What Is SX? A Simple Guide to the Differences Between SX, DX, and GX, and the Benefits of SX
Many companies have made significant progress in Digital Transformation (DX), yet their sustainability initiatives are often not fully integrated into business management and organizational transformation. In practice, environmental initiatives, information disclosure, and operational efficiency improvements are frequently managed separately, creating a disconnect between corporate strategy and day-to-day business operations. Against this backdrop, Sustainability Transformation (SX) has emerged as an increasingly important approach for businesses.
What Is SX?
SX stands for Sustainability Transformation, a management transformation approach that aims to balance a company's sustainable growth with the sustainability of society. Rather than simply strengthening environmental initiatives, SX encourages organizations to reassess their business portfolio, investment decisions, information disclosure, and business operations in response to changes in society and the market.
According to Japan's Ministry of Economy, Trade and Industry (METI), the core principle of SX is to align the sustainability of society with the sustainability of businesses. In other words, SX aims to create a virtuous cycle in which delivering long-term value to society ultimately strengthens a company's earning power and enhances its corporate value over the medium and long term.
Why Is SX Gaining Attention?
The growing focus on SX is driven by changes in the external environment surrounding companies.
SX is gaining attention as the business environment continues to evolve. Companies are facing new challenges such as responding to climate change, restructuring supply chains, and addressing the growing importance of human capital and non-financial information. In this changing environment, short-term operational improvements alone are no longer sufficient.
In addition, investors and business partners are no longer focused solely on a company's sales and profits. They are increasingly evaluating how businesses can sustain and enhance their corporate value over the medium and long term. As a result, sustainability can no longer be treated as a responsibility limited to the CSR department; it must be integrated into corporate strategy and business operations.
Differences Between SX, DX, and GX
SX, DX, and GX all represent different forms of transformation, but each has a distinct focus.
DX
Digital Transformation (DX) is the process of leveraging data and digital technologies to transform products, services, business processes, and organizations in order to enhance competitiveness. For example, DX goes beyond simply digitizing paper-based workflows. It involves redesigning the entire order management process, improving customer service, and accelerating decision-making. This holistic approach is at the core of Digital Transformation.
GX
Green Transformation (GX) is a transformation focused on decarbonization and the transition to sustainable energy. Typical examples include the adoption of renewable energy, the implementation of energy-efficient equipment, and the visualization of greenhouse gas emissions. These initiatives enable companies to continue their business operations while reducing their environmental impact.
SX
SX is a higher-level management concept that encompasses both DX and GX, providing a comprehensive framework for transforming the entire organization. Simply put, DX serves as the means of driving transformation through digital technologies, GX focuses on environmental transformation, and SX connects both approaches to corporate strategy in order to create long-term value across the business.
Benefits of Implementing SX
Enhancing Long-Term Corporate Value
Implementing SX enables companies to make management decisions that consider both long-term business growth and societal expectations. This helps reduce the risk of falling behind market changes while making it easier to identify new business opportunities and emerging market demands.
Facilitating Communication with Stakeholders
SX makes it easier for companies to explain to customers, investors, financial institutions, and employees why certain investments are being made and what long-term goals the business aims to achieve. As a result, it helps build trust and foster alignment both inside and outside the organization.
Clarifying Priorities for DX and GX
When DX and GX are implemented as separate initiatives, there is a risk that system implementation or environmental measures become goals in themselves. By adopting an SX perspective, companies can better identify the initiatives that truly matter and determine the appropriate order in which they should be pursued to maximize long-term value.
Key Considerations for Promoting SX
Avoid Letting the Concept Remain Only a Slogan
Because SX is a broad concept, it can easily become nothing more than a corporate slogan. Rather than simply including it in corporate philosophy, companies should translate it into concrete business challenges, risk management measures, KPIs, and operational frameworks. Otherwise, it will be difficult to put SX into practice across the organization.
It Takes Time to Deliver Results
SX is not a short-term initiative. It often involves developing new business models, redesigning business processes, improving information management, and strengthening human resource development. As a result, tangible outcomes require time to emerge. Evaluating SX solely on short-term performance may cause initiatives to lose momentum before delivering meaningful results.
Cross-Functional Collaboration Is Essential
Successful SX requires close collaboration across multiple departments, including corporate planning, business units, IT, finance, human resources, and procurement. If each department operates with different objectives, data standards and decision-making criteria become fragmented, making it difficult to drive SX effectively across the organization.
A Practical Approach to SX for Small and Medium-Sized Enterprises
SX is not limited to large corporations. In fact, small and medium-sized enterprises (SMEs) have even greater reasons to prepare early in order to respond to customer requirements, labor shortages, and rising operating costs.
The first step is to identify the company's key business challenges, such as increasing energy costs, overreliance on individual employees, supply chain requirements, or recruitment difficulties.
Next, companies should determine which issues can be addressed through DX and which require GX initiatives. By evaluating how these efforts contribute to long-term corporate value, organizations can develop a clearer SX strategy.
In practice, companies can start with manageable initiatives such as:
- Organizing internal data, including non-financial information.
- Visualizing high-impact areas such as electricity consumption and paper-based operations.
- Digitizing core business processes such as order management, inventory control, and cost management.
- Establishing policies and performance indicators that can be shared with customers and business partners.
How SMILE Can Help
Successfully implementing SX requires more than understanding the concept—it requires translating strategy into business processes and systems. Activities such as analyzing existing workflows, improving data management, building shared operational platforms across departments, and implementing systems step by step are all practical areas where DX and SX intersect.
SMILE supports phased implementation, from clarifying business challenges and evaluating systemization to development and operations. Companies considering DX or the use of AI are encouraged to start with small-scale business improvements.
Summary
SX is a management approach that places sustainability at the core of corporate strategy to create long-term value.
Although it is often discussed alongside DX and GX, each concept serves a different purpose: DX focuses on digital transformation, GX emphasizes environmental transformation, while SX provides the overarching framework that aligns these initiatives with overall business transformation.
Going forward, companies will need to make management decisions that balance operational efficiency with social expectations and long-term business sustainability. A practical first step is to identify current business challenges, implement incremental improvements, and gradually develop a comprehensive transformation strategy.
Start a Consultation on Advancing GX and DX
We work with you to design an approach tailored to your company’s situation, from assessing the current state to implementing systems and improving operations.
- You can clarify current operational and data-related challenges.
- You can design implementation steps that fit your company's structure.
- You can also build a framework that remains easy to operate after implementation.
- You can use data to verify results and make improvements.
- You can start exploring AI and IoT applications in the areas where they are most needed.
