Software permeates almost every sector of the modern global economy. Over the past decade or so, software solutions have become embedded in real economy processes to make them more efficient, delivering financial savings and so supporting company margins. Their problem-solving capabilities can also help tackle environmental challenges.
In the era of the ‘digital factory’, every machine can be connected to cloud-based software solutions. Performance data can be captured and analysed to identify any issues before they shut down an entire production line, thereby improving resource efficiency in manufacturing.
Enterprise resourcing planning software meanwhile enables companies to perfect their logistics and distribution models, therefore reducing emissions associated with carbon-intensive supply chains and operations.
Even in the relatively analogue construction sector, software solutions are being increasingly applied to improve the design and delivery of projects, optimising the use of materials and cutting wastage on building sites.
The rise of data management, processing and storage is itself energy intensive. However, the relative efficiency and higher utilisation rates of large-scale data centres, when compared with traditional on-site servers, means the shift to cloud-based solutions can itself deliver environmental savings while also unleashing the potential benefits of enhanced computing power.
For investors looking to understand the impact of the companies they invest in, the software sector does carry its own challenges. Impact analysis is complicated by the fact that it hinges on how services are applied by software companies’ customers, as well as by the difficulties in establishing baselines for comparison. Yet, as we discuss in this recording, this issue is beginning to be addressed.
As we transition to a more sustainable economy, and as new innovations emerge, it seems clear that software can play a powerful enabling role as part of the solution to pressing environmental challenges.