Digital systems can underpin a company’s sustainability journey, highlighting where actions can be taken, and future-proofing against potential risks
This article was coauthored by Ian Trim and Jan-Martin Rhiemeier, directors at Guidehouse.
Organizations Face Increasing Pressure to Reduce Emissions
Consumers, employees, and investors are calling for companies to introduce emissions targets commensurate with avoiding dangerous climate change and increasing transparency around their environmental impact—not only from their operations, but across their wider value chains. Integrating environmental, social, and governance goals into corporate strategies is more important than ever before.
Organizations need to understand where emissions and energy hotspots are within their own organizations and across value chains. This need for companies to better understand their emissions profiles is heightened by the increasing number of jurisdictions introducing regulatory emissions controls, such as carbon taxes and emissions trading, which introduce new liabilities for organizations. Mapping emissions sources is a business imperative to reduce costs through efficiencies and mitigate against potential future costs.
Collecting and Analyzing Data Is Increasingly Time Intensive
While companies face the siren call to increase transparency and take responsibility for emissions from their suppliers and product use, they are doing so as value chains become more complex, flexible, and dispersed. Traditional data collection exercises with spreadsheets are prone to errors as datasets are collated from a disparate range of sources and formats. Converting energy and consumption data to emissions profiles becomes more complicated. For example, complex and globalized value chains mean that a vast array of emissions factors are required to account for the difference in generating mixes between countries and transport emissions become increasingly relevant.
Changing ways of working add to the increasing complexity of the value chain. With an ever-growing number of employees working remotely, lines are blurred around what a company should be responsible for. This challenge is dramatically increased by the pandemic.
Digital Data Monitoring Is the Foundation for a Sustainable Future
Companies are rightly turning to digital tracking and forecasting tools to streamline and simplify the handling of huge data sets. The most advanced of these tools help them visualize emissions and plan mitigation measures accordingly across the entire value chain. Visualization tools empower them to look holistically across their value chain and develop mitigation options that use smart financing solutions and group different abatement opportunities.
The greater transparency of emissions sources opens up the opportunity to strengthen both internal and external relationships. For example, a system producing accessible dashboards and reports that can be seen by employees can raise awareness of the need to act. These reports could stimulate employee engagement internally and help reduce both emissions and costs. Additionally, a system that can be configured to provide outputs for corporate reporting, such as CDP, can significantly reduce administrative time. It can also increase reassurance to investors that the company has a clear corporate sustainability strategy.
Using a system that enables suppliers to directly engage with the organization through, for example, cloud-based portals to enter supply data can identify opportunities both within the organization and the supply chain to reduce Scope 3 emissions. Greater connectivity with key suppliers can strengthen relationships and potentially reduce costs for both parties.
Ultimately, you cannot manage what you cannot monitor. Digital systems like Guidehouse Papaya™ can underpin a company’s sustainability journey, highlighting where actions can be taken, and future-proofing companies against potential risks.