Bill Wilson
Chief Sustainability Officer and Head of Data & Intelligence Solutions, NTT DATA UK
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Photograph: Mike Kononov/Unsplash
My interest in the climate emergency accelerated when I realised the crucial role that data has to play in providing accountability for action. It was when I looked deeper into the level of commitments made to specific targets that I became worried.
Having designed solutions that required strong data lineage and clear, auditable decision processes to meet regulatory changes in financial services, I can see that the regulatory environment for carbon is heading that way. Just as regulation led scores of data programmes to collect more accurate, fine-grained data in banking, investments and insurance, so climate change regulation will drive a similar wave of disruption across organisations that currently lack mature data platforms.
The data itself isn’t that tricky to understand. It’s the interactions between parties and the stakeholders who all have a small, differently-shaped piece of the puzzle.
While climate change regulation has created impetus across industries, and protest movements are affecting brands in the public eye, in B2B stronger pressure is arguably coming from the supply chain and the movement of investment funding. We can now see that data will serve the climate best by uncovering opportunities before as well as within a firm’s operations. But first, we must understand how to achieve a data baseline.
Avoiding data stalemate and minutia paralysis
Data pervades the climate action issue and, indeed, sustainability in general. The starting point is carbon measurement at the organisation level. But the challenge of this is that each carbon reduction initiative gathers its own measurement data (e.g. the amount of recycled material in new products), making it difficult to compare emissions across organisations.
A second issue is choosing the right level of detail when it comes to measurement. What level of granularity is necessary when calculating Scope 3 emissions? There certainly comes a point where you expend as much carbon trying to measure other carbon accurately.
What we need is a way of bringing this data together from across the organisation and external stakeholders, including emissions in the supply chain and information from customers about in-life use of products and services. I call this ‘the Single View of Carbon’ (to complement ‘the Single View of Customer’ goal that many data practitioners have made their life’s work).
To illustrate, most organisations start with simple master data management: can we see everything a customer has purchased? These solutions gradually become more sophisticated, tracking deeper within the customer journey, logging more customer interactions and enriching customer data with third-party information. We can parallel this with emissions calculations. Organisations need to start with getting a handle on the big picture, sacrificing detail to begin with. The holistic view then points the way to where greater accuracy and focused action is needed. However, to achieve the Single View of Carbon begs a number of data-related questions, and signals a new era of data exchange between organisations around carbon information.
None of this confusion on regulation uptake is new to data practitioners. A colleague asked me how we would break out from the current cottage industry of spreadsheets often used to calculate the carbon footprint. My answer was bit-by-bit, like the thousands of data platforms that began as out-of-control Excels.
Eventually, emissions could become as much a part of the tendering process for new contracts as financials.
What is new is the pace of change and the cross-cutting nature of the impact. The data itself isn’t that tricky to understand. It’s the interactions between parties and the stakeholders who all have a small, differently-shaped piece of the puzzle. This is the challenge that NTT DATA are taking on in partnership with our customers.
Driving opportunities on all horizons
Leaders in the field are investing in a range of technology solutions to combat the data accuracy challenges. Some are focusing on precise internal measurement, such as sensor technology, smart meters, instrumenting products to report emissions in use, and more rigorous data recording. Others require collaboration, such as distributed ledgers for supply chains and data sharing ecosystems.
Here are some more opportunities for data to play a key role in emissions reduction projects:
Cutting costs and emissions with repurposed data. The data gathered and cleansed for a carbon analysis of the supply chain, such as is needed to measure Scope 3 emissions, can be put to use for other purposes. The most obvious example is procurement analytics, which allows organisations to have a more financially astute sourcing model and to buy raw materials at more opportune times. It is perhaps assumed that large firms already had this under control, but I worked with one FTSE 100 company who described the same steel component in 16 different ways, which prevented bulk purchasing. Another example of repurposing data is using fine-grained sensor data, intended for measuring efficiency to drive AI models around predictive maintenance, which can increase equipment uptime by up to 20%.
Competitive low-carbon suppliers. As a supplier, being able to provide emissions data as part of a contract will become a differentiator. This is an area where first movers in B2B will gain a foothold. Eventually, emissions could become as much a part of the tendering process for new contracts as financials, and purchasing organisations will also need to trade off carbon alongside the usual criteria today. Firms will be driven to innovate to find ways to undercut each other’s carbon cost.
Investment decision-making. Driven by carbon targets, firms are already making investments that they wouldn’t have previously considered, such as in low-energy lighting, solar cells or heat recovery. The more forward-thinking are using abatement curves, which present the financial and carbon trade-offs. We are also delivering more IOT solutions to customers with the specific objective of energy reduction and smarter use of existing equipment. At the same time as these opportunities present themselves, investment funds linked to green initiatives are booming ($9 trillion focused on firms with net zero targets; $40 trillion to those with ESG aims).
Addressing the most important data challenge there has ever been has the potential to reap rewards not just for first movers but for everyone who comes on the journey.
A new data marketplace. We can already see that sustainability data is valuable: UBS estimates the current global market for Information Service providers specialising in ESG data at $2.2bn. In future, data that drives better carbon insights (e.g. competitor benchmarks) will itself become valuable. Those multi-organisation data ecosystems that focus on data for operational efficiency today (Lufthansa’s open Aviatar platform as one example) will start to embrace more use cases around carbon efficiency.
We’re still at the beginning
The opportunities mentioned are just a flavour of the potential upside to getting a handle on emissions reduction. Addressing the most important data challenge there has ever been has the potential to reap rewards not just for first movers but for everyone who comes on the journey.
Regulation is one part of the answer, but everyone’s data needs to be robust and play well with each other. Data exchange standards and ecosystems are still emerging, and for data practitioners, history is simply repeating itself in a different context.
Being able to calculate your carbon footprint and devise a measurable plan is now about access to markets and access to capital. With a more complete picture of our collective carbon use, we will finally be able to put the right moves into action.
