Industry 4.0 technologies as enablers of sustainability risk management

Abstract

Motivation: Companies operate in a volatile, uncertain, complex, and ambiguous (VUCA) business environment, as evidenced by massive collapses in commodity prices, acts of terrorism, cyber security threats, natural disasters, technological failures, and pandemics. Numerous reports indicate that the top risks with the highest probability of occurrence in the next decade include extreme weather events, failure of climate protection measures, and man-made environmental damage (The Global Risk Report 2021 of the World Economic Forum, The World Business Council for Sustainable Development report and many others). The UN Sustainable Development Goals (SDGs) cover the above challenges and define the agenda for solving them to 2030. The intensification of environmental and social risks reinforces the need to deepen research and explore new ways of managing sustainability risks (SRs). At the same time, businesses are undergoing the technology transformation (Industry 4.0) accelerated by the COVID-19 pandemic. It became necessary to shift some investment to this business area, which also needs to be supported by additional capital. The technology-driven transformation can significantly support companies in managing SRs. Aim: The aim of the study is to diagnose the importance of investments in Industry 4.0 technologies (T4.0) as potential enablers supporting sustainability risk management from the perspective of supply chains. Results: SRs represent one of the critical risk areas of the 21st century. Despite the well-recognized potential of the T4.0 implementation for sustainable supply chain management, the research studies concentrated on their potential role within SR management in international supply chains are limited and fragmented. The diagnosis of the growing importance of T4.0 supporting risk management at strategic and operational levels of business activities implies the recommendation to integrate their use in this area into the technological transformation, and then consistently into planning and financing of development and implementation projects. Companies may attempt to address these challenges through Environmental, Social, and Governance (ESG) initiatives.