Following the recent COP26 Conference, organisations around the globe are pushing themselves harder than ever to achieve Net Zero. The role of IT will be crucial in the pursuit of carbon emission reductions for these organisations.
The 2021 United Nations Climate Change Conference, or more commonly referred to as COP26, examined the current trajectory of the globe in the face of climate change. As a result of this conference, a crucial consensus was reached around limiting warming to 1.5 degrees, and an agreement was made seeing that funding would double across the globe for adapting to the severe impact of climate change.
During the conference, we at NTT DATA alongside PAC, a Teknowlogy Group company, published a report entitled, ‘Europe’s digital journey to Net Zero’. This report focused on businesses’ approaches to decarbonisation and their plans for reducing emissions. Based on interviews with senior executives from 200 large European businesses, it discovers the role that technology will play in helping businesses progress towards their net zero goals and how partners can help ease the burden on IT teams as companies work towards reducing their missions.
Businesses current attitudes towards decarbonisation and the challenges that they face
Most businesses see decarbonisation as a ‘matter of life and death’. The report shows that 94% of European business leaders believe that it will be critical to the future survival of their business. This is further evidenced by the fact that many investors, venture capitalists, and hedge funds are researching businesses that are both leading the way and lagging behind in this area. It’s therefore very likely that decarbonisation will be the biggest market differentiator going forward.
But what is driving this focus? Firstly, it’s important to note the impact data has had on being able to fully assess the entire supply chain and its carbon footprint. Previously, organisations either weren’t able to understand the true picture, or weren’t transparent about thei carbon creation across their entire organisation, but data availability has changed this. Alongside this, the report found three key areas driving decarbonisation:
It is important to note that action is being taken to decarbonise. More than three-quarters of businesses are currently rolling out carbon offsetting initiatives. 64% of these businesses are focusing on climate scenario analysis, while 63% are focusing on ‘smart’ estate infrastructure.
While efforts are being made, many businesses still lack a clear view of their current emissions levels, which presents a barrier to creating effective reduction strategies. Out of all the businesses studied, only 6% claim to have a ‘single pane of glass’ view of the carbon footprint of their organisation. 46% of businesses rely on a mix of manual effort and multiple tracking tools, while 34% rely on a patchwork of technology tools. What is even more worrying is that within the financial services sector, more than a quarter of businesses (27%) admit that they rely on manual effort to track their emissions data. Essentially many are still dealing with extremely inefficient processes.
The role of technology in helping businesses towards their Net Zero goals
According to the study, 88% of European businesses see their internal IT function as playing a pivotal role in the short-term reduction of emissions. The telecoms sector (95%) and the financial services sector (93%) in particular highlighted the central role of Internal IT in emissions reductions.
When asked which technology building blocks need to be in place to accelerate their decarbonisation strategies, a central emissions tracking platform was seen as the most popular option (52%). Other technology building blocks that should also be considered as vital can be seen as; smart building energy management solutions (47%), remote collaboration tooling (44%), IoT/Digital twin solutions for asset and grid optimisation (41%), and the migration of on-premise data centres to the cloud (40%).
It is important to note that while there are of course some overarching building blocks required, technology priorities vary according to the sectors in which the businesses sit. 63% of retail organisations highlighted the importance of central emissions platforms for providing a clearer view on companywide emissions. 60% of energy and utility businesses highlighted smart building energy management systems. While 60% of public and health sector leaders highlighted remote collaboration platforms as key.
This focus on remote collaboration platforms has arguably been exacerbated by the pandemic and its impact on a general move to hybrid working. While the hybrid model has been widely praised by employers and employees alike, there are currently huge question marks over what this means for carbon reduction. It’s thought that offices are more energy efficient per person than people working from home. This therefore must be a consideration for businesses, which will also need to consider how to use technology to make reductions that outweigh the additional carbon product the hybrid model is presenting.
A final technology which the report also noted was that 71% of all businesses believe that blockchain can have a positive impact on decarbonisation. Ultimately, these insights demonstrate that businesses must not take a ‘one size fits all’ approach and should instead understand what specific technologies will be key for aiding them in their goals.
When looking to the delivery of these strategies, organisations are seeking a diverse ecosystem of partners. 77% rate environmental consultancies as having strong capabilities to support their requirements. While 71% view software vendors as bringing valuable skills and expertise to the table. Finally, 70% of businesses see the value in working with an IT services provider to help them identify the best available offerings from the global marketplace.
The road ahead to Net Zero
It’s clear to see the key role that technology will play in short-term decarbonisation strategies, and how important the next two to three years are for executing these strategies.
Decarbonisation is an opportunity which can open many possibilities surrounding new products and services to improve both customer experience and loyalty. However, it is also important to recognise the burden of expectation that sits on IT leadership teams and the need to draw on partnerships to successfully execute decarbonisation strategies.