The European Commission is convinced that Europe will not only recover from the Covid-19 pandemic, but that businesses and the economy will grow on a new, more sustainable path. There is a need to build back better. This means enabling and supporting European companies of all sizes to become more resilient in their data-enabled businesses, but also incorporating fair data economy principles into their sustainability agendas.
Sitra and the European Commission’s Directorate-General for the Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) organised a workshop on how European companies and organisations can build a competitive advantage from the fair use of data as part of their responsible and sustainable business conduct.
The commission’s 2030 goals for Europe’s Digital Decade will be published soon, so it is important to build on this momentum and discuss how to use digitisation to boost sustainability. With sustainability, we not only mean environmental, but also social and economic sustainability. This entails concepts such as human rights, gender equality, reduced inequality and decent education.
While the amount of available data increases exponentially every day, it is of utmost importance to agree on rules to use this data fairly and sustainably.
For example, smart city development is an area where data, transparency in the use of data and sustainable goals are intertwined. Therefore, the transition to sustainability also needs to go hand in hand with technological and digital innovation, including key enabling technologies, artificial intelligence (AI), the internet of things (IoT) and, above all, the treatment of data. We need to talk about the fair use of data and how it helps to build and create social sustainability. Concerning the environmental challenges, we also need to consider the growing impact of digitisation, data use and the IT industry’s energy consumption.
Embracing SMEs as trailblazers in single data market
Businesses should be a key driving force in this transition. SMEs (small and medium-sized enterprises), in particular, play an important role as they represent 99% of the business ecosystem in Europe. Businesses have a duty towards the community they work in and the planet they operate on. The role of SMEs as innovative and agile actors can show the way to how this new business culture should be built.
However, to make this transition feasible for all, decision-makers need to apply a proportionality principle. Too heavy requirements on small and medium-sized companies can become a barrier to growth and an administrative burden. If we manage to build a single market for data with common rules and shared incentives for data sharing, we potentially help SMEs to innovate on common data spaces and bring more agility into innovation ecosystems now dominated by large players. As someone from the audience put it, “storing data is a liability; the right to use that data is the asset”.
The commission has presented a forward-looking package of strategic and regulative measures: the Data Strategy, Digital Services Act and Digital Markets Act. The data strategy is supposed to have positive consequences for the data market’s environmental and social impact. In particular, there is a strong focus on the circular economy and energy efficiency together with data protection and ethics, especially in AI development. These also have a common objective of creating a safer digital space in which the fundamental rights of all users of digital services are protected thanks to responsible and sustainable use of their data.
In addition to regulation, we need business examples and trailblazers that lead the way to the fair data economy.
During the workshop, we heard two interesting examples of how a small company has built its business model based on human-centricity and how a large financial company makes its data use transparent thanks to a data balance sheet. With a data balance sheet, companies can report data assets, liabilities and equity as if data were a tangible product. This way, the company can assess its quality of data management in a more efficient manner.
The winners exceed stakeholder expectations
In the future, it will be even more important for businesses to go beyond what regulation demands, and in this way show their trustworthiness to their customers and business partners.
The need for joint discussion is apparent but talking about human-centricity can sometimes be challenging. We often concentrate merely on regulation challenges or on promoting, for example, a certain technological solution. However, we need shared definitions and understanding of what we mean by human-centricity and how we should enhance it.
EU-wide regulation is a powerful way to enhance human-centricity. However, businesses can and should also take a proactive role, for example, by implementing fair data principles in their strategic and operational work, or by coming up with ways of integrating data use into their sustainability agenda. One option could be to take on a future-orientated action of implementing data sovereignty in their business.
How a fair data economy maturity model can help
Actionable tools can pave the way for changing the culture of using and sharing data. Sitra has been developing a tool called the Fair Data Economy Score, which helps businesses understand their position in the fair data economy. It will also offer recommendations for and provide understanding on what kinds of actions should be taken to become fairer in the use of data. But nothing is done alone. Sitra welcomes all interested parties to take part in developing the tool and give feedback on how it should be built.
Next steps and call to action
We will continue the discussion on the fair balance and benefits of a data-driven society in the next “Smart policies for data” workshop in March 2021. We need to lead with data, but also learn how to lead the data in more sustainable and human-centric ways.
The Recovery Plan for Europe is the largest stimulus package ever financed through the EU budget. There is a strong focus on the twin transition of climate change mitigation and digital transition, via the Just Transition Fund and the Digital Europe Programme. The time for policymakers, experts and companies to come together and build more innovative and sustainable solutions for data-driven services is now.
Sitra plans to continue its collaboration with various stakeholders and work closely with the European Commission – DG GROW and DG CNECT – to ensure that this momentum is used for the good of society. Please help us by sending any feedback or suggestions to IHAN@sitra.fi.
The article was written with contribution from DG GROW.