Industry 5.0 – Why Sustainability Will Be The Next Revolution
How we got to Industry 5.0: The Impact of Industrial Revolutions
The Industrial Revolution of the 19th century transformed lives all over the world. It made life easier and more comfortable for many people, but it also created a new kind of misery as well as an economic divide that would shape our world for generations to come.
As we will see, all major revolutions have their “Pros” and “Cons”. They always begin with overwhelming optimism, but eventually the unintended consequences always seem to rear their ugly heads. However, as a whole, these revolutions have raised the standards of living for virtually all humans on the planet. A good friend recently noted that, “Today, we all live better than any King or Queen just 200 years ago”. Don’t believe it? Just Google medicine and dentistry of the 1800s!
Another note is that not everyone agrees with the definitions of “Industry 1.0” “2.0” and so on. For this article, we focused on the true revolutionary aspects of the periods. From Steam, to Mechanical, to Digital to Artificial Intelligence. We felt there needed to be a clear line of demarcation between periods that are considered…well, revolutionary!
Corporations have been talking about machine learning and the internet of things for over a decade. It’s time to propel our society into the next generation of capitalism. Of course, that next generation of opportunity is Industry 5.0.
In order to really understand the innovations that will lead us into the future, we need to dive into how humans have evolved up until today.
The transition point of the human race really started in the mid to late 1700s during the first industrial revolution. Up until that point, humans had gone through a couple of foundational changes.
- The Paleolithic Era – Millions of years – 10,000 BC. These were the hunter-gatherer days when technology was defined by bows, arrows, spears, fires, containers, and huts.
- The Neolithic Era – 10,000BC – 1760. This was the agricultural revolution where we domesticated plants and animals and started to build communities.
During the Neolithic era, humans went through many phases. There were philosophical revolutions, religions, dark ages, renaissances, urbanization, and, of course, the age of enlightenment.
But the late 1700s became the inflection point that changed the human race forever. The first industrial revolution drove the production of goods to new heights. The path to operational efficiency became the golden ticket for manufacturers. Each of the industrial revolutions created a fundamental shift in how businesses functioned.
In this article, we will first take a look at the first 4 phases (Industry 1.0 to Industry 4.0) to get an understanding of how radically each one changed the world:
- First Industrial Revolution (Mechanization) – defined by mechanical production using water and steam.
- Second Industrial Revolution (Electrification) – defined by mass production through electrical power.
- Third Industrial Revolution (Automation) – defined by automation using computers and electronics.
- Fourth Industrial Revolution (Digitization) – defined by big data, robotics, the internet of things, and modern software.
And we’ll get a grasp of some of the technologies that have come about as a result:
- First Industrial Revolution (starting in the 1780s) – The steam engine.
- Second Industrial Revolution (starting in the 1870s) – The telephone, light bulb, combustion engine, airplane, and assembly line.
- Third Industrial Revolution (starting in the 1970s) – The personal computer, internet, and semiconductors.
- Fourth Industrial Revolution (starting in the 2010s) – Machine learning, quantum computing, CRISPR, and artificial intelligence.
To understand our position on the 5th Revolution, it’s necessary to map out the first four, and the ground-breaking technologies that came about as a result. Our argument is that Industry 5.0 cannot be simply an elevation of 4.0 (Digitation), but something far more progressive.
The fourth industrial revolution started around 10 years ago. This phase has really been defined by the enmeshment of the digital, physical, and biological worlds. Biotechnology, social media, and smart devices have propelled the human race into the type of future we saw in The Jetsons and Star Wars.
The original Steam Revolution (1.0) was an era of dramatic social, economic, and technological change. Sometimes called the “Industrial Revolution, we make a clear distinction between the two (Industry 1.0 and Industry 2.0). For this study we refer to the Age of Steam, and the first revolution and mostly associated with the advent of steam power. This differs from the more mechanical revolution that broadened this mechanization to overtake the “made by hand” era completely. This second revolution marked the transition from traditional manufacturing by hand, to full-on mass production including fossil fuel and electricity. This is when we saw the rise of modern machines and factories, and with them came a new era: The Machine Age.
The third revolution was the advent of the digital age. While technology and computers existed before the true digital age (we consider it starting in 1969), they were more of an augmentation of previous processes. The digital revolution changed the way we live and do business and went way beyond mechanizing or automating tasks to include operations and outputs no human could perform.
We end the history lesson with Industry 4.0. – The rise of machine learning and artificial intelligence. As much of a jump of digital processing was to computers, AI far eclipses the digital world to create a new society of machine learners.
Finally, we look at Industry 5.0. The need for, and global crisis around sustainability. It’s fundamentally changing business, investment, operations and our personal lives.
All these revolutions were truly global phenomena, touching every corner of the earth and reshaping societies. They jump-started modern capitalism as we know it today. They all set the stage for the following revolutions mostly centered around some game-changing technologies, but all dependent on the previous “revolutions” to set the stages for future progress.
Industry 1.0: The Steam Revolution
There is no good way to track the exact dates of the impact caused by the steam revolution because it took place gradually over time. However, there are markers that can be used to identify the milestones. The first marker is 1698 when Thomas Savery invented the steam pump. The next marker was in 1807 when Robert Fulton’s steamboat made its inaugural voyage up New York’s Hudson River and a third in 1829 when the steam locomotive was unveiled by the B&O Railroad, demonstrating that steam had become a reliable source of power for transportation and industry.
Prior to the steam engine, mechanization depended on human, animal, wind or waterpower. Most mills and pumps were located close to a moving water source (river) and were driven by a water wheel. The downside was that power was regulated by mother nature herself, and that could be very unreliable at times. The invention of the steam engine meant that the power source could now be located virtually anywhere and be much more consistent.
The first steam powered device started with Thomas Savery’s “Miner’s Friend”. The device was designed to pump water out of mines. Savery’s valve/vacuum design was patented all the way back in 1698! However, it wasn’t until Thomas Newcomen invented the first mechanically driven steam engine in 1712 that the piston design was incorporated. Even with this major advance, what we would recognize as a modern steam engine, wasn’t invented until 1778 by James Watt.
Watt’s advancement of the jacketed piston meant not only higher efficiency and power, but the true ability to drive a rotary wheel. This design of transferring piston power into rotational generation set in motion (no pun) every mechanical power advancement in the future. Virtually all mechanization is based on a rotational generator of some type.
As steam engine technology advanced, so did the number of uses. As the engines became smaller and more efficient, they led the way for more advanced machines. Think about metal lathe, this machine could now produce higher quality parts for even larger, more powerful machines. This led to mechanized textile mills, steamboat power and eventually the railroads.
This set the precedent for not only expansion of local factories, but industrial expansion across geographies. Without steamboats and railroads, America would have had a hard time expanding beyond the densely populated Eastern Seaboard.
It was a period of dramatic socio-economic and cultural change. It helped create modern capitalism as we know it today. The revolution began in Great Britain in the late 18th century with the mechanization of the textile industry, but soon spread throughout Europe and North America. Businesses quickly realized that they needed to use this new technology to their advantage if they wanted to stay competitive in this era.
1.0 Unintended Consequences
While the new era of mechanization provided the nation with a new, higher-powered economy, some of the consequences were dire. The new transportation era began with the steamboat and most cargo was food or people. Farmers could now ship goods along the rivers (the superhighways of the 1800s), but this also fed the nation’s internal slave trade, as the Mississippi River brought many unwilling passengers into the mainland from the port of New Orleans.
Workshops also sprang up in the bigger cities and the modern “urban” area was created. While some enjoyed newfound wealth, most were subjected to stifling poverty and intolerable “New World” living conditions on a scale never seen before.
While the steam engine provided an advancement in manufacturing, the general population began to move away from the agrarian economy to the commercialization of a production and manufacturing economy. The tone was now set for the even harsher world that the second industrial revolution would set in motion.
Industry 2.0: The Industrial/Mechanical Revolution
While Industry 1.0 relied on one specific technology, the steam engine, the second revolution would see the rise of a plethora of industries led by steel, oil and electricity.
The second revolution of the late 19th century transformed lives all over the world. Huge factories were built, which meant that people could work indoors and out of the sun. The newfound technology of electricity meant that the workday would start long before sunrise and last long after sunset.
The new machines also made it possible to produce more than ever before, so there was a new age of consumerism born. Previously our ancestors bought mostly what they needed, now we start to see a transitional shift into an era of purchasing “wants” as opposed to “needs”.
While the first industrial revolution enabled our nation to develop a domestic economy, the second revolution led to the advent of globalism. During this time, we advanced beyond steam-driven factories and locomotives, to cars, planes and the steel-based infrastructure that allowed all of them to thrive.
Steel was the first on the scene, and many future advancements owe their heritage to the alloy. Up until the late 1800s, iron was the metal of choice for tools and machinery mainly because of its abundance and ease to form into various shapes. The downside is that iron contains impurities that lead to faster corrosion and weakness over time. Steel, on the other hand is an alloy that is iron based, without the impurities and it’s not prone to weakening over time.
Steel had been in use as early as the 17th century, but it wasn’t until the Bessemer Process that it became more pure, less expensive, and so widely used. Steel literally built the industrial world we live in today. Roads, bridges, skyscrapers, cars, ships, railroads, all owe their legacy to steel.
Oil (and the ability to refine it into its base elements) was another huge discovery that literally fueled the second industrial revolution. Oils have been around for centuries; mostly animal and plant based. Oil lamps lit the civilizations of Egypt, Greece, and Ancient Rome. However, once we learned how to tap the large, land-based, and deep oil reserves the industry took flight. In 1859, the Pennsylvania Rock Oil company hit a reserve at 60 feet below ground. This is thought to be the first oil recovered by drilling.
A few years later, John D. Rockefeller took the industry by storm by “standardizing” his lamp oil, or at least marketing that point! By 1901 there were 1500 registered oil companies in the United States. Most of these companies were built on a product that is nowhere near as popular today, Kerosine. Kerosine was widely used to light our world. In the days before electrification, kerosine lamps were everywhere. As refining became, well, more refined, a byproduct of Kerosine production was gasoline. Originally seen as waste, gasoline soon became the oil companies’ golden goose.
In parallel to the commercialization of steel and oil, was the harnessing of electricity. Thomas Edison (and even Ben Franklin) typically comes to mind when thinking of electricity, and especially electric light, but one of the true pioneers was Michael Faraday. Faraday was a chemist by trade, but most well-known for his discovery of the relationship between magnetism and electricity. Hence, the science of power conversion and generation was born.
Electric generators first came to light in the 1870s and were all based on Faraday’s electro-magnetism theories. The ability to understand electricity was one thing. The ability to generate it, control it, and in turn distribute it, changed the world. Essentially, motion in a generator creates electricity, and that motion can come from various sources, hydro, wind, combustion engine, virtually anything that can turn a rotor. Think back to Watt’s steam engine that was powerful enough to turn a rotor, as time moves on, that breakthrough will show up time and time again.
All of these inventions/discoveries on their own would have been quite monumental, but it’s the synergies that were created amongst them that really propelled us in the 20th century.
Steel combined with oil and fuel, created the first gasoline powered combustion engine. There was also the element of electricity to fire the fuel within the chamber. This is a perfect example of the combination of technologies to create and even bigger breakthroughs, which during the second revolution took off at a pace never seen before.
Some outputs of these combinations are:
- Telegraph and Telephone
- Diesel Locomotives
Electricity itself was a wonder in just the pure form to illuminate a light bulb, but shortly after harnessing the power, other noted scientists discovered the many properties of electrons and through further manipulation of electricity, the study of electronics was born.
Electronics can be traced back to the early 1900s and Fleming’s invention of the vacuum tube. This gave us the ability to really control the flow of electrons down to a tiny amount of current, thus opening the door for a host of electric appliances and devices. Radio, TV, computers all owe their existence to that first tube.
The Industrial Revolution brought about a huge social change as people no longer had to rely on other people as much for their survival, but instead they could rely more on machines and their own skills. Industry 2.0 was a monumental shift away from the individual being totally responsible for their level of prosperity, and now the newly formed society was dependent on its collective self for the advancement of both the individual and the community.
There was a true social dichotomy as a result, while healthcare and sanitation began to improve, the need also rose at an alarming rate. The new urban lifestyle created some intolerable living conditions. The rise of factories meant that the workers needed to live nearby, hence housing was a reaction to the proliferation of new manufacturing centers, and they were viewed as simply places where the workers would live.
This is before unions and many of the social constructs that protected citizens. Over time, Police, Fire and Sanitation became commonplace departments in the large cities, but only because of the rising need for such social intervention was crucial to prevent utter chaos within these cities.
Medical advances arrived on the scene as well, but only because of the need to combat the devastating diseases, viruses and bacterial infections that came about due to overcrowded, unsanitary living and working conditions.
By establishing this new modern social system, and the advent of a consumer mentality, the world began a seismic economic shift. No longer were we as isolated as an agrarian/artisan society; we were now learning to live amongst the masses and consume products at a rate never seen before.
By shifting to a consumer economy, as well as learning to more efficiently turn raw materials into finished products, Industry 2.0 set the stage for ever faster, and ever-expanding, leapfrogging technologies.
Industry 3.0: The Computer/Digital Transformation
The way in which our current society has become dependent on technology is no secret; but what many people don’t realize is that this dependency has been developing for centuries. In fact, the first machines developed for information processing were developed more than 300 years ago: In 1790, Thomas Jefferson developed a cipher wheel. The cipher wheel allowed a person to encode a message with a set of 10 symbols. To encode the message, the sender would have to know the key which is a word or phrase for each of the symbols on the face of the wheel. This was in fact a “Computer”, albeit a mechanical one, as opposed to the electronic ones in use today.
The third industrial revolution centers around modern computers, and more specifically the shift from analog to digital technology. The move represents using computers for tasks, and using computers to manage data and information. The shift took an even sharper shift with the introduction and adaptation of the Internet.
Digital communications differ from analog in the fact that exact copies of information can be made. Think of it like this – an old copy machine makes “facsimiles” of documents. However, each copy loses some information. If you’ve made copies of copies, you know what I mean. Each subsequent copy is a little blurrier than the original. Digital however, is all a series of ones and zeros. So, exact copies can be made, even if there are millions or billions of ones and zeros in a string of information. As long as each sequence is copied, the result is an exact replica. Because these exact copies can be endless, transmitting them results in no loss of information, no matter how many times it’s used.
In the late 1960s we were welcomed to the digital era. While companies like Fairchild Semiconductor began to flourish in Silicon Valley in the late 1950s, the true digital revolution was accelerated by the invention of the microprocessor. Early transistors were the evolution of vacuum tube functionality and began to overtake tubes in the 1960s as the semiconductor of choice (most don’t realize that vacuum tube technology performed the same function, controlling electrical conductivity through an external signal). What we think of as today’s semiconductors were now made of a solid-state material, silicon. This was a huge leap forward from the process being controlled by beams of electrons shot through a vacuum tube.
Those smaller, lighter, more efficient wafers of silicon gave rise to the integrated circuit, and eventually the microprocessor. While the evolution is a bit muddy, most consider the Intel 4004, released in 1969, as the first commercially viable microprocessor. As more than an integrated circuit designed to perform a singular task, the microprocessor could be “programmed” to perform various and multiple tasks, hence giving rise to the true Digital Age.
Digital was now no longer an abstract concept that we hear about only in the context of Silicon Valley and startups. It began permeating and transforming every aspect of our lives, from how we work, to how we live, to how we play. It changed our fundamental notions about what it means to consume information and interact with other people, as well as influencing how we express ourselves creatively and share ideas.
This revolution led to inventions like the home computer, cell phone, MP3 players, digital camera, computer games and the iPhone. We separate the iPhone from the cell phone because the smartphone is really a pocket computer and represented a monumental leap from a device used to make telephony mobile to a mobile computer that is always connected. In many ways it has replaced the items listed above!
Again, we see the synergies of evolving technologies (like the smartphone) as an amalgam of previous digital technologies. Digital technology led to the interconnected network of home and business computers (Internet). Use of the Internet rose at a tremendous rate, from essentially zero in 1990 to over 65% of households in the U.S. connected by 2000.
As we transitioned from an analog economy to a digital economy, the transformation process has come to affect every industry in some way. Industries that were traditionally non-digitized are now seeing the effects of this transformation in their business models and strategies. It’s hard to imagine any business not being connected to the world wide web these days, however there may be a few.
The advantages of this revolution clearly favor businesses and individuals who adopt, and adapt to, change. Those choosing to lag, or not participate surely got left behind. New eras of globalization have emerged, and the business playing fields have been leveled in many cases.
Other consequences may not have been so positive, the workload and rate of change today surpasses anything we knew just 30 years ago. Today, you can get on the subway, open your smartphone, edit a promotional video, send it to colleagues and get feedback before you arrive at your office. That is, if you still even travel to an office! This faster pace has led to a rise in mental health concerns including burnout. As we can stay connected 24/7, some choose to do so, we begin to pay an emotional price.
Also, many claim that we are losing jobs associated with tasks that are now automated. With the upcoming AI revolution, we talk about next, that trend will certainly continue, and pervade occupations that were just a few years ago, considered things that only a human could do.
Like any technology, the original uses are considered positive, but nefarious people will always find reprehensible ways to take advantage of others. With the newfound technical ability to connect, there will also be new avenues for individuals and businesses to be taken advantage of. The term “Fake News” didn’t really exist a few years ago, however, today it has found its way into all our platforms of communication. On top of that, the way digital information can now be altered, it’s becoming increasingly difficult to differentiate between the truth and fiction.
Finally, there’s the issue of sustainability that we cover in detail later. The digital revolution has had a huge impact on our ecosystems, even though we sometimes don’t see the destruction first-hand. The enormous amounts of electrical energy needed to digitize our world are increasing at the same rates of the information explosion. A study released stated that by 2040, digital power needs alone would exceed all the power produced globally in 2010!
Industry 3.0 is the idea of using digital technologies in order to revolutionize the industrial sector. Automation will be an industry-wide phenomenon in the near future, but it is not just about machines replacing human labor. Industry 3.0 was more than just digitizing manual tasks; it’s about digitizing all stages of production and the “programming” of computers to perform tasks well beyond any human capabilities.
Industry 4.0: The Rise of IoT and Automation
As we move into the future and society becomes more and more digital, we need to start thinking about how we can shift our production needs to match this shift. Industry 4.0 is a term coined by German advisor Professor Harald Welzer in response to the digital transformation in the manufacturing sector. The thrust of industry 4.0 is the intertwining of the cyber world and the physical – coined cyber-physical convergence.
This convergence will be defined as the current trend of automation and data exchange in manufacturing technologies, we see advances in the Internet of things (IoT), cloud computing, cognitive computing or AI, and the rise of the smart factory, smart city, smart building, smart energy….and so on.
Industry 4.0 is a term for the next generation of manufacturing which takes advantage of cyber-physical systems and Internet of Things (IoT). It combines process optimization, production intelligence, and information technologies with smart automation and autonomous systems to create dramatic improvements in performance while simultaneously reducing costs, time-to-market, and energy consumption.
As with the first three revolutions, the arrival of Industry 4.0 will create fundamental shifts in business, our economy, and our social system. However, the speed and breadth of this forth revolution is unlike anything experienced previously. This current revolution consists of moving technology well beyond the digital age of information and data, to seeing the rise of machine learning and artificial intelligence. In many ways, this is clearing the way for some incredible advances never imagined before.
Industry 4.0 will fundamentally change our business landscapes, our educational institutions, our governments, and our personal lives. Everything from the Internet of Things, self-driving cars, robots/cobots, material science, energy production/storage, 3D printing, and quantum computing will clear the way for a futuristic world, and all coming at us at a breakneck pace.
As with the second and third revolution, this forth will intertwine technologies to create new opportunities, and previously unthinkable synergies. The first three revolutions changed how we did things, the fourth may change who we are!
Automation will go beyond simple task swapping to outpace the ability of a human to perform the job. Think about autonomous vehicles. We have seen the beginnings of this evolution but what will it lead to? Could we see a time when no one drives a car and that turning 16 here in the United States won’t mean much more than turning 13, 14 or 15? What about cities with no stop signs or stop lights? Will self-driving trucks rule the roadways and be loaded and unloaded totally by robots?
The Internet of things is the network of physical objects or “things” embedded with electronics, software, sensors, and connectivity to enable these objects to collect and exchange data.
IoT is changing the way we live, work, and interact with one another. It’s also transforming the world’s economic structure as well as our environment. The Internet of Things will affect many aspects of our lives including healthcare, transportation, energy consumption, education, and entertainment.
IoT is growing at such a fast pace, in the not-too-distant future, it may be more common for items to be connected than not. Will our running shoes have sensors that not only tell us when it’s time to get a new pair, they may measure our progress and provide emotional motivation through our earpieces as we jog down the trail!
The Internet of Things has become an integral part of modern life and it’s not just about connecting devices to networks anymore, but rather about connecting anything and everything in the physical world to vast networks.
With this becoming something that permeates our daily lives, it’s no wonder there are new and innovative ways to keep track of all the data. One of these innovations is the IoT Data Platform. It evolves the way we categorize and analyze data by combining networked devices and cloud-based software to create a system that can monitor anything from manufacturing machinery to human movement.
In recent years, the use of decentralized automation has increased, as more companies are looking to cut costs with smaller labor forces in manufacturing centers. This technology is also popular with manufacturers because it can be used to coordinate a variety of machines and devices that remotely control other equipment.
The intersection of AI and biology is another key component of Industry 4.0. Synthetic biology is on the horizon, and it will enable us to customize organisms by rewriting or even writing DNA. Setting aside the ethical concerns, this proves to be a stunning development for fields such as medicine and agriculture. It has an immediate effect on those sectors but also offers vast rewards for producers of biofuels in the future.
A lot of diseases like cancer and heart disease have a genetic factor in them. In other words, the ability to order a genetic make-up test routinely (through machines used in conventional diagnostics) will revolutionize personalized healthcare and make it more effective. Based on which genes are present in the tumor, doctors will know which cancer treatments will be more effective for a certain type of tumor. This allows them to make better decisions about their patients’ treatment plans.
3D Printing and gene editing will be used to produce pieces of living tissue that could be used for repairing damage or regenerating body parts. This process is called bioprinting. This has already been used to create skin, bone, heart, and vascular tissue. Eventually, printed human cells could even be created to provide transplant organs!
With the ability to edit biology, we can apply it practically to any type of cell. For example, we could create genetically modified plants or animals, or modify the cells of adult organisms including humans. Advances in gene editing have made it possible to edit genes and change their structure with relative ease. This precision is a major improvement from the 1980s when studying or changing genes was difficult. In fact, scientific progress is so fast that the limitations are no longer technical but legal, regulatory, and ethical.
Unlike the first three revolutions which spurred unintended consequences afterwards, this revolution is unique in the fact that these concerns are being brought up as the revolution starts, not as a complete afterthought. Many futurists began flagging those negative aspects of artificial intelligence before the actual revolution started. They argued that artificial intelligence will far surpass the human intellect, and the computers will rise to power, leaving us behind in their wake. The digital world may advance on its own and our very existence could be secondary. It’s a theory as of now, but in fact, in the future it may become much harder to distinguish between the physical and digital worlds.
Technology and culture writer Nicholas Carr states that the more time we spend immersed in digital waters, the shallower our cognitive capabilities become due to the fact that we cease exercising control over our attention: “The Internet is by design an interruption system, a machine geared for dividing attention. Frequent interruptions scatter our thoughts, weaken our memory, and make us tense and anxious. The more complex the train of thought we’re involved in, the greater the impairment the distractions cause.”
4.0 spurred new technologies that make it easier and faster for us to do things. It’s easier to make travel arrangements, it’s easier to publish a book (or an eBook), and we communicate with co-workers almost seamlessly from our kitchen, patio, or nearby coffee house. But it’s also clear that there are many things to do before we can be totally certain about the negative effects and implications of this constant, ever-connected society on our psyche. This means that the world is more likely to become even more polarized into factions of those who can adapt to change rapidly with less effort, and those who cannot.
Industry 5.0: Why We Believe It’s All About Sustainability
The word “Revolution” gets overused in our opinion. While there have been some true revolutions to take place in recorded history (American, Russian, and Chinese for example), the word seems to get tied to any event, or product that someone wants to hype up – the low-carb diet revolution, the smartphone revolution, or the ever-forgettable 80’s big hair revolution. While they all may have been trends, revolution is simply too big of a word!
For our purposes, we define “Revolution” as:
- A radical and pervasive change in society and the social structure, especially one made suddenly
- A sudden, complete, or marked change in something
When we apply this to the industrial revolutions, then they do make sense. Steam Engines were certainly a radical change, and once adopted, they encroached on many areas of our society. 2.0 brought us the harnessing of electricity and other mechanical advances. 3.0 took computers from hulking analog machines that had limited processing power, to digital circuits that can solve billions of calculations in a second. And finally, with the advent of machine learning and the inevitable artificial intelligence, we will see technology that begins to learn and advance with less human interaction or interference. Starting with 1.0 and advancing over a couple of centuries to 4.0, we have seen a substantial evolution of technologies.
Defining Industry 5.0
If you go on Google and search for the “fifth industrial revolution”, you will most likely be underwhelmed.
- You’ll see people working alongside robots and smart machines.
- You’ll see robots helping humans work better and faster by leveraging ‘advanced technologies’ like the internet of things and big data.
- You’ll see snippets about mass customization and personalization.
But these things have existed for years. None of these technologies are new. In fact, all these technologies became commonplace during industry 4.0. There is nothing revolutionary about IoT or humans working alongside robots. We are already over a decade into that movement. The Big Tech boom created machine learning capabilities that encompass all these industry 4.0 capabilities in both hardware and software.
When we see the term “Industry 5.0” tied to higher levels of AI and man-machine interface we must take pause. Because to us, this feels like Industry 4.1 or maybe Industry 4.5 at best. The true radical change in technological advancement is not there. Higher levels of computer interaction do not represent a true “revolution” in our eyes.
What we see as the next industrial breakthrough in not just technology, but also our way of thinking is – Sustainability! Sustainability will completely rewrite how business is done and how we will live our lives. It changes finance, operations, sales, supply chains, marketing, and the C-suite just to name a few.
Honestly, it will change every aspect of business as we know it today. We will center all activities and production around its effect on us and our planet. Gone will be the days of altering our environment for the worse in the name of progress. Sustainability will become a natural part of our personal and corporate existence.
Business leaders are always trying to predict the innovations that will put them on the bleeding edge of their industries. But now that Industry 4.0 has played out, people are asking themselves, what’s next?
This brings up the context of our argument that Industry 5.0 is not simply more, faster AI, but rather a true revolution that significantly changes business and society. It will truly reshape business, society, and our personal lives. While we are at the very beginning of this era; the sustainable revolution will be felt for decades to come, just like the first four revolutions. So, in turn, we propose the next true revolution.
The Fifth Industrial Revolution (Industry 5.0) – A Bridge Between Capitalism and Sustainability
The previous four industrial revolutions helped define the word capitalism. The advancements gave rise to great fortunes and launched our economy into the pattern of consistent growth we see today. Some of our peers caution that if sustainability were a corporate division (and in some cases today it is), that it would be a cost center and not a profit center. While we agree that there are investments to be made and of course some costs to incur. The act of becoming more sustainable will lead to greater efficiency, productivity, and profit.
Technical innovations will come as fast as in the previous four, most likely even faster. These innovations will be around energy use, land/air/water conservation, materials, production methods and procurement protocols to name a few. However, innovation alone will not get us to the necessary sustainable levels to save the planet. It will require regulations, collaboration and assigning a “value” to carbon and other waste materials.
Sustainability is arguably the only path to longevity in both the public and private markets. In a previous article, we talked about how sustainability is the foundational investment thesis of the future. In it, we discuss how an investment thesis focused on sustainability creates a framework for long-term growth.
So, in previous revolutions, there were clear catalysts for the technology “booms”. Industry 1.0 was spurred by the single invention of the steam engine and its subsequent advances. 2.0 came about as we discovered that mechanical devices could aid in human advancement and the fact that technology would in fact breed more/higher technology (hence the inventions came fast and furious). 3.0 started because of the electrical computational advances of the mid-20th century – suddenly we were able to perform computerized tasks far faster than any human’s ability. Finally, 4.0 was the dawning of incredible amounts of digital data and information used to augment, mimic, or even exceed the capabilities of human intelligence. So, what will drive capitalism towards 5.0?
In a word, “self-awareness”. We are seeing the culminating effects of all this technology and what it has done to our planet and our species. We feel the anxiety of our overcrowded inner cities. We see what happens to the environment when we displace green spaces for industrial expanses. Our minds work overtime to keep up with the parahuman pace that computers have set; and we now can imagine a day when computers take over society because they’ve advanced so far as to make humankind superfluous.
The new era of industry 5.0: we all feel it.
We now thirst for an era of society that many consider long gone. When our forests outnumbered our parking lots. When the landscape was not dominated by electrical towers and roadways. When our air and waterways were not contaminated; and when other humans had more interaction with each other, than their handheld personal devices.
These “gaps” in what our world looks like today, and the vision of what we want it to look like tomorrow, are the opportunities for a capitalistic system to fill. Most, if not all of capitalism is driven by meeting unmet needs and unattained wants. The needs and wants of a society yearning for a more sustainable outlook are overwhelming. New products, new services, new verticals, and new supply chains will sprout up to meet all of these and more. The financial opportunity will eclipse anything we have witnessed to this point.
Personally, we’re focused on building out a new supply chain (using bio-products such as hemp) in America to make sustainable materials affordable and available. Right now, one of the biggest laggards in sustainability is the ability for manufacturers to access reliable supply chains of biobased raw materials. Previously, this has meant that manufacturers have been reliant on synthetic, mined, and petroleum-based goods.
Fortunately, this is changing in real-time. Our supply chain will provide hundreds of millions of pounds of hemp materials to help manufacturers develop stronger, lighter, cheaper, and more sustainable end products. Our goal is to replicate the supply chain we’re building dozens of times both domestically and internationally.
One of the questions our team is asking ourselves is, “how can our mission and vision help to propel the fifth industrial revolution?” Since our focus is on creating reliable supply chains of biobased materials, how can our business usher in the next generation of sustainable corporations? The idea that sustainability will drive innovation and profitability is not a new assumption. The most innovative products and services are the ones that upgrade the long-term outcomes and capabilities of companies and consumers.
As we move forward in our quest, we see more and more companies trending in the same direction as us. Will this work, help save the planet? Yes. Will this work advance our society? Yes. Will this work be personally rewarding? Absolutely, but also this work will be financially rewarding, and that is the driver that will fuel the revolution.
How and When will Industry 5.0 Come About?
When will the next industrial revolution start? Well, some say the sustainability revolution is already here, and we see more energy dedicated to the cause with each passing day.
The world is changing at a rapid pace, and we have begun to realize the devastating effects of climate change. Many countries have already taken steps to shift towards sustainable energy production and consumption, driven by the Paris Agreement on Climate Change.
Ratified in 2016 by 55 countries, the Paris Agreement on Climate Change, or sometimes referred to as the Paris Climate Accord, sets a long-term temperature goal to keep the rise in mean global temperature below 2 °C (3.6 °F). Preferably, the accord seeks even tighter standards of increases below 1.5 °C (2.7 °F), which is the number that is published most often. In 2021, 193 members of the United Nations Framework Convention on Climate Change (UNFCCC) were now parties to the agreement.
The accord also seeks to reduce greenhouse gas emissions. To reach the stricter 1.5 °C goal, estimates say we must reduce our emissions by 50% by the year 2030. These numbers, not coincidentally, align with pre-industrial levels.
Even though agreements were signed prior to the Paris Climate Accord, for example the Kyoto Protocol in 1997, most agree that the global effort commenced in 2016 with the Paris Accord. Whatever the year, 1997, 2016 or 2021 we feel that the “When” is “Now”.
How will it start? Simple – pressure.
Social pressure to be more exact. Some of this pressure is coming from individuals and communities of like-minded environmentalists. For decades, conservational evangelists have been campaigning about the negative effects of human activity on our planet. Let’s be clear, humans have been affecting the planet for hundreds of thousands of years. It’s the recent combination of humans and high technology that have sent the negative effects into the stratosphere (literally) over the last 100 years.
This rapid advancement in technology has spurred an equally rapid decline in our environment. Previously, the Earth’s natural defenses could outpace our destructive tendencies, today they cannot, and many of our peers have known this for a while. The good news is that companies are starting to wake up to the cause.
Corporate pressure will come from speculation, competition, and regulation.
The Securities and Exchange Commission (SEC) has proposed new rules that would require public companies to report detailed accounts of their climate-related risks, greenhouse gas emissions, and ultimately their net-zero transition plans. This will leverage companies into making sustainability a core consideration for their businesses. Not just because the regulations exist, but because investor speculation will favor those who demonstrate higher levels of corporate responsibility, and the competitive landscape will shift to align with customers’ attitudes towards environmental causes.
Potential business advances based on sustainability include material savings and cost reductions. However, to achieve these, first-cost investments will need to be wagered. Luckily, we may see regulations and oversight on sustainability reporting soon via the SEC’s proposed climate disclosure rules.
Estimates are that over $5 trillion will be invested annually in sustainability-related businesses and activities. This could prove a huge shift in investor sentiment when it comes to companies and their commitments to a better environment. This trend will not be limited to investors, but consumers and employees as well. The bottom line is that if companies want to thrive in the next few decades, they will have to have a keen focus on their sustainability strategies and implementations.
Outside of the U.S., there are similar actions taking place. The EU, Japan, Hong Kong and others are moving ahead with like measures. The Task Force on Financial Disclosures created voluntary guidelines for sustainability reporting in 2021 and over 2600 companies adopted them. So, we see this revolution going global from the start, far beyond the boundaries of the U.S., however the plans here will jump-start sustainability-related reporting by publicly traded firms.
New SEC goals
The new SEC plan would require disclosure in three main areas:
- Material Climate Impacts
- Greenhouse Gas Emissions
- Targets and Transition Plans
Material Impacts center on physical risks like fires, floods and other events that are triggered by weather change, also transition risks associated with market changes, technology and/or regulatory conditions. Companies would be required to report on the impacts, both financial and operational.
Greenhouse gas emissions would be centered around Scope 1 and 2, however reporting on Scope 3 emissions will be part of the structure in 2024. How do the Scope 1, 2, and 3 break down?
- Scope 1 emissions are direct emissions from owned or controlled sources.
- Scope 2 emissions are indirect emissions from the generation of purchased energy.
- Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
These emissions include those from product use and disposal, as well as those from the production and distribution of products.
What Does it Mean to Manage Scope 3 Carbon Emissions and Why are they more Challenging?
Scope 3 Emissions are not the same as Scope 1 and 2 emissions. Scope 1 and 2 emissions happen within our organization or supply chain, while scope 3 emissions come from external sources. For example, it’s possible for an organization to purchase paper for printing purposes that comes with a high level of scope 3 emissions because it was made in a way that led to significant resource depletion.
Managing scope 3 emissions is about finding ways to reduce their impact on the environment through simple steps like buying responsibly sourced materials or switching out energy providers who offer renewable energy only plans. All of these reduce the amount of carbon in the cycle.
Measuring Scope 1 and 2 are straight forward, however the Scope 3 emissions are a much bigger challenge for companies. Scope 1 and 2 are more direct in nature and thereby a simpler calculation. Scope 3 on the other hand will rely on data from suppliers, suppliers of suppliers and so on. With every subsequent level of data, it is expected that the results will be less exact. Also, with “chains” of data points, double counting of the information will be more likely. The SEC is keenly aware of this and expects it to take a few years to iron out the reporting details on Scope 3.
The third area of focus is Targets and Transition Plans. Under this section, companies will need to report any targets around emissions reductions, energy usage, nature conservation plans, and revenues from low-carbon products. The reporting will need to outline the transition plans to meet each of these. This will include the use of renewable energy sources, carbon offsets and the details on any internal pricing for carbon, such as how the price was calculated and what projects will be affected (we anticipate this trend will grow, along with the price per metric ton of carbon).
Timing on the disclosures for large companies is filing in FY 2024, meaning that the data collected would be in FY 2023. Smaller firms will have an additional year to report. Also, Scope 3 emissions will be pushed back one year, as they are much more difficult to quantify.
Most companies are aware of the traditional sustainable resources at their disposal.
- Energy – solar, wind, and waste to energy conversion plants.
- Materials – industrial hemp, flax, cotton, and other agricultural goods.
- Recycling – plastic, paper, metals, woods, rubbers, and other raw materials.
But, in today’s world, our sustainability efforts need to transcend energy to include materials, and recycling. These new disclosure requirements will mean that Industry 5.0 will get a jump start through regulation. Unlike any of the previous eras, this one seems to have an intentional kickoff.
Industry 5.0 Will Force Us to Shift Our Thinking Processes
The sustainable revolution is bigger than any one company, process, or decision-maker. Sustainability is the single most important initiative that can help us create a desirable environment for all living things for generations to come.
The fifth industrial revolution will be focused on sustainable decision-making throughout the value chain. Today, most large companies have net-zero carbon targets by 2050. With the rise in companies focused on becoming carbon neutral, there has been increased attention on things like carbon sequestration, ESG investing, and carbon-negative materials.
You may be wondering, how can companies become more sustainable beyond their usage of green energy, materials, and recycling programs?
- Governance – creating sustainable management structures with succession plans that embed diversity into the organizational chart.
- Philanthropy – contributing to society’s social, philanthropic, charitable, and activist initiatives through volunteering.
- Compensation – developing comp structures that will pay employees above a living wage and allow them to explore their passions in the context of the work they’re doing.
- Ecosystem Involvement – embedding the workforce into events and organizations that promote a thriving community.
- 3rd Party Vendor Accountability – validating that suppliers are acting responsibly in how they procure things like materials and labor.
- Life Cycle Analysis – making sure that a company’s carbon footprint is quantified so that measures can be actively taken to reduce it.
These are just a few of the opportunities companies can seize as they seek to go beyond innovations in energy, materials, and recycling.
Throughout the years, organizations and mandates have been created that ensure companies are following sustainable business practices.
- SDGs – United Nations Sustainable Development Goals
- GMP – Good Manufacturing Practices
- ISO – International Organization of Standardization
- ASTM – American Society for Testing and Materials
Because these types of standards have become commonplace throughout industries, companies are operating with the same guidelines. These are the rails that allow companies to speak the same language and move toward the same outcomes.
There are also forms of self-regulation that have been developed to align company initiatives with global initiatives.
- CSR (Corporate Social Responsibility) – According to Investopedia, the term corporate social responsibility (CSR) refers to practices and policies undertaken by corporations that are intended to have a positive influence on the world. The key idea behind CSR is for corporations to pursue other pro-social objectives, in addition to maximizing profits. Examples of common CSR objectives include minimizing environmental externalities, promoting volunteerism among company employees, and donating to charity.
- EHS (Environment Health and Safety) – According to Wikipedia, Environment, health, and safety (EHS) is an acronym for the methodology that studies and implements the practical aspects of protecting the environment and maintaining health and safety at occupation. In simple terms it is what organizations must do to make sure that their activities do not cause harm to anyone.
Where Do We Go from Here?
Becoming a sustainable planet by reducing our carbon footprint cannot be reduced to one initiative. In fact, it’s unrealistic to think we can use reductionistic methodologies to solve holistic problems. There is no one law, mandate, or corporate initiative that can save our planet. It’s a collective effort of millions of companies and billions of people taking little steps every day. To say it in other words – it will take a revolution to accomplish all of these goals.
Industry 5.0 may be the first revolution that begins to proactively cure the unintended ills of the first four. We will see regenerative farming come back into vogue, companies will value the emotional currency of their employees as much as their profits, and humanity may begin to put its self-centered goals aside for more altruistic values. Therefore, sustainable decision-making throughout the value chain is foundational to our planet’s ability to thrive into the future.
This is the outline for Industry 5.0 in our eyes; a true revolution that will change all of our lives, the way we work, and the way we interact with Mother Earth. In fact, avoiding the issues confronted in this next revolution could certainly lead to our extinction and the eventual destruction of our planet.
This is why we feel so strongly about our views on 5.0, and why we have ingrained it completely into our business model; and we aren’t the only ones. Cultural norms are shifting, and we as a species are fundamentally tackling the most important issues of our lifetime. Individuals, communities and now corporations are shifting their views and embracing sustainability. What a revolutionary time to be alive!
Join us as we make a world out of hemp.
The Whitehouse announces Industry 5.0: biomanufacturing
Today, the Whitehouse announced a major initiative to drive local farming supporting local manufacturing via biomanufacturing.