While the corporate will to become sustainable has never been greater, and the need to act never more urgent, many businesses appear stuck in a policy quagmire and don’t really know where or how to start.
As Mia Diawara, a partner at Lowercarbon Capital, which invests in climate tech, observed at Slush last month: “What you often see is companies caught up in this paralysis, where they’ve made a commitment to sustainability – but they don’t know what to do next.
“It’s a lofty goal that someone from the C-Suite has committed to and they don’t know what to do so it gets passed down to the people below them.”
While there’s no direct link between technology and sustainability, it’s clear that digital tools that gather data, enhance supply chain visibility and optimise processes have obvious use cases in helping firms on their way towards net zero.
In theory, technology should be aligned with all organisations’ sustainability goals in the same way that digital transformation technologies have become aligned with their business goals, but we’re not at that stage yet.
Only 7% of firms in a recent Accenture survey claim to have fully integrated their technology and sustainability strategies. 33% struggled with the complexity of the solutions meanwhile, or with making their legacy systems sustainable.
It’s notable that some of the early users of climate tech have come from the technology and finance sectors. Supercritical, for instance, is a software platform that claims to help asset businesses, VC funds and tech businesses, reduce and offset climate impact.
It’s founder Michelle You explains its customer base are the “perfect early adopters” because “they’re comfortable with risk and they understand scaling”.
There’s also a trend among CIOs within firms taking on the sustainability role. Jo Graham, CIO of online fashion retailer Boohoo recently led her firm’s Agenda for Change (A4C) to put an end to modern-day slavery allegations and supply chain failings.
At a recent summit she noted: “The project needed someone who had done transformation, who had done programming governance and who could work with and satisfy those people.”
Mandatory carbon reporting – especially for companies of a certain size, but soon too for SMEs, is coming thick and fast in territories such as the EU, the UK and US – yet most of the laws being passed still don’t state how granular this data needs to be.
Given all this confusion and lack of current standards, how can firms make the leap from policy to implementation? And what technologies can help them do this?
To work out how much your company is emitting you need a measurement system. This is where the “scopes” – a term that originally surfaced in the Green House Gas Protocol over two decades ago – come into play.
Scope 1, 2 and 3 have become the standard way of categorising the different kinds of carbon emissions that companies create in their own operations and within their wider value chain.
Scope 1 covers the carbon emissions a company makes directly -running boilers or vehicles, for instance; while Scope 2 covers all the emissions firms make indirectly – when the electricity they buy for heating and cooling buildings, for example, which is being produced on their behalf.
Scope1 and 2 are considered within most organisations’ control but Scope 3 is harder to measure and currently accounts for 70% of all corporate carbon emissions.
In this third category go all the emissions associated, not with the company itself, but those that the organisation is indirectly responsible for, up and down its value chain. For example, from buying products from its suppliers, and from its products when customers use them.
If you’re still processing all the terms, the acronyms, and the legislation tied up in world of carbon emissions, then you have the sympathy of David de Picciotto – co-founder and CEO of Pledge, an infrastructure platform that claims to make it easier to embed carbon measurement into customer experience.
He used to work for a firm with a big focus on ESG and saw how tedious it was to understand and report on the specifics of climate metrics. He advises:
“The best place to start is by thinking about what net zero means. Net zero is a target to negate greenhouse emissions caused directly and indirectly by your business.
“There are four key steps in that journey – there’s measuring emissions; reducing emissions; removing emissions and then reporting on the progress until you reach the end of your journey.”
“So, you need to have the data and then understand which methodology you need to apply to compute emission in a way that is accurate as possible,” he adds.
Stephen Mellor, CTO of Responsible Computing – a membership consortium founded by Dell and IBM that is pushing for greener IT operations – suggests finding your organisation’s sustainability North Star (“or Southern Cross if you’re operating in the southern hemisphere”).
He says: “Measure what it is that you currently care about. We’re all worried about energy, obviously, because of prices, but you might also need to think about materials and about waste. But they’re going to differ by business. What a car plant cares about are not going to be the same as a logistics firm or a healthcare business.”
The consortium is currently formulating a self-assessment questionnaire that firms can fill in which then offers recommendations on the best course of action to take.
“Not all the suggestions are necessarily tied back to ROI,” adds Mellor, “but companies are not going to do this unless there’s a strong incentive, so the focus is around how can they make their businesses more efficient, more effective and more profitable.”
Whether it’s plotting carbon emissions on a spreadsheet or using automated solutions such as SaaS-based reporting tools, most experts agree that measurement is a good first step towards becoming carbon neutral. It’s only once you know where your emissions are coming from that you can then come up with a plan to reduce them.
In terms of tech platforms – from IBM’s Envizi and SalesForce’s Cloud Net Zero to the plethora of start-ups out there focussed on industry-specific tasks – there are plenty to choose from – although be aware that many are still at the proof-of-concept stage.
You explains the benefits of using a specialist software platform and advisor to support companies on this journey. “I’ve seen companies struggle with spreadsheets and try and do it themselves – but it takes expertise – it’s good to have guidance to advise on the low hanging fruit,” she says.
The founder explains another mistake companies make is in neglecting to measure the full supply chain emissions. “Not just energy-related scope 1 or 2 but further up the value chain – your cloud usage, your work from home emissions…that is all what has to be measured and reduced,” she adds.
Once firms know where their emissions are coming from, they need to come up with a plan to reduce and, where they can’t reduce, they can offset – and the latter is often where things start to get more confusing than they probably need to be.
Companies can account for their unavoidable emissions by buying carbon credits from certified activities that support carbon avoidance schemes such as community development, protecting ecosystems or investing in clean energy plants.
These projects are typically paid for through the purchase of carbon credits and account for around 95% of the projects invested in today.
The other 5% of projects are focussed on carbon removal, which are offset projects that adsorb additional carbon back from the atmosphere to remove the greenhouse gas potential.
Some of these involve engineering methods: Microsoft, for example has invested millions into funding companies working on the development of direct air capture – a process of capturing carbon dioxide directly from the air and generating a concentrated stream of the gas which is then either stored underground permanently or recycled for further use. Nature-based initiatives, meanwhile, include planting forests and mangroves.
There’s currently no central body that regulates either offset project types and various companies have carved out a niche brokering carbon credits and certifying standards.
Verra, the largest issuer of avoidance credits is currently in the process of overhauling its methodologies to help the market scale-up and following repeated media stories about the validity of the credits it produces.
One such investigation by The Guardian and Greenpeace found that carbon credits generated by forest protection schemes were based on a flawed system and well-known airlines that bought credits were thus overstating their carbon-neutral flight claims.
Picciotto – who used to work for a private equity fund – is very clear about where he thinks firms should invest their carbon credits going forward – and it’s about capture rather than avoidance: “There’s no path to net zero without carbon removals” he states.
“Even after businesses embark on reduction targets – there will still be unavoidable and residual emissions, and this is where we need to scale these technologies that absorb carbon dioxide from the atmosphere.
This is backed up by Microsoft’s Carbon Removal Initiative, which, in its second year of reporting argue that, categorised in terms of durability (how long they can store carbon for) natural based initiatives were low durability (around 100 years) while DAC is estimated to store carbon for a 10,000 years.
However, tech-based carbon removal credits are currently more expensive than traditional offsets that are affiliated with Verra “by a factor of 15-20 times more”, according to Picciotto.
It’s also a nascent market: many promising deep tech solutions to the climate crisis can currently be found in European universities – some have been plugging away at solutions for over twenty years.
According to Seth Bannon, a founding partner of Fifty Years which invests in early-stage impact start-ups, this is part of the problem. Deep tech solutions – although an increasingly essential part of the net zero landscape – is operating at a slower speed in terms of getting products to market.
Speaking at Slush this year Bannon added: “So if you develop a cool product at university, you typically must negotiate to get that IP out and into a company.
“In the vast majority of European universities, it takes a minimum six months and a maximum two years – and often the uni takes so much economic right out of the product that it can’t get private funding.”
The good news for deep tech-based climate solutions is that new legislation and private initiatives are happening that will encourage routes to market and new means of funding.
The Biden administration’s inaptly named Inflation Reduction Act (the one thing it won’t do is reduce inflation) was passed in August and is offering $370bn in incentives and programmes to accelerate action on climate and energy.
And Microsoft isn’t the only carbon capture tech investor. Since 2020 Silicon Valley-based payment platform Stripe, through its climate tool, allows firms to direct a fraction of their revenue to help scale emerging carbon removal technologies.
Stripe was also one of the partners – along with Alphabet, Meta, Shopify and McKinsey – to launch a fund back in April of this year which aims to purchase $925m worth of permanent carbon removal from companies that are developing the technology over the next nine years.
So, while these deep tech climate technologies are nascent – they are coming.
So, there’s been a lot of talk; a lot of tech development and lots of investment happening, with regulation and standards in the pipeline. And many experts. Firms are even starting to recruit for specialist positions now, among which include: ‘green cloud advocate’; ‘sustainable technology lead’ and ‘ESG digitalisation manager’.
But what does ‘good’ look like in practice? It’s probably far more accessible and less bleeding edge than you might think at this stage, starting with a commitment and utilising many existing technologies.
Saint-Gobain is a Parisian construction company that started out 350 years ago making mirrors. It has survived the French Revolution and two world wars – its very existence has depended on a level of transformation.
The firm employs 18,000 people with a €40bn turnover and, by its nature, it’s a huge carbon emissions creator – yet it decided to pivot to a carbon neutral world around four years ago.
Ben Johnson, the firm’s director of innovation strategy and governance (CIO) claimed at a Mulesoft event last summer that technology was central to Saint-Gobain’s sustainability pivot.
“There’s a whole case in here about data and connectivity and accelerating with digital tools. It’s also a way of thinking that people are getting to, which you can’t do unless you have access to all your data,” he says.
“We also want to extend this model to suppliers, to customers and to projects so that once you start combining operational and information technology – which traditional tend to be fairly separate – then you have a data pipe which gives you visibility of all your carbon data from aggregate.”
Johnson adds that now the firm is trying to understand all the energy that’s gone into each product; how it feeds all the way through to the manufacturing process to logistics through to the panels it makes for customers and then ultimately to examine how they can tie it into complete projects.
He cited some ‘micro projects’ by way of example. The firm is spending £20m a year on wooden pallets that were used once and then burned. They’re now looking to recycle them multiple times and attach a code to each one so they can track them back to projects within SalesForce.
And it’s about feeding back the sustainability information to its customers too. For one of its logistics clients, British Shipsen, the firm is using Einstein Chatbots to provide highly technical sustainability data 24/7 on the plasterboard materials it supplies anyone who requires access.
According to Johnson, Saint-Gobain is also using APIs and bridging technologies to create a central repository that receives sustainability data from several different sources, giving it full visibility of a single product’s lifecycle.
Says Johnson: “Customers want to know this now; they don’t care whether we’re making a profit or not. What they care about is ‘Can we have a sustainable business model? And it protects your brand.”
The sustainability tech guru acknowledges that gathering data for scope 3 emissions can be a slower process however and advises firms to first assess what their sustainability parameters within their organisation are likely to be.
“You need to understand what the permitter is of what you’re trying to achieve. Some suppliers will resist giving you your data – but once you’ve understood that at least you can give an honest view of the world. You can just say you don’t know. But at least once you’ve got that then you can start chipping away at it.”
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