Technology is key to the implementation era of decarbonization

Phil Spring, UKI Comms and EMEA Energy, Environment and Utilities Leader, IBM explains the role that technology plays in ensuring transparent ESG reporting.

Speaking at the opening of Climate Week New York City in September, the new executive secretary of UN Climate Change, Simon Stiell, described the upcoming UN Climate Change Conference COP27 in Sharm el-Sheikh in November as “the world’s first opportunity in the era of implementation of the Paris Agreement to demonstrate progress.” And it’s an implementation era that must deliver given that 2021 UNEP Emissions Gap Report stated that updated Nationally Determined Contributions only take 7.5 per cent off predicted 2030 emissions, while 55 per cent is needed to meet the 1.5°C Paris goal.

So, as we head into COP27, it is not a reach to say climate research points to the fact there are serious grounds for concern. There are, however, grounds for hope, with technology a fundamental driver, playing a crucial role in mapping out commitment progress and driving decarbonization across critical industries to protect our planet. Progress can be seen in the following areas:

There has been much talk about reducing the confusion in the ESG reporting space, and if we are to know we can have a collective impact, we must be able measure it and report on progress. A single global ESG standard would certainly help; however, to work, the tools for gathering, auditing, and reporting sustainability information must be in place. As many as 44 per cent of CEOs say they currently lack the ability to translate sustainability data into insights that help them meet environmental targets.

We know that ESG reporting rules will continue to expand, particularly in the EU and the US, with new requirements for public companies to report on their impacts on climate, social issues, and governance. Businesses will rightly be experiencing mounting pressure across their stakeholders to be transparent and accountable for reporting on their progress against environmental commitments and ESG disclosures. 

The approach so far has been for companies to produce 100-page glossy sustainability reports, but now the focus needs to be on standardised metrics that can evidence decarbonisation milestones. By using a single system of record, data-driven software solutions can reduce cost, time, and reporting burden so organizations can focus on delivering ESG strategic outcomes.

It is estimated that global supply chains amount to around 80 per cent of an organisation’s greenhouse gas (GHG) emissions. Consumers are therefore demanding more transparency and sustainability in the entire supply chain of the products they purchase and consume, putting pressure on companies to reimagine their supply chains. The pandemic and war in Ukraine have led to significant challenges for global supply chains. Companies traditionally focused on the ‘lowest cost producer’ are now looking at supply chain partners more broadly to ensure they are partnering for longer-term supply chain resilience.

Regulation is increasingly making corporate enterprise more accountable for their direct emissions and those created in the ‘value chain’ of their products and services. However, the various types of data that companies need to understand and report on sustainability initiatives remains highly fragmented and difficult for all relevant parties to access.

One way to do this is through using insights and intelligent workflows that enable more responsible sourcing and transparent supply chains. For example, technologies such as AI and blockchain enable businesses to manage data through an immutable, distributed, and shared ledger, meaning they can transact with supply chain partners in a more trusted and efficient way to ensure provenance and quality, reduce product waste and increase profitability. 

According to the latest Renewables 2022 Global Status Report, the global energy transition the world had hoped for, as it emerged from the COVID-19 pandemic, is simply not happening. While the growth of renewable energy continues, the speed of transition remains too slow, given the global consensus that a transition to low carbon energy sources is essential if we are to limit the global temperature rise to 1.5°C.

Technology, however, is making an impact in speeding and smoothing energy transition and offering greater insight for enterprises in understanding how to make better, more efficient use of the energy they require. As more parts of our global economy rely on electricity to run, electricity ecosystems will become more complex and diversified. More interconnected functions will generate increasingly complex information flows. But organisations must evaluate their operations to ensure that they can accelerate the integration of clean energy solutions into their operations.

Finally, we also must acknowledge that technology is not impact-free. Computers, data centres and networks consume approximately ten per cent of the world’s electricity. So as the energy sector becomes more digitalised, it will also be essential for the technology sector to continue developing digital technologies and services that are more energy and material efficient.

Along with governments, many leading companies worldwide have pledged to achieve net-zero emissions by 2050 or sooner.  But a gap remains across corporate enterprises between the pledge and the delivery.  Organizations across a range of industries must bridge that gap by adopting technologies and integrating clean energy supplies into their operations, allowing them to accelerate the transition to a net-zero future.