rationale
risks of alternative options (future potential scenario) and provides a rationale
for the preferred sustainability business practice (e.g., financially measurable
for the preferred sustainability business practice (e.g., financially measurable
ROI using forward
ROI using forward-
-looking sustainability measurement metrics).
looking sustainability measurement metrics).
A sustainability business case can help to understand how a sustainable
A sustainability business case can help to understand how a sustainable
business practice affects a company’s core business strategy and a sustainable
business practice affects a company’s core business strategy and a sustainable
business practice’s comprehensiveness and impacts.
business practice’s comprehensiveness and impacts.
Drivers for creating a sustainability business case:
Drivers for creating a sustainability business case:
Lowering risk from risk management improvement
•
• Lowering risk from risk management improvement
•
• Cost savings from operation efficiency
Cost savings from operation efficiency
•
• Revenue growth from sustainable innovation
Revenue growth from sustainable innovation
•
• Building customer loyalty/Attracting talents from enhanced reputation
Building customer loyalty/Attracting talents from enhanced reputation

Sustainability Balanced Scorecard (SBSC)
Balanced scorecard (BSC) is a performance measurement and management
system aiming at balancing financial and non-financial as well as short and
syste a g at ba a c g a c a a d o a c a as e as s o t a d
long-term measures. Modifications to the original BSC which explicitly consider
environmental and social or ethical issues are referred to as sustainability
balanced scorecards (SBSC).
Source. The Fifth Pillar of the Balanced Scorecard: Sustainability
https://www.sciencedirect.com/science/article/pii/S1877042816315610?via%3Dihub

Reference: SBSC Strategy Map Example

ESG + Digital Integrated Transformation (ESGDX) Imperative
Source. The European double up https://www.accenture.com/us-en/insights/strategy/european-double-up

Reference: ESG + Digital Transformation Integrated Management
Conduct assessment to determine which ESG risks, opportunities, and
impacts are of strategic significance to the company and stakeholders;
Monitor and measure them with data
Monitor and measure them with data-
-driven tools
driven tools
Monitor and measure them with data
Monitor and measure them with data-
-driven tools
driven tools
Set and communicate long
Set and communicate long-
-term value creation and
term value creation and
ESG sustainability strategy, supported by targets,
resources and technology foundations; Establish
metrics and KPIs that enable management to monitor
performance against goals; Embed management of
ESG sustainability issues in wider business processes
Set and communicate long
Set and communicate long-
-term value creation and
term value creation and
Define governance structure to embed ESG
sustainability throughout the digital transformation
strategy; Ensuring the entire C
strategy; Ensuring the entire C-
-suite
suite
understands how ESG sustainability issues are
relevant to their respective areas of responsibility.
strategy; Ensuring the entire C
strategy; Ensuring the entire C-
-suite
suite
Integrate ESG sustainability into value
propositions and customer experiences,
enabled by digital
enabled by digital-
- and data
and data-
-driven efficiencies
driven efficiencies
for end users; Set a data
for end users; Set a data-
-and
and-
-analytics
analytics
enabled by digital
enabled by digital-
- and data
and data-
-driven efficiencies
driven efficiencies
for end users; Set a data
for end users; Set a data-
-and
and-
-analytics
analytics
Provide employees with the digital
and data tools and capabilities to
deliver innovation aligned to the
company purpose and ESG
sustainability KPIs; Effectively
communicate the company’s long
communicate the company’s long-
-
communicate the company’s long
communicate the company’s long-
- ;
; y
y
strategy to collect ESG sustainability data
across business units and create new revenue
streams by making this data available to
customers and partners.
;
; y
y
Build capabilities needed to adopt digital business
term growth plans, including any
digital and ESG goals; Continuously
improve KPIs that combine digital
transformation and ESG
sustainability goals
models that improve ESG sustainable resource use
through intelligent provisioning, coordination or
optimization; Enable data
optimization; Enable data-
-sharing across isolated
sharing across isolated
organizational groups to optimize and track the ESG and
economic savings realized by digitally enabled business
models, and to understand the aggregated impact of
these outcomes; Facilitate a data
these outcomes; Facilitate a data-
-sharing with real
sharing with real-
-time
time
l i d i i i h l d d d
optimization; Enable data
optimization; Enable data-
-sharing across isolated
sharing across isolated
these outcomes; Facilitate a data
these outcomes; Facilitate a data-
-sharing with real
sharing with real-
-time
time
Develop/ implement measurement tools and impact
assessment frameworks to value ESG externalities and
return on investment; Incorporate digital tools into
financial assessment processes in order to conduct
sound assessments of ESG sustainability impacts
within a defined set of future scenarios; Integrate and
centralize data in order to report performance against
centralize data in order to report performance against analytics and optimization to match supply and demand;
analytics and optimization to match supply and demand;
Use digital platforms and channels to collect more
distributed, inclusive customer feedback for ESG
sustainable digital business model innovation
Develop a roadmap for investment in IT capabilities to
Exchange data insights in organization and value chain, using
diverse sources to inform action while ensuring data compliance,
environmental KPIs aligned to global sustainability
reporting standards
reporting standards
reporting standards
reporting standards
p p p
p p p
support transparent and integrated data
support transparent and integrated data-
-led efficiency
led efficiency
improvements; Factor ESG considerations into
operational decision
operational decision-
-making criteria where impacts are
making criteria where impacts are
most significant; Enable intelligent workflows and
process automation to create measurable efficiency
gains and improve resource use
p p p
p p p
support transparent and integrated data
support transparent and integrated data-
-led efficiency
led efficiency
operational decision
operational decision-
-making criteria where impacts are
making criteria where impacts are
Create a control
Create a control-
-tower solution that integrates real
tower solution that integrates real-
-time
time
data across the supply chain with external data sources
to improve visibility and resilience; Design a data model
that integrates internal and external data sources to
identify and reduce exposure to acute and chronic
ESG risks (e.g. weather events, supply volatility), as well
Create a control
Create a control-
-tower solution that integrates real
tower solution that integrates real-
-time
time
privacy and security; Ensure ESG sustainability data is a core
factor of decision
factor of decision-
-making; Conduct continuous ESG assessments
making; Conduct continuous ESG assessments
using data analytics, combined with AI technology, to monitor
changes in strategic issues and make real
changes in strategic issues and make real-
-time decisions;
time decisions;
Democratize access ESG impact data/insights through self
Democratize access ESG impact data/insights through self-
-service
service
portals for all employees, including a dashboard that tracks
company
company-
-wide KPIs aligned with ESG sustainability reporting
wide KPIs aligned with ESG sustainability reporting
factor of decision
factor of decision-
-making; Conduct continuous ESG assessments
making; Conduct continuous ESG assessments
changes in strategic issues and make real
changes in strategic issues and make real-
-time decisions;
time decisions;
Democratize access ESG impact data/insights through self
Democratize access ESG impact data/insights through self-
-service
service
company
company-
-wide KPIs aligned with ESG sustainability reporting
wide KPIs aligned with ESG sustainability reporting
( g , pp y y),
( g , pp y y),
as tracking performance against environmental goals
( g , pp y y),
( g , pp y y),
standards
standards
standards
standards
Source. Bridging Digital and Environmental Goals: A Framework for Business Action
http://www3.weforum.org/docs/WEF_Bridging_Digital_and_Environmental_Goals_2021.pdf

ESG + Digital Transformation (ESGDX) Imperative
How to?
How to?
ESGDX Framework & Sustainability Digital Competency (SDCTM) Methodology
o to
o to
ESGDX framework for profitably
sustainable business
corresponds to the development
ESGDX framework for profitably
sustainable business
Sustainability Digital
Competency (SDCTM)
engineering
Sustainability Digital
Competency (SDCTM)
engineering
and execution of the components
of SDBM (Sustainable Digital
Business Model): Sustainable
digital value proposition,
S t i bl di it l l ti
and execution of the components
of SDBM (Sustainable Digital
Business Model): Sustainable
digital value proposition,
S t i bl di it l l ti
engineering
methodology enables
development,
implementation,
deployment, and
i ti f
engineering
methodology enables
development,
implementation,
deployment, and
i ti f
Sustainable digital value creation,
Sustainable digital operating
model, and Sustainable digital
value capture.
Sustainable digital value creation,
Sustainable digital operating
model, and Sustainable digital
value capture.
communication of
competitive SDBM for
profitably sustainable
business practice.
communication of
competitive SDBM for
profitably sustainable
business practice.

Reference: ESG + Digital Transformation for Profitably Sustainable Business White Paper
Download link: https://www.vinculagroup.com/images/whitepaper.pdf

Business Model Innovation for Sustainable Economic Growth
How can companies achieve short-term profits and ESG/sustainability goals at
the same time?
the same time?
Initiatives to increase operation efficiency, mitigate potential risks, introduce
new products/services with an endurable level of financial performance over
new products/services with an endurable level of financial performance over
time may be a partial solution: companies cannot avoid trade-offs between
ESG/sustainability and financial performance entirely without a fundamental
change in business practice.
The paradigm shift
The paradigm shift from short
from short-
-term financial return maximization approach to
term financial return maximization approach to
multi
multi-
-terms
terms balancing growth
balancing growth -
- balancing financial and ESG/sustainability goals
balancing financial and ESG/sustainability goals
simultaneously through business model innovation
simultaneously through business model innovation:
:
Value proposition innovation is to offer new types of value;
Operating model innovation is to deliver the created value through innovative
Operating model innovation is to deliver the created value through innovative
use of key resources or value adding activities;
Value creation innovation is to create needed solutions through product and
service innovation for new customer needs/wants;
service innovation for new customer needs/wants;
Value capture innovation is to develop an innovative pricing model;

Reference: Business Model Framework
Business model describes how a company can create, deliver, offer, and
capture value from business opportunities:
captu e a ue o bus ess oppo tu t es
Value proposition is to offer the created value (solve a problem or perform a
job-to-be-done (needs of customers) at a given price)
Operating model is to deliver the created value (operation of key resources,
activities and partners that are needed for a company to carry out what the
l iti i )
value proposition requires)
Value creation is to create needed solutions through product and service
Innovation
Innovation
Value capture is to monetize the created value through the pricing mechanism
and cash flow generation There are costs to delivering value and thus to be
and cash flow generation There are costs to delivering value and thus to be .
There are costs to delivering value, and thus, to be profitable, the solution
offered to customers must cost less to produce than the customer is willing to
pay for it.
p y

Sustainable Business Model
A sustainable business model creates and provide value by balancing between
economic and sustainability benefits
eco o c a d susta ab ty be e ts
Source. https://www.sustainablebd.com/what-does-a-sustainable-business-look-like

Digital Business Model Innovation
The essential part of digital transformation is using data and digital capabilities
to reshape customer value propositions, transforming operating models for
to es ape custo e a ue p opos t o s, t a s o g ope at g ode s o
greater customer interaction through the efficiency and productivity gains,
designing new pricing model, and accelerating product and service innovation,
which introduce a new digital business model, and then, lead to new revenue
streams and new revenue opportunities. The essential part of digital
transformation strategy is using data and digital capabilities to create new,
novel, compelling and competitive value for customers.

ESGDX Framework for Profitably Sustainable Business
ESGDX requires a strategic development of business model for profitably
sustainable business practice.
By Integrating ESG/sustainability into digital business model (Sustainable
Di it l B i M d l (SDBM)) t t
Digital Business Model (SDBM)), a company can generate revenue streams,
achieve cost savings, reduce business and ESG/sustainability risks, improve
sustainable resource use, increase business resilience, gain customer trust,
and expand market opportunities
and expand market opportunities.
SDBM for embedding ESG/sustainability considerations into a digital business
model can serve as a growth engine by improving a company’s
model can serve as a growth engine by improving a company s
operations/products/services and by creating new market opportunities/revenue
streams through the orchestration, optimization and dematerialization of
resources and assets.

ESGDX framework for profitably sustainable business corresponds to the
development and execution of the components of SDBM: Sustainable digital
development and execution of the components of SDBM: Sustainable digital
value proposition, Sustainable digital value creation, Sustainable digital
operating model, and Sustainable digital value capture.
Sustainable digital value proposition
Sustainable digital value proposition reshapes value proposition
(products/services to target customers, measurable environmental/social values
(positive impacts)) to stakeholders, trust, and resilient business) using digital
capabilities, customer/stakeholder relations, and marketing channels.
Sustainable digital value creation
Sustainable digital value creation refers to producing/providing
products/services to target customers and environmental/social values to
stakeholders using digital capabilities and business resources/assets
stakeholders using digital capabilities and business resources/assets
sustainably (e.g., sustainable/circular products/services development).

Sustainable digital operating model
Sustainable digital operating model refers to delivering the created values using
Sustainable digital operating model refers to delivering the created values using
digital business processes (e.g., intelligent workflows/process automations),
supply chain/value networks, and sustainable business operation (e.g.,
integrate ESG considerations into business operational decision-making
integrate ESG considerations into business operational decision making
criteria).
Sustainable digital value capture
Sustainable digital value capture refers monetizing the created value through
profit formula (revenue/cost structure). Profit formula includes revenue
generation/cost reduction through efficiency/productivity gain/new market
opportunities/new monetization models (e.g., digital servitization) by digital
transformation and sustainability opportunities/risks management.

Sustainability Digital Competency (SDCTM) engineering methodology enables
development, implementation, deployment, and communication of competitive
SDBM for profitably sustainable business practice.
SDCTM f D l t
SDCTM for Development
SDCTM engineering methodology adopts systems thinking and system
dynamics approach in the development of SDBM. SDCTM engineering
methodology considers a business model as a system
methodology considers a business model as a system.
SDCTM engineering methodology investigates all business system components
to find how these system components are interrelated dynamically and impact
to find how these system components are interrelated dynamically and impact
the business system within an organization and across the supply/value chain
where it aligns with ESG/sustainability.
The findings are used for embedding ESG/sustainability
risks/opportunities/impacts into each component of SDBM focusing on high-
material ESG/sustainability issues strongly connected to the specific business
practices, which can result in optimal ESG/sustainability management
outcomes with financial profitability.

SDCTM for Implementation
To exploit and leverage digital technology for effective implementation and best
practice deployment of SDBM, efficient and effective supporting enterprise
digital resources/infrastructure (e.g., secure data management system,
I T/AI/bl k h i /di it l t i t t ti t l d
IoT/AI/blockchain/digital twin systems, process automation system, cloud
computing platform) within an organization and across supply/value chain are
essential.
Required enterprise digital resources/infrastructure can be implemented either
by renovating and integrating existing enterprise digital resources/infrastructure
or custom development redesigning and integrating third-party
or custom development redesigning and integrating third party
solutions/platforms.

SDCTM for Deployment
For a successful deployment of the developed SDBM, a business case of
SDBM for a specific industry/business is developed for evaluating whether the
developed SDBM can best respond to the future potential scenarios.
System Dynamics (SD) methodology is used to innovate and test the
developed SDBM by developing a reinforcing feedback casual-loop diagram
among components of SDBM By integrating SD methodology and digital twin
among components of SDBM. By integrating SD methodology and digital twin-
assisted scenario analysis, forward-looking financial justification of the
deployment of the developed SDBM can be made by the quantitative measures
of ROI
of ROI.
Especially, our financial measurements adopt the bottom-up approach: The
measuring processes and technologies are more likely to be local. Having local
g p g y g
input and initiation of programs is more likely to be accompanied by
measurement procedures and technologies that are integrated into the
organizations operational processes.

SDCTM for Communication
To communicate with stakeholders for the performance measurement and
outcomes of the development, implementation, and deployment of SDBM,
ESGDX playbook (complementary to sustainability report based on standard
ti f k h GRI/SASB/TCFD/WEF) b d l d
reporting frameworks such as GRI/SASB/TCFD/WEF) can be developed.
Evidence of ESGDX non-financial performance can be provided using
sustainability accounting method Details about SDMB innovation process can
sustainability accounting method. Details about SDMB innovation process can
be included.

ESG + Digital Transformation + Metaverse Convergence

ESG + Digital Transformation + Metaverse Convergence

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