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Canada driving sustainable growth of ‘intelligent industry’

The digitalization of the physical world has sparked the emergence of “intelligent industry” – a transformational opportunity to drive climate-friendly growth to a degree that the adoption of renewable energy generation can’t match.
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The digitalization of the physical world has sparked the emergence of “intelligent industry” – a transformational opportunity to drive climate-friendly growth to a degree that the adoption of renewable energy generation can’t match.

At the steering wheel is Canada, a country assuming a leadership role in building and scaling the technology companies that are driving this global shift founded not only on climate concerns, but competitive advantage.

Addressing climate change is no easy task. Big problems often lead to big, new thinking. However, to effectively address climate change in the near term, the real focus should be on technology that optimizes the performance of existing solutions.

Simply converting to renewable energy generation will yield only a fraction of the change needed to reach a multitude of climate-based goals, including global warming, greenhouse gas emissions and carbon intensity. The most significant changes are to be driven by traditional industries, transportation, buildings, cities and infrastructure and agriculture and food.

Intelligent industry represents an unprecedented opportunity to accelerate the adoption of better practices across all channels. Over the last three decades, the internet has evolved into a next-generation platform comprising a diverse set of connected advancements in software, communications and computing technologies. Intelligent industry embraces the application of data, machine learning, artificial intelligence, software-defined systems, industrial internet of things and other technologies – all supported by cloud computing – to drive innovation, reduce the impact of climate change and create operational efficiencies.

Intelligent industry’s engine is digital and its fuel is data. The number of monitoring and control points connecting industrial and commercial infrastructure to the internet is expected to reach at least 75 billion by 2025, more than 20 times the size of the current internet, with the potential to generate almost $60 trillion in the next 15 years.

Intelligent industry is able to harness that data to create more, with less waste. It is both systemic and scalable. Digitalization enables the discovery of continuous improvements, solving problems and optimizing outcomes in real time with software and data. It can drive improvements in the productivity of physical capital, infrastructure and other asset-intensive operations, leading to a reduction of natural resource consumption and carbon intensity, optimizing asset efficiency and minimizing the output of undesirable byproducts such as waste materials and environmental pollutants – especially those that contribute to global climate change.

An example from our portfolio companies is software from Vancouver’s Bit Stew Systems (acquired by GE Digital), which ingests millions of real-time data points on an electrical grid, enabling utilities to make intelligent decisions to optimize energy use. Another is Toronto’s ThoughtWire, which has developed a software platform to equip cities and buildings with the capacity to become smarter, safer and more energy-efficient by interconnecting their people, workflows, data and things in the built environment.

The market for these technologies is already growing rapidly. In fact, we are already seeing demand from global markets that businesses driving such traditional industries adopt “fit-for-future” technologies to stay competitive. Global policy is also embracing intelligent industry. The role of intelligent industry is critical to the United Nations’ 2030 Agenda for Sustainable Development and is perhaps best embodied through the application of Sustainable Development Goal 9 (SDG 9), which is to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. The three foundational pillars of SDG 9 – infrastructure, industry and innovation – all share the objective of achieving environmentally sustainable economic development. The UN’s Intergovernmental Panel on Climate Change labels intelligent industry a fundamental requirement moving forward.

As investors in this space, we can attest Canada is regarded by its peers as being at the vanguard. Specifically, we are seen as the home to innovation in artificial intelligence and machine learning. We have three globally recognized technology ecosystems in Vancouver, Toronto and Montreal. By the numbers, our country has the highest concentration and second-highest total activity of intelligent-industry companies globally.

Addressing climate change is no easy task. We need to focus on existing root causes and seek interventions to change outcomes. Today, Canadian companies are developing numerous innovations, both big and small, effective and iterative, that, when added up, will have a major impact towards reducing the impact of climate change and facilitating the goal of a sustainable future. •

Salil Munjal is managing partner, Eric Bukovinsky is partner and Sophie Gupta is principal of Yaletown Partners.