# Industry 5.0 – Why Sustainability Will Be The Next Revolution

> Industry 5.0 is not more AI or IoT — it is the sustainability revolution. SEC climate disclosure, Scope 1/2/3 reporting, and consumer pressure are reshaping every business in the value chain.

*Published 2022-08-21 · tags: industry-5-0, sustainability, esg, carbon-credits*

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## 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.

Not everyone agrees with the definitions of "Industry 1.0," "2.0," and so on. For this article, we focused on the truly 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 to 10,000 BC. The hunter-gatherer days, when technology was defined by bows, arrows, spears, fires, containers, and huts.
- **The Neolithic Era** — 10,000 BC to 1760. The agricultural revolution, where we domesticated plants and animals and started to build communities.

During the Neolithic era, humans went through many phases — philosophical revolutions, religions, dark ages, renaissances, urbanization, and the age of enlightenment. But the late 1700s became the inflection point that changed the human race forever. Each industrial revolution created a fundamental shift in how businesses functioned:

- 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 the technologies that came with them:

- **First** (1780s) — the steam engine.
- **Second** (1870s) — telephone, light bulb, combustion engine, airplane, assembly line.
- **Third** (1970s) — the personal computer, internet, semiconductors.
- **Fourth** (2010s) — machine learning, quantum computing, CRISPR, artificial intelligence.

Our argument is that Industry 5.0 cannot be simply an elevation of 4.0 (digitization), but something far more progressive — the rise of sustainability as the defining force of business and society.

## 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 — 1698 when Thomas Savery invented the steam pump; 1807 when Robert Fulton's steamboat made its inaugural voyage up New York's Hudson River; and 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 and were driven by a water wheel. The downside was that power was regulated by mother nature herself. The invention of the steam engine meant that the power source could now be located virtually anywhere and be much more consistent.

Watt's advancement of the jacketed piston in 1778 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 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. Smaller, more efficient engines led to mechanized textile mills, steamboat power, and eventually railroads. Without steamboats and railroads, America would have had a hard time expanding beyond the densely populated Eastern Seaboard.

### 1.0 Unintended Consequences

While mechanization provided a higher-powered economy, some consequences were dire. Cargo by steamboat was largely food and people — and tragically, the Mississippi River carried many unwilling passengers in the internal slave trade. Workshops sprang up in cities and the modern "urban" area was created. While some enjoyed newfound wealth, most were subjected to poverty and intolerable living conditions on a scale never seen before.

## Industry 2.0: The Industrial / Mechanical Revolution

The second revolution would see the rise of a plethora of industries led by steel, oil, and electricity. Huge factories were built. Electricity meant the workday could start before sunrise and end after sunset. Newfound machine output created the era of consumerism — purchasing wants, not just needs.

Steel, refined oil, and electricity converged. The Bessemer Process made steel pure, cheap, and ubiquitous — it built the bridges, skyscrapers, cars, ships, and railroads of the modern world. In 1859, the Pennsylvania Rock Oil Company hit a reserve at 60 feet below ground — the first oil recovered by drilling — and by 1901 there were 1,500 registered oil companies in the U.S. Originally a Kerosine byproduct, gasoline became the oil companies' golden goose.

Faraday's discoveries of electromagnetism birthed the science of power conversion and generation. Electric generators came on the scene in the 1870s. Steel + oil + electricity gave the world automobiles, elevators/skyscrapers, telegraph and telephone, planes, barges, drilling/mining, and diesel locomotives. Electronics traces back to Fleming's vacuum tube in the early 1900s — the path from there leads to radio, TV, and computers.

The Industrial Revolution brought a huge social change as people no longer had to rely on each other as much for survival, but instead on machines and their own skills. Factories meant workers needed to live nearby; housing was a reaction to manufacturing centers. Police, fire, and sanitation became commonplace city departments only because the rising need was crucial to prevent chaos. By shifting to a consumer economy and learning to more efficiently turn raw materials into finished products, Industry 2.0 set the stage for ever-faster, ever-expanding, leapfrogging technologies.

## Industry 3.0: The Computer / Digital Transformation

The third industrial revolution centers around modern computers, and more specifically the shift from analog to digital technology. Digital communications differ from analog in that exact copies of information can be made — series of ones and zeros, copyable indefinitely with no loss of fidelity.

While Fairchild Semiconductor began to flourish in Silicon Valley in the late 1950s, the true digital revolution was accelerated by the invention of the microprocessor. Most consider the Intel 4004, released in 1969, as the first commercially viable microprocessor. The microprocessor could be programmed to perform multiple tasks, giving rise to the true digital age.

This revolution led to the home computer, cell phone, MP3 players, digital camera, computer games, and the iPhone. Digital technology led to the interconnected network of home and business computers — the internet — which rose from essentially zero household penetration in 1990 to over 65% in the U.S. by 2000.

The advantages clearly favor businesses and individuals who adopt and adapt to change. Other consequences may not have been so positive — the workload and rate of change today surpasses anything we knew just 30 years ago. As we stay connected 24/7, some choose to do so, and we begin to pay an emotional price. We are also losing jobs associated with tasks that are now automated — and "fake news" didn't exist a few years ago. Finally, there's the issue of sustainability: a study released stated that by 2040, digital power needs alone would exceed all the power produced globally in 2010.

## Industry 4.0: The Rise of IoT and Automation

Industry 4.0 is the intertwining of the cyber world and the physical — coined cyber-physical convergence. Industry 4.0 takes advantage of cyber-physical systems and the Internet of Things to combine process optimization, production intelligence, and information technologies with smart automation and autonomous systems. The convergence will create dramatic improvements in performance while reducing costs, time-to-market, and energy consumption.

The first three revolutions changed how we did things; the fourth may change who we are. Automation goes beyond simple task swapping to outpace humans entirely — autonomous vehicles, robots/cobots, smart factories, smart cities, smart energy. The intersection of AI and biology, with synthetic biology and gene editing, will enable us to customize organisms by rewriting or even writing DNA — with sweeping implications in medicine, agriculture, and biofuels.

Unlike the first three revolutions, which spurred unintended consequences afterwards, this revolution is unique in that concerns are being brought up *as* the revolution starts. As Nicholas Carr observed: "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."

## Industry 5.0: Why We Believe It's All About Sustainability

The word "revolution" gets overused. For our purposes, we define it as a radical, pervasive change in society and social structure — a sudden, complete, marked change in something. Industry 1.0 through 4.0 each fit. With the advent of machine learning and the inevitable artificial intelligence, we see technology that begins to learn and advance with less human interaction.

### 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 snippets about mass customization and personalization. But these things have existed for years. None of these technologies are new. They became commonplace during Industry 4.0.

When we see the term "Industry 5.0" tied to higher levels of AI and man-machine interface, we must take pause. To us, this feels like Industry 4.1, or maybe 4.5 at best — not a true radical change.

What we see as the next industrial breakthrough — in not just technology, but 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. We will center all activities and production around their effect on us and our planet.

### A Bridge Between Capitalism and Sustainability

The previous four industrial revolutions helped define the word capitalism. Some peers caution that if sustainability were a corporate division, it would be a cost center, not a profit center. While there are investments to be made and costs to incur, we believe the act of becoming more sustainable will lead to greater efficiency, productivity, and profit.

Technical innovations will come fast — around energy use, land/air/water conservation, materials, production methods, and procurement protocols. However, innovation alone will not get us there. It will require regulations, collaboration, and assigning a "value" to carbon and other waste materials.

### The new era of Industry 5.0: we all feel it

We now thirst for an era many consider long gone — when our forests outnumbered our parking lots, when our air and waterways were not contaminated, when humans interacted with each other more than with handheld personal devices. These gaps between today's world and the vision of tomorrow are opportunities for capitalism to fill. Most of capitalism is driven by meeting unmet needs and unattained wants — and the financial opportunity will eclipse anything we have witnessed.

### How and When will Industry 5.0 Come About?

When will the next industrial revolution start? Some say the sustainability revolution is already here. Many countries have taken steps toward sustainable energy, driven by the Paris Agreement on Climate Change, ratified in 2016 by 55 countries and signed by 193 UNFCCC parties by 2021. The accord seeks to keep global temperature rise below 1.5 °C — requiring emissions reductions of 50% by 2030.

### How will it start? Simple — pressure

Social pressure first: conservation evangelists, like-minded environmentalists, and decades of campaigning. Corporate pressure follows: speculation, competition, and regulation. The Securities and Exchange Commission has proposed rules requiring public companies to report their climate-related risks, GHG emissions, and net-zero transition plans. Estimates are that over $5 trillion will be invested annually in sustainability-related businesses and activities. The EU, Japan, Hong Kong, and others are moving ahead with similar measures.

### New SEC goals

The new SEC plan would require disclosure in three main areas:

1. **Material Climate Impacts** — physical risks (fires, floods, weather) and transition risks (markets, technology, regulation).
2. **Greenhouse Gas Emissions** — Scope 1 (direct, owned/controlled), Scope 2 (purchased energy), Scope 3 (value-chain, both upstream and downstream).
3. **Targets and Transition Plans** — emissions reductions, energy usage, conservation, and revenues from low-carbon products.

#### What does it mean to manage Scope 3 emissions?

Scope 3 happen outside our organization or supply chain. Managing them is about reducing impact through simple steps — buying responsibly sourced materials, switching out energy providers for renewable-only plans. Measuring Scope 1 and 2 is straightforward; Scope 3 is much harder, relying on data from suppliers, suppliers' suppliers, and so on. Double counting becomes likely. The SEC is keenly aware and expects it to take a few years to iron out the reporting details on Scope 3.

Timing on disclosures: large companies file in FY 2024 (data from FY 2023). Smaller firms get an extra year. Scope 3 emissions are pushed back one year given their difficulty.

Most companies are aware of the traditional sustainable resources — energy (solar, wind, waste-to-energy), materials (industrial hemp, flax, cotton), and recycling (plastic, paper, metals, woods, rubbers). Today's sustainability efforts need to transcend energy to include materials and recycling. Industry 5.0 will get a jump-start through regulation. Unlike previous eras, this one has an intentional kickoff.

### Industry 5.0 Will Force Us to Shift Our Thinking

The fifth industrial revolution will be focused on **sustainable decision-making throughout the value chain**. Beyond green energy, materials, and recycling programs, sustainability extends to:

- **Governance** — sustainable management structures with succession plans embedding diversity into the org chart.
- **Philanthropy** — contributing to social, charitable, and activist initiatives through volunteering.
- **Compensation** — pay structures above a living wage that allow employees to explore their passions in their work.
- **Ecosystem Involvement** — embedding the workforce into events and organizations that promote a thriving community.
- **Third-Party Vendor Accountability** — validating that suppliers act responsibly in materials and labor.
- **Lifecycle Analysis** — quantifying carbon footprint so measures can actively reduce it.

Standards-bearing organizations and mandates: SDGs (United Nations Sustainable Development Goals), GMP (Good Manufacturing Practices), ISO, ASTM, plus self-regulation frameworks like CSR (Corporate Social Responsibility) and EHS (Environment, Health, and Safety).

## Where Do We Go from Here?

Becoming a sustainable planet by reducing our carbon footprint cannot be reduced to one initiative. 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 why we feel so strongly about our views on 5.0 — 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.

— The Carbon Farming Trust

## UPDATE: The Whitehouse announces Industry 5.0: biomanufacturing

On 2022-09-12, the [Whitehouse announced a major initiative](https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/12/fact-sheet-president-biden-to-launch-a-national-biotechnology-and-biomanufacturing-initiative/) to drive local farming supporting local manufacturing via biomanufacturing.

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Source: https://carbonfarmingtrust.com/sustainability-news/industry-50-a-sustainable-future
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