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Sustainable digitalization through SMEs

By Mia Hem

For Europe to transform into a globally competitive, climate-neutral digitalized economy and society, there is the need to fulfill two goals: the green and digital (‘twin’) transitions. That will require new products, services, markets, and business models that are grounded in the European values and their social market economy. The New Circular Economy Plan, together with the European Green Deal, has set an ambitious agenda for environmental policy, while the Industrial Strategy has set out actions in the area of innovation, investment, standards, fair competition, and efforts to reduce barriers to the single market. Collectively, they can outline a strategy to successfully reach the goal of the twin transitions. European digital enterprises, especially SMEs, have the power to exhaustively digitalize the economy. They enable the digitalization of other sectors through the development of technological solutions such as software, AI, blockchain, and the internet of things, which other companies can thereafter use.

It is crucial that this digital transformation takes place in a sustainable manner, supporting the environmental goals of the Green Deal and the Circular Economy Plan. However, to continue, it is essential to understand the definition of sustainable digitalization: It is the process of digitalizing the economy in a long term, green and organic way. This is possible through its key strengths - SMEs and their business ecosystems. This can be accomplished through three interconnected dimensions:

  1. Sustainable Business 2 Business (B2B) digitalization: Digital transformation that builds on B2B relationships in the long-term to create innovation-driven ecosystems, instead of employing closed solutions (which leads to dependency).

  2. Greener technologies and a circular economy: Allowing the repairability and re-use of products will lead to increased efficiency and saving resources in the digital sector.

  3. Innovation-enabling policy and regulation: Holistic rule-making can support innovation whilst also supporting the environmental goals. This may include software- and hardware openness; platform regulation; ensuring safety and security in wireless devices; access to data and data portability; and repairability.

But how can European policymakers support this sustainable digital transformation in terms of climate neutrality? A basic requirement would be investing in Europe’s innovative expertise that supports the twin transitions. SMEs are fundamental here. We must ensure that measures supporting digital transformation do this sustainably. Furthermore, regulatory initiatives must be examined from a holistic point of view, which extends to the area of competition, telecommunication regulation, and consumer law. It is in this way that Europe can develop into a more innovative and green business ecosystem that successfully achieves the twin transitions to a green and digital economy.

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