A Stepping Stone Towards a Sustainable Company: Gathering the Right Data
As a Senior Management Consultant at IBM, Anja Juhl Jensen has been working with digital innovation and disruptive technologies for more than 16 years. Currently, she supports IBM customers in the use of technologies such as artificial intelligence and blockchain to set a sustainable course for their organization. In an interview with Supertrends, she calls attention to an essential step in achieving a sustainable organization: proper data collection and analysis.
Anja Juhl Jensen has extensive experience working with disruptive technologies that drive sustainability. Other areas of expertise include innovation, cognitive solutions, SAP software, compliance, and security. Currently, Ms. Jensen is involved in projects focused on gathering data and develop real-time sustainability reports as well as product modernization using artificial intelligence, image recognition, and machine learning.
With increased support from governments and socio-environmental activists, sustainability is now part of the mindsets of many businesses and consumers. Defined as an integrated effort to balance economic profit, the environment, and society’s wellbeing, sustainability has become a gold standard in the last decade.
Driven by increasingly stronger regulations, by the desire to boost their public image, or simply because of genuine concern for the future of humankind, companies have started to look into strategies to improve their environmental and social impact.
The current state of affairs
Despite growing interest in sustainable business goals, companies’ attitudes and interests towards this issue vary significantly. Jensen highlights three main categories:
The “business-as-usual” firms are on one side of the spectrum. They do the bare minimum and meet only the most stringent regulations. In their case, sustainability is a PR exercise: Sustainability-related terms show up on their website or in glossy reports, without any real effort to make them a reality. This type of company has no genuine interest in changing its business model to become more sustainable.
“Optimizers” represent a different approach on the spectrum. Setting sustainable-related goals is seen as a means to optimize and improve processes and operations within the organization. These companies have already developed a sustainability strategy and started gathering data. Often, however, this is done manually and unsystematically. These companies have the right intentions but lack the necessary knowledge base to address sustainability issues.
Finally, the “re-inventors” are determined to substantially change their business model and develop new, sustainable products or services. Various surveys show that these companies have already started getting value back from the investment in sustainability and re-invention of the company.
Companies’ attitudes towards the sustainability challenge
However, optimizing a business or re-designing corporate strategy requires sound data and cannot be done without a thorough analysis of the company’s current environmental, social, and economic impact.
Moreover, an increasing number of European regulations (e.g., Product Environmental Footprint (PEF) or EU Taxonomy) stipulate clear conditions that companies must meet to be qualified as environmentally sustainable. To prove that they meet these criteria, companies need access to proprietary data that spans a large spectrum.
The common issue – lack of consistent, comprehensive data
According to the Greenhouse Gas Protocol (GHG) Protocol, which sets global standardized frameworks for greenhouse gas emissions, corporations are required to monitor and report three major factors: direct emissions – fuel burned for the company’s direct activities (Scope 1); indirect emissions – resulting from the consumption of purchased energy, steam, heat, and cooling (Scope 2); and emissions that occur in the value chain of the reporting company (Scope 3).
As Jensen notes, today most of this information is gathered manually, usually once a year, when companies release a sustainability report. Besides being time-consuming, the process also lacks transparency in terms of data provenance or calculation. Moreover, transferring and converting information between various systems is slow and difficult, making data mapping across specific sites, brands, and geographies a cumbersome effort.
The problem becomes even more complex when it comes to gathering data from suppliers. For example, a dairy producer who obtains milk from over 12,000 farmers needs to know the footprint of each liter of milk acquired. Getting this information from the suppliers can become very difficult if they don’t monitor sustainability parameters or use a different reporting system. Currently, companies work with industry averages, but in the future, the need for exact data will significantly increase.
Despite being perceived as an onerous process, gathering this type of data can also be beneficial for the company, as Jensen points out:
“When companies start collecting data dynamically and automized, they can start analyzing it across the whole company. This way, they can immediately see where resources are wasted, where there are gaps in the process, what could be optimized, and where their emissions are coming from.”
However, based on the old principle “You get what you measure”, companies need relevant inputs, actionable metrics, and robust analytics to get an overview of all sustainability areas and make informed decisions.
Technology – a powerful sustainability enabler
New technologies have the potential to enable, facilitate, and speed up the data gathering, analysis, and reporting processes, at the same time making them more reliable and transparent. Digital platforms can integrate data related to a wide range of sustainability initiatives (e.g., water and energy consumption, sources of raw materials, etc.) and provide the necessary insight for business decisions and operational plans.
“Some might see all the new regulations coming as a constraint for companies. This is the case to a certain extent. However, limitations also spark innovation. I strongly believe that we will see an acceleration of innovations based on the new insight companies get from their data when they are forced to start reporting on it.”
Through its smart, connected sensors, the Internet of Things enables access to an increasing amount of data. This way, companies can monitor their emissions in real time. Due to its use of distributed ledgers and its shared record of transactions, blockchain technology becomes an essential tool in monitoring the sustainability results all through the supply chain. Ultimately, artificial intelligence and machine learning can analyze the data and identify potential improvement areas.
Meeting sustainability requirements brings value for organizations
By using an integrated, automated system of gathering and analyzing sustainability-related data, companies have the possibility to increase their sustainability ratings, lower the cost of operations, and increase their efficiency. Jensen is convinced that such platforms can also lead to potential new sources of revenue, easier talent acquisition and staff retention, and improved brand perception and customer loyalty.
Common standards and automated reporting methods would also increase transparency in the supply chain, leading to improved process efficiency and reduced costs.
Businesses that are neglecting or don’t want to invest resources in meeting sustainability expectations might significantly lower their chances of benefiting from the myriad of opportunities in the current global economy.