Sustainable Tomorrow

In my last post I discussed the need for enterprise data to be holistically integrated as the core reason why IT is at the nexus of sustainable innovation for the enterprise. Now please allow me to provide just one example. In many instances a site or facilities building management system is tied to some kind of energy forecasting tool, perhaps pulling weather data to better account for future energy use. Far too often these one or two systems are internal islands, only being accessed by a facilities or controls team and often not even housed on hardware owned by IT.

 

However, ideally one would also want them tied to a carbon accounting tool to have better ability to gauge future carbon output of Scope 1 or 2 emissions. In order to enable better decision making, these systems must also talk to your real estate management systems (for accurate headcount, lease terms, etc), corporate financial systems (energy use = budget) and therefore the ERP (among others). If the energy forecast can be tightened to have a lower variance, more budget funds may be diverted to other projects within the company, say R&D which leads to revenue generation. However if you're budgeting is not adjusting continuously it would be "too little too late" and departments often need to scramble and find ways to either spend or cut elsewhere. The tie in to financial systems becomes even more apparent if your company is subject to mandatory carbon reporting laws such as California's AB 32 or the EU Emissions Trading Scheme; both of which put a price on carbon. Knowing in near or real time where the company stands on the need to purchase offsets or their tax liability to a carbon tax will make everyone more efficient and effective in their decision making. The same holds true if you're committed to purchasing renewables or buy your energy on the open market where prices fluctuate.

 

With proper systems integration these changes can be made in near or real time and the finance office is now pleased that they've got such a great facilities team who always hits their mark for energy use with little variance. The sustainability team is also happy because they can provide accurate and timely executive dashboards and make recommendations for future activities without the delay of (in some cases) working with 6-12 month old data. The same types of models hold true for sourcing and supply chain management, corporate travel offices, or logistics and distribution. Better visibility and communications between IT systems allows for better holistic decision making, and it all comes together when firms view these activities through the sustainability lens - considering environmental and social governance as a key driver to performance at what they do.

 

In subsequent blogs we'll explore the notion of integrated systems for more specific applications, because at its core sustainability is about integration and interdependence. Though I'm curious what other systems readers see as vitally requiring integration for improved and sustainable business results. Could cost avoidance and risk exposure be included in this discussion? I think they can and ultimately will, however I'd like to hear how readers think The Internet of Things is going to bring these systems together, or stories of success and failure you've had trying this path. Just as systems need to intelligently share information and data, so too do we humans need to share and learn from one another's experiences towards a sustainable tomorrow.

Posted by Peter Perrault at 6:22 PM | Permalink | Comments (1) | TrackBacks (0)

Since this is my first blog post I suppose I should provide a brief introduction of myself to the readers. I'm a fairly new Infoscion having just started at the end of last month, and I'm very excited for the opportunity to be with a forward thinking and innovative company like Infosys. I have many fond memories and lasting relationships coming out of my previous position as the Green Giant (yes, that really was my job title) at a large data storage provider, and I'm proud of the many accomplishments the company made to which I contributed. Now with Infosys I've got the chance to build on those experiences and share the knowledge I gained with Infosys's many clients - a broader reach for greater impact.

 

One thing my colleagues and I discuss often is the matter of green IT and systems integration. I firmly believe that IT organizations, particularly within large enterprises, are at the nexus of all things sustainability. IT has become the backbone for large corporations, regardless of whether you are in healthcare, utilities, building widgets, or anything else. Nowadays everyone relies on emails, Outlook calendars, shared online repositories and collaboration spaces to get work done in the corporate world. With the advent of the smart grid, smart buildings, and other intelligent systems; "The Internet of Things" holds the promise to help guide the corporate world into a faster and more efficient future - in near or real time.

 

Along with all the promise The Internet of Things holds comes with it massive amounts of data - from building operations information, employee and customer data, and enterprise-wide data on everything from product content to logistics or financials. This is precisely why I say IT is at the nexus of all things sustainability. While some firms are still crunching carbon numbers in spreadsheets, many others have transitioned to enterprise carbon accounting solutions. Even further some leaders have gone; integrating water data, product information, and other key sustainability metrics into their systems. But alas, still many firms fall short by using manual data entry by end users or with periodic batch uploads of spreadsheets which again were completed manually or generated via a separate disparate software or system. This is unscalable, costly, and error prone (as many have come to note).

 

Regardless of how information gets into your sustainability systems one thing is for certain: big data is only useful when properly analyzed. Therefore firms need robust systems that are able to connect the dots or put the pieces of the puzzle together to paint a picture, or whatever other metaphor you choose to describe integration. Understand integration is the opportunity; those of us working in the field know that to be sustainable means among other things to have a complex set of people, activities, locations, and processes working in harmony towards a common goal: a vibrant future.

 

The truly sustainable leaders will recognize that their IT systems hold big data, but the key is to integrate all of that data together for proper analysis and decision making. A holistic approach to business transformation means that every aspect of your business is viewed, at least in part, through the lens of sustainability. Decisions must be made by taking into consideration the long term costs/benefits and ultimately how they'll impact your stakeholders, both internal and external.

Posted by Peter Perrault at 6:13 PM | Permalink | Comments (0) | TrackBacks (0)

Sitting at the Boston airport, waiting for my flight back home to Atlanta, getting my daily dose of what's happening around the corporate sustainability world, I read an interesting report about the background of American CSOs. In the report titled CSO Back Story - How Chief Sustainability Officers Reached the C-Suite by the Weinreb Group, 29 US CSO's were profiled, of which 25 came from within the company. Of these 8 were responsible for External affairs or Marketing prior to being the CSO. 6 were responsible for Environment or Sustainability already. 5 were from an operational background. 4 were from Research and 1 each from Legal and Finance. If I look at other companies that don't have a CSO, sustainability is the domain of either the facilities team or the compliance team.

While the background of these executives throw some light on who are the people who typically become a CSO, I thought if somebody asks me who should be the CSO, what would I say? Hmmm.... that takes me back to my Organization & Behavior classes in my MBA days. Why are certain positions created in a company? What are the factors used to select the ideal candidate for a position? Strategic focus and skill sets come to my mind. When companies do this correctly, they give the strategic focus more importance - they would first decide where they want to be 5, 10 or 30 years from now and then use that information to drive the creation of an executive position, the assignment of responsibilities and the selection of the suitable target. Companies who do not do a good job of it look at it from the perspective of who is currently in the company closest to performing that role and give that person additional responsibilities. While the latter strategy sometimes works better in the short term to get some "quick wins" and reduces the change management required, it does not necessarily ensure long term strategic alignment.

So back to the question - who should be CSO?

My answer to that would be that sustainability is not about short term goals anyway. So what would drive the selection in my mind would be the person who can address the biggest challenge a company would face in sustainability. And that differs from company to company. Let us look at a number of key executive positions and see who should be the primary person carrying sustainability goals.

Chief Executive Officer: It is correct that Sustainability is not something that can be seen in a silo and that a whole company should be run in a sustainable way. However, Sustainability requires organizational transformation. It is not something that a company can achieve one fine day. As Ellen Weinreb pointed out in in her blog Owning Sustainability: The CSO vs. the CEO, Muhtar Kent made Coca Cola's sustainability his own personal agenda, but was quick to correct his mistake when he appointed Beatriz Perez as their first CSO. I would think eventually CEO's should be responsible for sustainability, but that is still decades away. For the time being, they should appoint someone directly reporting to them.

Chief Operating Officer / Head of an operational unit: Different from a CEO, the COO is supposed to have a more day-to-day operations focus of the business, and hence an attractive candidate for the sustainability position. They would have substantial knowledge and experience in what is best for the business in the long run, and as a result, how to make their business more sustainable. It may be a hard change for them, since they would have typically been in the business for quite some time, making them set in their ways, and like all other organizational transformational changes, it would be a hard pill for them to swallow. However, this would only work so long as there is only one COO. Some companies have multiple COOs, and it is not a good idea to make a few or all of them responsible for sustainability right out of the bat.

Chief Compliance Officer / Chief Legal Officer / Regulatory / Environmental, Health and Safety: This would be a very tactical move as I mentioned before. If a company looks at sustainability only from a compliance angle, then this makes sense. But I would question the strategy to look at it only from a compliance angle. It's a reactive stance that will ensure the minimum required to meet regulations and not a drop more.

Chief Human Resources Officer / Chief Administrative Officer/ Corporate Services / Real Estate and Facilities: These set of positions could also look at sustainability as they already look at parts of it. Sustainability includes understanding the social dynamics of its employees and engaging them for long-term success, and that's the forte of the head of Human Resources. Administrative positions are the key people held responsible for all the energy, paper and fuel consumption, things that lead to a substantial portion of most company's carbon footprint. However, in all these cases, the executive would tend to have a myopic view of sustainability as their area of responsibility is limited.

Chief Information Officer: Now this would be an interesting choice! Thinking from the companies that are driven largely by IT, this may make sense as a short-term tactical decision. It does solve a few strategic issues related to Sustainability like the access to good data in a meaningful way to understand a company's impact on the society and environment and the ability to share audit proof reports with the external world. Why I don't like this idea is again the blinders that the CIO may have on, a focus on business from the perspective of the data and the systems (an inside-out view), which may not necessarily yield the best ideas. Sustainability may require re-thinking the basics on the way the business is run, and may not necessarily involve an IT solution.

Chief Marketing Officer: Brand and reputation is a very important driver for the sustainability initiatives of many B2C companies. In a study by McKinsey in 2011 corporate reputation was the 3^rd biggest driver for sustainability. It was the biggest driver in the same survey a year back. In a recent discussion with Brent Yamaato, SVP responsible for community engagement of SunTrust Bank, he mentioned that they wanted to come out of the financial downturn with a superior brand image driven by corporate social responsibility. I like this idea primarily because the field of sustainability is a new one and lacking in a lot of hard metrics to drive business cases with. The marketing discipline is the best suited for understanding the impact of a company's actions on all it stakeholders including the society at large, and also in executing these initiatives. Where I don't like the idea is similar to the Chief HR Officer argument - this may tend to become more aligned to what improves a company's brand image, rather than what is right for the society or the environment, which may not necessarily be aligned all the time.

Chief Financial Officer: Now this is one I like. I know, I know - this is like designating Mr. Grinch as the deputy Santa Claus (no offence to all my CFO friends). But hear me out. The CFO already is in the job of sustainability - albeit only economic sustainability. Secondly, they are the masters of measuring, auditing and controlling. That solves a big problem in sustainability today. Thirdly, they are already the gatekeepers of all investment. They use financial analysis as the tool to select the best decisions. All I ask is to broaden the scope of "value" to not only look at free cash flows, but also the environmental and social values. And lastly, in my opinion, they would be the toughest nut to crack. If you have them as a believer, then there's no stopping a company from becoming a truly sustainable company.

Now, the assumption is that the post of CSO did not exist before and a truly sustainable company should look at environmental and social aspects in the same way they look at financial aspects when making business decisions. But that is for another day. I don't know if I have thought through all the pros and con for each the cases above. I invite comments from readers - who in your opinion would make the best CSO?

Posted by Shamik Mitra at 3:45 PM | Permalink | Comments (2) | TrackBacks (0)

I work with different sets  of people each day at work and outside, and find that sustainability is much discussed  but pretty difficult to operationalize, streamline and holistically embrace. What holds true for individuals holds true for organizations as well.  Here are 6 difficulties organizations  face to adopt and embed sustainability.

 

1. Sustainability is not rocket science.  Decision makers form the impression that it is easy and we can figure it all out by reading and training. However this is far from true, while I agree it is not rocket science, a clear strategy can evolve only after painstaking effort and deliberations. This means breaking up strategy into bite size chunks and implementing it. Organizations must understand that this is  one critical strategy that will actually ensure that the organization is socially, economically and environmentally sustainable for the long term.

 

2. Too much information - I say this as we have sustainability all over - the media is full of it and you can access tons of information free of cost. What is crucial is making sense of the information and choosing what applies to you - you are unique, the information that works for you is unique, and you will use and leverage that information to create your unique strategy.

 

3. Sustainability does not require investments - Huge mistake - Sustainability needs major investments.  You will transform into an organization of the future only if you consider three things - 1. Operational Sustainability 2. Risks and Adaptation framework 3. Sustainability Opportunities. All this requires dedicated resource and capital investment. However  these  investments this will pay off in the long run.

 

4. Ignoring organization culture - In  embracing sustainability we cannot ignore organizational culture. Many companies are struggling to incorporate their sustainability vision, goals and strategy into their company culture despite its espoused value. There can be 4 types of org culture - control, collaborate, create, compete oriented (Ref "Toward Engagement 2.0: Creating a More Sustainable Company through Employee Engagement" 2011, Report by National Environmental Education Foundation). The culture of the organization and the related org and behavior change needed should be considered.

 

 

5. Reactive strategy -An organization with no clearly thought through sustainability strategy reacts to the pressures of reporting and regulatory compliance. Typically these organizations also   approach sustainability in silos. Reactive thinking comes from the fact that specific functions have sustainability responsibility, and these siloed stakeholders may be championing sustainability in their own spheres, but may hit roadblocks while attempting to embed sustainability  across the organization. There is also an accountability issue tied with reactive thinking and siloed approach. Often such organizations may not have clearly defined roles and responsibilities, and governance,  making it difficult to take a stand on sustainability. . So ultimately there is often too much   inertia to overcome, combined with unclear governance and accountability, sustainability takes a back seat in relation to business as usual.

 

6. Lack of stakeholder engagement - Sustainability cannot succeed without stakeholder engagement. In a new book, Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value, CB Bhattacharya, Daniel Korschun, and Sankar Sen talk about how  important  understanding how stakeholders feel and think about all the initiatives an organization undertakes under the banner of Corporate Responsibility.  Long term sustainability of the organization depends  on listening to its stakeholders like employees, investors, NGOs, regulatory bodies and the local community, and understanding the needs of each set of stakeholders and ensuring that the organization's sustainability strategy and goals are aligned to the same. An effective and transparent approach to communicating with all stakeholders is also an essential part of successful stakeholder engagement.

 

All the points can be overcome by a clearly defined strategy and implementation framework. This is a huge challenge by itself, however nothing is impossible as they say impossible = I M Possible!

 

Posted by Sunita Purushottam at 9:38 AM | Permalink | Comments (2) | TrackBacks (0)

Children show a clear understanding of what belongs to them and what doesn't.  Similarly with emissions, companies are very clear about what emissions are theirs and what are not theirs. Clearly delineated as what is known as scopes we all know what they mean in the carbon emissions reporting parlance.

Scope 1: Emissions I own and emit - direct emissions.

Scope 2 and 3: Emissions that are emitted by others due to services and products used by me - Indirect emissions

The drivers for reporting carbon emissions are many, but the biggest driver is regulatory. Legislations like AB32, EPMRR, UKCRC, NGERs all requires to report carbon emissions. What is common amongst mandatory reporting is that they all have to report scope 1 emissions.  Emissions trading also require trading emissions which companies own i.e Scope 1.

Voluntary reporting registries/protocol ask for scope 1 and scope 2 (indirect emissions reporting due to electricity and district heating and cooling). Reporting scope 3 is optional.

Hence why should I account for Scope 3 at all when there is no requirement to do so by law or by voluntary registries? What is it that is asking companies to take a look at scope 3 emissions?

What has been increasingly observed is that companies are undertaking investigation of all environmental impacts of any given product or service, over its entire life cycle - commonly referred to as Life Cycle Analysis or LCA. While LCA refers to entire gamut of environmental impacts, the LCA of carbon emissions is the carbon footprint of the product or service.

Scope 3 accounting is gaining importance as companies like Walmart, is nudging its suppliers to engage in deeper sustainable practices. Given that accounting for scope 3 emissions is no cake walk, the premise of scope 3 accounting is that we know that we are responsible for more than what we own.  Since scope 3 is no cake walk, companies like Coca Cola, and Inuit are seeking help. What is difficult is the amount of data and management of the same. Scope 3 emissions account for the biggest portion of emissions that a company is responsible for. It is here that a company has the largest scope of reducing its emissions, identifying efficiencies in its processes, logistics, and resource and energy consumption.

While I have observed that over the last few years the number of companies participating in voluntary disclosure has increased manifold, the trend to account for all three scopes is something that will be increasingly adopted. Initiated by sustainability leaders, this movement will nudge companies to embark on the journey of finding out relevant long lost relatives, grandparents and uncles and aunts i.e scope 3 emissions accounting, perhaps reflecting a greater sense of belongingness in the family of emissions. Cherry picking of what activities to report in Scope 3 continues. Comprehensive reporting of scope 3 is still no cakewalk. Atleast now we know the importance of Scope 3 reporting as a means to assess inefficiencies in our supply chain.

Posted by Sunita Purushottam at 11:51 AM | Permalink | Comments (0) | TrackBacks (0)

Guest Post by
B. G. Srinivas, Executive Council Member, Senior Vice President, Manufacturing; Product Engineering; Product Lifecycle and Engineering Solutions, Infosys Technologies Limited

Enterprise collaboration can address the imbalances in global business and ensure sustainable growth. B. G. Srinivas blogs on how the digital media has redefined globalization and why companies in the developed and emerging economies must collaborate.

- Achieving Sustainability in a Competitive Green World

- Optimism for Balanced Trading Terms

Reproduced with permission of ComputerWeekly.com

Posted by Syeda Meher Taj at 8:27 AM | Permalink | Comments (0) | TrackBacks (0)