For business leaders, environmental, social and governance (ESG) goals are very much front of mind. More than 70 countries, including China, the US and the European Union, now have firm pledges to reach Net Zero, and the UK is committed to hitting this by 2050. Businesses of all sizes are increasingly aware that they have to be part of the solution, rather than add to the problem.
Procurement leaders are uniquely positioned to drive positive change and broader business impacts on ESG goals. While organisational sustainability efforts have historically been grounded in ensuring compliance with regulations, a comprehensive, proactive approach to sustainable procurement can reduce risk exposure (such as reputational, brand safety or regulatory), create savings, and improve brand value for the enterprise.
Procurement departments are certainly aware of the need to thoroughly assess the provenance of the products they purchase. But while this may be possible with core purchases – usually involving large amounts of money where there is a direct relationship with the supplier – it is simply not possible to vet every single product, particularly in categories such as IT purchases, catering items and health products, where the overall spend may be lower but individual purchase volumes are higher.
A trusted smart business buying solution, such as Amazon Business, can help operationalise and scale a responsible purchasing program. As well as other benefits, including access to business-only pricing, a familiar user interface, and Amazon’s reliable delivery network, buyers can select more sustainable products across business-relevant categories, specifying from over 40 certifications covering a wide range of credentials.
This allows businesses to set specific requirements, and even set preferences, ahead of employee product searches. These out-of-the-box buying policies can direct your team to products and sellers that can help satisfy your organisation’s purchasing goals, and would make products with certain sustainability certifications the preferred product in a buyer’s search results.
Clear labelling of products with sustainability certifications frees up time spent finding, validating and growing a base of suppliers that can help you meet your organisation’s responsible purchasing criteria, using an interface with which employees may already be familiar. In turn, business leaders can access pre-built reports (for example, orders, shipments, returns, refunds, reconciliation, related offers and the credentials report which contains product sustainability details), or build custom reports to identify purchasing patterns and track spend toward more sustainable products that meet ESG goals.
One example of a supplier that offer products with sustainability certifications is UK firm Portus Digital, which helps to repurpose or recycle redundant computer equipment. “Our aim is to be a frontrunner in the industry and set an example of how it is possible to combine technology and sustainability,” explains Tash Clementis, Director of Marketing. “People are more likely to choose a greener option when it’s easier and more accessible.”
Amazon Business also works with suppliers to help them become certified, ensuring they can benefit from organisations looking to make more sustainable and responsible purchases. “We launched on Amazon to help more businesses make sustainable IT decisions,” says Rob Judd, Director of Sales at Portus Digital. “We’re pleased by the response we’ve managed to generate so far – it’s exceeded our expectations.”
Research from McKinsey shows that organisations that embrace a comprehensive ESG strategy can enhance investment returns, increase top-line growth and keep and attract quality talent. Further, improvements on reporting can help businesses demonstrate their progress towards ESG goals more broadly, providing specific metrics to proactively measure against social responsibility and sustainability goals.
Amazon Business can also partner with organisations as they look to improve sustainability in other ways. Amazon Business Prime members can choose to consolidate their deliveries using Amazon Day, which gives them the choice of two days each week during which they can receive their orders. On, average, this reduces the number of packages. For larger orders, it’s also possible to receive bulk deliveries by the pallet, meaning organisations can stock up on items while minimising delivery journeys, where available.
Amazon Business, as part of Amazon, is committed to adopting sustainable practises, including reducing packaging and making use of electric delivery vehicles. It has also committed to power its operations with 100 percent renewable energy by 2025.
With sustainability and responsible business rising up the agenda for organisations, investors and consumers, it’s vital companies take steps – and can demonstrate those steps – to source responsibly. This is an issue that all businesses must embrace, and one they cannot afford to ignore.
Climate change, circular economies, ESG and sustainability have all become business priorities over the past few years, with global supply chains sitting right in the middle of these issues – both as a major contributor to the problem and as an area of focus for improvements. Businesses must, therefore, purchase materials and products from companies that can show that they have good sustainability practices, from both a labour and manufacturing point of view.
The benefits of responsible sourcing and sustainable packaging
Responsible sourcing has been shown to influence consumers buying decisions, with studies suggesting that up to 70% of consumers would pay more for sustainably-produced goods. Businesses must therefore meet the increasing demand from consumers for products that are both environmentally and socially responsible.
Yet businesses are still learning when it comes to improving their responsible sourcing process, with Richard Howells, Vice President of Solution Management for Digital Supply Chain at SAP, describing it as an “evolving landscape,” allowing businesses the opportunity to combine sustainability initiatives with efficiency efforts and customer demand.
“While the ‘Amazon Effect’ has led to heightened consumer expectations for quick delivery, there is a similar demand for eco-friendly products,” Howell says. “In fact, 90% of Gen X consumers say they’d be willing to pay more for sustainable items – compared to 34% just a couple of years ago.
“In today’s market, for businesses to prosper and expand they must discover novel approaches to meet rising demands for ESG standards, placing greater emphasis on responsible sourcing.”
Responsible sourcing within procurement
For businesses to build a responsible and resilient supply chain, leaders need to acknowledge that procurement is the first step. “The procurement team begins the sourcing process by evaluating potential goods and materials that would make up the products made and distributed in the supply chain,” says Etosha Thurman, Chief Marketing & Solutions Officer, of Intelligent Spend and Business Network at SAP.
“In their evaluation, they are considering the environmental, societal, and economic impact of sourcing the materials. For example, potential risks with energy efficiency, water and land usage, and hazardous materials.”
To ensure businesses adopt responsible sourcing, leadership needs to set out clear definitions which align with the ESG goals of the organisation. Procurement professionals must also be educated about the necessary steps to ensure the goods and services under consideration meet the criteria.
Technologies role in responsible sourcing
In today’s rapidly evolving business landscape, technology stands as a pivotal ally in driving sustainability across the source-to-pay (S2P) and procure-to-pay (P2P) processes. By seamlessly integrating innovative solutions, organisations can navigate strategic sourcing, procurement, and supplier relationships while adhering to responsible and ethical practices.
“Technology can help organisations follow sustainable practices at every stage of the S2P and P2P process,” Thurman says. “In strategic sourcing, the right solutions can help analyse current and future spending, find and source from suppliers, ensure compliance and reduce risk with sustainability in mind. SAP Ariba Sourcing is a good example of a solution that enables users to prioritise suppliers that align with ESG goals.”
During the P2P process, Thurman reminds organisations that it is important to use solutions that help guide business users to make risk-aware and sustainable purchases, ensuring contract compliance with sustainable procurement policies. “The guided buying capability in SAP Ariba Procurement solutions can help guide employees to purchase from sustainable suppliers,” she adds. “Technology can also be a valuable tool in nurturing relationships with sustainable suppliers. Taulia’s Sustainable Supplier Finance solution allows users to reward suppliers that share their ESG qualifications with early payment incentives.
What’s more, to build a sustainable and risk-resilient supply chain, businesses need to establish strong relationships with key suppliers, which must be diverse. The supply chain data then needs to be monitored and analysed in real time, and investment needs to be made in technologies that can enhance supply chain visibility and agility.
“Efficient, effective technology can help businesses acquire and manage the data and information they need to measure compliance, minimise risk and boost sustainability,” Howells says. “Businesses must examine their value chains comprehensively, from sourcing raw materials to understanding the end product’s lifecycle. By adopting technology-driven solutions like blockchain and IoT, companies can ensure that their sustainability efforts extend beyond the surface level to every aspect of their operations.”
What’s more, SAP works with its partners to provide efficient solutions to business operations, while recognising the importance of monitoring and measuring not only cost, speed, profitability and customer service, but increasingly, emissions, waste, inequality and other sustainability and risk KPIs across the supply chain. This can be accomplished by connecting every process, contextualising every decision and collaborating with partners without obstacles. However, there is no one-size-fits-all solution for supply chain complexities.
Howell explains: “Buyers on SAP Business Network can choose vendors based not only on price and availability but also on human rights records and third-party sustainability ratings. Suppliers share human rights questionnaires to their profiles on SAP Business Network, where buyers can access them. Buyers are automatically notified any time a supplier they are doing business with updates their questionnaire. This saves suppliers time and helps buyers easily prepare for due diligence processes.”
Final thoughts
Embracing responsible sourcing is paramount for businesses aiming to navigate the evolving landscape of sustainability, satisfy consumer demands and enhance their growth prospects. Through integrating technology, fostering diverse supplier relationships and monitoring supply chain data, organisations can achieve a holistic approach to ESG standards, ensuring lasting positive impacts on both their operations and the wider world.
In a rapidly changing business environment, responsible sourcing stands as a gateway to sustainable success. By aligning with ESG goals, leveraging technology-driven solutions, and nurturing supplier relationships, businesses can forge resilient supply chains that not only meet current demands but also pave the way for a more environmentally and socially conscious future.
There are four major sources of renewable energy in the UK – wind, solar, hydroelectric and bioenergy. The technology used in these solutions includes photovoltaics basics, which are commonly found in solar panels.
Wind turbines convert kinetic energy into rotational energy. Technologies being used to enhance to capabilities of wind turbines include smart blades, 3D printing and improved blade design.
Materials
Packaging has been at the forefront of environmental issues for a number of years. Businesses have switched to biodegradable materials instead of plastics in the hope of reducing the landfill problem and have sought to limit the amount of packaging used on products.
But new and emerging technologies have opened the door to even more creative solutions. One example is using CAD design software to create sustainable products from materials that are recycled and from renewable sources.
Using this type of technology to design and manufacture products such as packaging and clothing also results in less waste due to the accuracy of computer-generated cuts.
IoT technology
The Internet of Things is being increasingly adopted by a wide range of industries, making their processes more efficient, connected and sustainable.
As well as helping to track ESG goals, IoT technology allows data sharing, and improved productivity and can monitor logistics in real-time. Creating a more efficient factory, office or site can also help reduce energy consumption and waste and support the optimisation of the workspace.
AI
Artificial Intelligence has the potential to transform industries and, when used creatively, could harness a variety of sustainable solutions. For example, the agricultural industry has seen huge developments which have paved the way for automated tractors and other machinery as well as robotics for crop optimisation.
AI has also enabled farmers to create optimal conditions for improved nutrients and harvesting which the natural environment might struggle to achieve.
Electric vehicles
Powered by electricity rather than fossil fuels, electric cars produce less greenhouse gases than petrol or diesel vehicles. However, to optimise sustainability, the manufacturing and running of electric vehicles should eventually be facilitated via renewable energy.
As the government invests in introducing new charging points and electric vehicles become cheaper and more efficient, an increasing number of businesses and individuals are likely to switch from conventional cars.
As newer and more advanced technologies continue to emerge, there’s no doubt that sustainable solutions will become more creative, adaptable and profitable.
Crocs, which is based in the US and sells shoes globally, posted the updated climate in its latest environmental, social and governance (ESG) report late last week.
The report states that Crocs’ initial commitment to net-zero across by 2030, made in 2021, was “neither fast nor vast enough”.
Nonetheless, it has amended the commitment to net-zero across all emissions scopes by 2040. The report states that, when the initial 2030 goal was announced, Crocs had not completed its acquisition of HEYDUDE nor had it completed a comprehensive baseline of its greenhouse gas emissions.
The acquisition pushed Crocs’ baseline emissions up and the baselining activity revealed a higher-than-expected starting level of emissions.
Crocs estimated its value chain emissions in 2021 at 538,037 tonnes of CO2e. The estimate for 2022 is 45.5% higher at 782,774 tonnes of CO2e. At least 193,000 tonnes of these 2022 emissions are attributable to the HEYDUDE acquisition.
Crocs’ report states that the new 2040 goal is “still ambitious” but “more credible and realistic”.
A commitment to halve the carbon footprint of each pair of Crocs Classic Clogs between 2021 and 2030 has been retained, and extended to the HEYDUDE ‘Wendy’ and ‘Wally’ models. Increasing the share of bio-based content within shoes to 50% by 2030 will play a key role in reducing associated carbon. At present, the proportion is just 2.2%. An interim target has been set to reach 20% by the end of 2023.
Some commentators have questioned whether this approach is enough, and whether the brand should, instead, be looking at selling fewer pairs of shoes that last for longer. Crocs solar some 115.6 million pairs of shoes in 2022, up from 103 million in 2021.
Circular economy thought-leader Paul Foulkes-Arellano wrote on LinkedIn of a “lack of genuine commitment” from the footwear sector on climate and circularity, followed by “backtracking”.
The team behind sustainability pioneer Green Mountain share their insights into ESG, The Scandinavian Management Philosophy and collaborative cultures
“To operate efficient state-of-the-art colocation data centers, the number one priority for Green Mountain is to have skilled, motivated, and enthusiastic employees who are up for the task.”
This is the ethos of Tor Kristian, the CEO of Green Mountain. And it is this people-centric approach that has shaped the entirety of Green Mountain’s company strategy.
“Whether it is the operations team, project managers, service delivery, sales, management or supporting functions – they all contribute to the same goal; “Setting the green standard” in the data center industry.”
According to Kristian, Green Mountain is shaped by four core values: a strong customer focus; reliability and honesty; knowledge and enthusiasm.
“These values are deeply rooted in our company culture and reflect on anything we do. After all – it is all about the people.”
To delve deeper into Green Mountain’s people-led philosophy, and the importance of the human factor in the running of a data center, we spoke to four Green Mountain employees, spanning the company’s entire value chain.
To help enable businesses to launch, analyse and manage sustainability targets, Tech Mahindra has announced its end-to-end ESG portfolio, which will also aim to help them achieve their ESG goals.
Through the portfolio, Tech Mahindra will help customers reduce their current carbon emissions footprint by renovating across operations, supply chains and processes.
“Sustainability has always been at the core of how we do business at Tech Mahindra. We have been a proud flag bearer of sustainable development and over the years, we have improved our sustainability strategy and scaled our spending on sustainability measures to mitigate the impacts of climate change while also creating value for our stakeholders. With our comprehensive ESG offerings, we are taking a step further to help our customers shape a better and sustainable future,” said Sandeep Chandna, Chief Sustainability Officer, Tech Mahindra.
Using technologies to create a greener future
Founded in 1986, Tech Mahindra is part of the Mahinda group, which is one of the largest multinational federation of companies with more than 158,000 professionals across 90 countries.
The company has pledged to achieve carbon neutrality by 2030 and 50% renewable energy mix by 2025. It is also a Signatory to 1.5degree supply chain and ESG Centre of Excellence. In 2020, it ensured carbon emission reduction by 31% and aims to reach 50% GHG emissions reduction by 2035 and net-zero by 2050.
With this new announcement, Tech Mahindra will assist customers in measuring, monitoring, improving, and achieving ESG plans by offering tailored solutions for distinct needs. The organisation’s ESG offerings are developed by leveraging the research and insights garnered during the last 15 years of operations in the domain.
According to the company, artificial intelligence (AI) levers could reduce worldwide GHG emissions by 4% by 2030, an amount equivalent to 2.4 Gt CO2e. The Internet of Things (IoT) is projected to reduce global carbon emissions by around 20% and data centre management, wherein moving to cloud can reduce energy and emissions up to 35% on server management.
As AWS, Microsoft Azure and Google Cloud work toward their carbon-free and net zero carbon emissions goals, they’re also helping their customers understand their own cloud-related carbon footprints and take steps to reduce their impacts.
All three have released tools that, in varying degrees, measure estimated carbon emissions tied to individual customers’ cloud infrastructure and services usage and help them work more sustainably. Enterprises can use those tools to make and track progress toward their carbon-reduction targets and meet environmental, social and corporate governance (ESG) reporting requirements.
Cloud providers’ data centers are energy-intensive, and the electricity used to run them generates greenhouse gas emissions: primarily carbon dioxide, which is tied to global warming.
“Consumers, employees, investors and policymakers are demanding that organizations prioritize sustainability and be transparent about the impact they’re having on the environment and the progress they’re making on their sustainability initiatives,” Google Cloud CEO Thomas Kurian said during the cloud provider’s inaugural Sustainability Summit last month.
For cloud customers, it comes down to “map, measure, reduce,” said Christopher Wellise, AWS’ director of sustainability. Customers need to map their operational boundaries, use tools to measure the carbon impact and then create targets and strategies for reduction.
“Then it’s look for ways to transform their own business — what products are they innovating, what are their customers looking for — and begin to embed sustainability into their innovation practices,” Wellise told Protocol.
Christopher Wellise, AWS’ director of sustainabilityPhoto: AWS
It’s unclear how last month’s Supreme Court ruling, which limited the Environmental Protection Agency’s ability to regulate emissions from existing coal- and natural gas-fired power plants, will impact enterprises’ plans. But the Securities and Exchange Commission unveiled proposed rule changes in March that would force public companies to make certain climate-related risk disclosures, including their emissions, to provide greater transparency for investors.
Either way, certain large multinational companies and financial institutions doing business or investing capital in Europe still face sustainability requirements under EU rules, even if they’re U.S.-based, according to Elisabeth Brinton, Microsoft’s corporate vice president of sustainability.
“The EU made their jurisdictional authority for sustainability very similar to GDPR and privacy,” Brinton told Protocol. “So the market and where we have to go in terms of enabling not only carbon emissions reductions, but then across ESG more broadly, actually flows through and across to the U.S. companies that are global. It touches down into your cost centers, regardless of where they are.”
Here’s a look at how the Big Three cloud providers have been moving toward their carbon goals and helping customers decarbonize their applications and infrastructure, and how other technology companies are jumping into the business.
AWS
Amazon co-founded The Climate Pledge in 2019, committing to achieve net zero carbon emissions across its businesses by 2040, including plans to power its operations with 100% renewable energy.
“We have a 2030 target of reaching 100% renewable energy, but we’re actually five years ahead of schedule,” Wellise said.
Amazon bills itself as the world’s largest corporate purchaser of renewable energy. It’s announced more than 310 renewable projects globally, including wind and solar farms, that it says will have the capacity to deliver more than 42,000 gigawatt hours of renewable energy annually – enough to power more than 3.9 million U.S. homes per year.
Enterprises can start to reduce their carbon emissions just by moving their workloads from on-premises data centers to the cloud, according to Wellise.
“There are big benefits, obviously, just moving into cloud primarily, and then there are some things we’re doing once you’re within cloud to help optimize workloads for customers, which further drives down their carbon footprint,” he said.
On the demand side, AWS designed its own semiconductor chips to run specific workloads and further drive energy efficiencies in its data center infrastructure, Wellise noted. They include its Arm-based AWS Graviton processors. Graviton3-based compute instances use up to 60% less energy for the same performance than comparable instances using Intel or AMD chips, according to AWS.
“We’re really achieving huge economies of scale,” Wellise said, pointing to AWS-commissioned 451 Research studies that found AWS’ infrastructure is 3.6 times more energy-efficient than the median of surveyed U.S. enterprise data centers and up to five times more energy-efficient than average data centers in Europe and Asia. “Two-thirds of that is accomplished through our economies of scale and specific hardware design, and the other third of that is driven by our renewable energy programs. What that results in is up to an 80% reduction in carbon footprint associated with our customers’ workloads.”
AWS’ Customer Carbon Footprint Tool, which became generally available in March, allows customers to see the estimated carbon impacts of their AWS workloads down to the service level for its EC2 compute service and S3 storage service. Customers also can get an estimate of the carbon emissions they avoided by using AWS instead of on-premises data centers, a calculation based on the 451 Research report findings.
The Customer Carbon Footprint Tool shows AWS’ Scope 1 and Scope 2 emissions associated with a customer’s cloud use from January 2020 onward. Scope 1 emissions come directly from AWS’ operations, such as the energy consumed by its data centers; Scope 2 emissions are indirect emissions from the generation of purchased energy, such as the production of electricity used to power AWS facilities.
The dashboard calculates those emissions monthly, but the data is reported on a three-month delay due to billing cycles of AWS’ electric utilities suppliers. Customers can measure changes in their carbon footprints over time as they deploy new resources on the cloud and review forecasted emissions based on their current usage and AWS’ renewable energy project road map.
The Customer Carbon Footprint Tool, which is available in AWS’ billing console, uses the Greenhouse Gas Protocol accounting standards.
“Whether it’s governments, nonprofits, other organizations that are using our services, many of them are involved in either mandatory or voluntary related carbon reporting,” Wellise said. “And if they’re a large SaaS provider or somebody that has a large percentage of their footprint tied up in IT, it’s really important that they understand what that footprint is.”
But since the tool’s rollout, AWS has been drawing some criticism for its lack of transparency, such as not disclosing its Scope 3 emissions and aggregating emissions data by the broader geographies instead of breaking it down at a cloud-region level. RedMonk analyst James Governor referred to it as a “Version One product,” saying an API would help developers build carbon tracking functionality into their apps or access the emissions data via their preferred command line tools or editors.
“The calculator also doesn’t initially have an easy way to compare and model carbon intensity in different regions — that’s something that we will hopefully see sooner rather than later,” Governor wrote in April. “Instead, the calculator is initially positioned to illustrate the benefits of AWS hosting over self-hosting in your own data centres. Reasonable enough, but the real charm will be when customers can make better decisions about the sustainability of their cloud workloads.”
Wellise acknowledged that customers would like more regional granularity and an API to parse the emissions data on their own. Including Scope 3 emissions and “further definition for regional differences” are on AWS’ road map, according to an AWS spokesperson.
Once customers get their carbon data, the conversation moves to optimization, according to Wellise. In March, AWS added a Sustainability Pillar to its Well-Architected Framework, which provides a set of best practices for designing and operating workloads in the AWS cloud.
“They can actually drive down and architect workloads in a way that they optimize for carbon,” Wellise said.
Microsoft
Rival Microsoft has set a goal to become carbon-negative by 2030. Two years ago, it announced a $1 billion climate innovation fund to spur development of carbon reduction, capture and removal technologies, and Climeworks is among its investments. Microsoft this month signed a 10-year agreement under which Climeworks, which specializes in direct air-capture, will permanently remove 10,000 tons of carbon emissions from the atmosphere on its behalf. And last month, the Microsoft Climate Research Initiative launched with a focus on overcoming constraints to decarbonization, reducing uncertainties in carbon accounting and assessing climate risks in greater detail.
For customers, Microsoft’s Cloud for Sustainability became generally available in June as a set of ESG capabilities from across its cloud portfolio, including Office 365 products such as Excel as well as products and services from partners.
More than 60% of sustainability-related data from global enterprises sits in Excel, according to Brinton.
By pulling together enterprises’ Excel data and edge or IoT data, the Cloud for Sustainability provides an extensible data platform for unified data models and for turning that data into actionable insights that drive “double bottom line of corporate performance, along with actual measurable impact around ESG,” she said.
Elisabeth Brinton, Microsoft’s corporate vice president of sustainability, said even U.S. companies face EU climate rules.Photo: Microsoft
Microsoft’s Sustainability Manager app is a baseline tool to help customers get a handle on their Scope 1, 2 and 3 emissions, according to Brinton. It automates data collection, centralizing disparate data into a common format to enable customers to record, monitor, analyze and report their emissions in near real time, and set and track sustainability targets.
“A typical enterprise is going to have well over 100,000 different cost centers, and so being able to pull up and actually report and understand exactly your carbon emissions status by cost center — that’s a huge data science challenge,” Brinton said.
Microsoft’s Emissions Impact Dashboard for Azure became generally available last October. The Power BI application lets customers track, report and reduce the carbon emissions associated with their Azure cloud usage. Its dashboard lets customers drill down into Scope 1, 2 and 3 emissions by month, service and data-center region, and enter non-migrated workloads to get estimates of emissions savings from migrating to Azure.
“It helps them with critical insights, helps them make informed, data-driven decisions about their own sustainable computing,” Brinton said. “It is a really, really great tool that gives you that real-time information.”
Microsoft’s Emissions Impact Dashboard for Microsoft 365, which allows customers to track GHG emissions tied to their use of applications including Microsoft Teams and Exchange Online, is in preview.
Microsoft also is continuing to focus on opportunities for sustainable low-code, no-code options, according to Brinton.
“Low-code/no-code is an example of a method that you can actually derive sustainable improvements [from] because you’re actually lowering the energy intensity, as it were, of your ability to develop code or compute,” she said.
Google Cloud
Google Cloud, which says it’s been carbon-neutral since 2007, has matched 100% of its electricity consumption with renewable energy since 2017 and maintains it operates the “cleanest cloud.” Its “moonshot” goal is to use carbon-free energy 24/7 in all of its data centers and offices by 2030 — which means it would match its electricity use with carbon-free energy for every hour in every region where it operates — as part of its goal to reach net zero emissions across its operations that year.
Google Cloud’s Carbon Footprint, in preview as of last October, allows customers to measure, report and reduce their carbon emissions by providing the gross carbon emissions associated with the electricity from their Google Cloud Platform usage. Customers can monitor their cloud emissions by product, project and region. Google Cloud is adding Scope 1 and 3 emissions to that reporting data.
“In addition to accounting for our customers’ Scope 2 emissions associated with the production of the energy that we use, customers will also be able to access data on the emissions from the sources we control directly, as well as the relevant emissions of Google’s Scope 3 apportioned to customer usage,” Justin Keeble, managing director of global sustainability at Google Cloud, told reporters in a briefing last month. “This will give our customers the most comprehensive view possible of the emissions associated with their cloud usage.”
Google Cloud’s Carbon Footprint allows customers to measure, report and reduce their carbon emissions.Image: Google Cloud
Customers can export data from Carbon Footprint to Google Cloud’s BigQuery data warehouse to perform analytics and visualizations, in addition to using the data for sustainability reporting requirements. Google Cloud publishes its calculation methodology so auditors and reporting teams can verify that data meets Greenhouse Gas Protocol frameworks for measuring emissions. Non-technical users of Google Cloud, such as sustainability teams, also will be able to access the data for reporting purposes.
Early next year, Google Cloud plans to release Carbon Footprint for Google Workspace (its cloud-based productivity and collaboration tools) so customers can understand emissions associated with products including Gmail and Google Meet and Docs.
Carbon Footprint is part of Google Cloud’s Carbon Sense collection of tools that includes features from products such as Active Assist — its tools for customers to optimize their cloud operations — and Region Picker. Google Cloud added a sustainability category to Active Assist, and its unattended project recommender uses machine learning to estimate the gross carbon emissions that customers can save if they remove abandoned or idle cloud resources.
“In addition to intentionally shortening resource schedules, you can also proactively delete unused VMs, optimize VM shapes, as well as shut down inactive projects,” said Alexandrina Garcia Verdin, a cloud and sustainability developer relations engineer at Google Cloud. “This is where the Active Assist tool really shines, as it proactively suggests carbon-reducing configurations, along with other cost-performance and security-friendly actions.”
One of the most impactful steps a customer can take to reduce cloud-related emissions is using Region Picker to select cloud regions powered by cleaner energy, Keeble said. Google Cloud last year unveiled the carbon characteristics of its cloud regions and icons identifying low-carbon cloud regions so customers can choose “cleaner” ones for their work. Region Picker helps customers compare priorities around lowering emissions versus pricing and latency.
Google Cloud also has introduced low-carbon mode, which lets customers automatically restrict their cloud resources to low-carbon locations across Google Cloud infrastructure with a few clicks.
“Setting defaults can really just simplify the number of priorities put on developers while still ensuring the apps they build run on as low carbon infrastructure as possible,” Kate Brandt, Google’s chief sustainability officer, said during the Sustainability Summit. “For organizations where digital infrastructure is a considerable part of their supply chain footprint, prioritizing sustainable infrastructure … can really make a huge difference.”
Salesforce, a Google Cloud customer that’s been prioritizing low-carbon infrastructure, expects to reduce its yearly gross emissions of certain workloads by roughly 80% with Google Cloud, Brandt said.
Google Cloud is sharing 24/7 carbon-free energy data with customers under a new pilot program announced last month. The information, collected by Google Cloud and its partners over 10 years, includes historical and real-time regional energy grid and carbon data at hourly levels. Customers will be able to see their electricity emissions profile, baseline their carbon-free energy (CFE) score and their Scope 2 emissions footprint from indirect GHG emissions, and forecast and plan for an optimized energy portfolio to achieve its desired CFE score, including by executing carbon-free energy transactions.
The cloud provider last month also rolled out Google Cloud Ready – Sustainability, a new validation program for partners with products and services on Google Cloud that assist customers in achieving sustainability goals, including reducing carbon emissions, increasing the sustainability of their value chains and processing ESG data. The products and services will be available through a new Google Cloud Marketplace Sustainability Hub.
Other efforts
Other companies also are jumping into the mix. Alibaba Cloud last month released Energy Expert, software for customers to manage the carbon emissions of their operations and products. Cloud Carbon Footprint, an open-source project sponsored by Thoughtworks, provides tooling to measure, monitor and reduce cloud carbon emissions, including embodied emissions from manufacturing, and works for multiple cloud providers, including AWS, Microsoft Azure and Google Cloud.
Cirrus Nexus, which has an artificial intelligence-driven cloud management platform, in May launched TrueCarbon, a carbon-reduction tool that currently works for AWS and Microsoft Azure.
“We look at actual consumption,” Cirrus Nexus CEO Chris Noble told Protocol. “We just don’t take a database or a virtual machine or some sort of workload and say, ‘OK, this is about how much carbon.’ We actually look at it in five-minute increments. We don’t rely on the reporting of the CSP [cloud service provider]. Our interest isn’t driving utilization or driving efficiency in their data centers. Our goal is to give our customers a very clear, honest view of how much carbon they’re causing to be produced, regardless of what offsets, what carbon credits CSPs buy.”
TrueCarbon uses real-time information from energy production data that’s published on an hourly basis for the U.S., U.K. and EU, according to Noble.
“Every hour, we know what that composition on the energy grid is,” he said. “We know how much of the energy is nuclear, coal, wind, solar. So every five minutes, we look at how much power they’re consuming per workload, and then we translate that to how much energy it’s consuming off the grid. And we translate how much carbon that’s caused to be produced by consuming that energy.”
TrueCarbon also allows customers to automate changes, according to Noble.
“If a company really wanted to get aggressive about it, we can move their workloads from region to region to get the best carbon efficiency,” he said. “Our tool will actually go out and make those changes for them on the fly.”
Cloud providers pour billions of dollars into their data centers and have a vested interest in driving business through them, even if they’re not as environmentally sound as data centers in other cloud regions, Noble said.
“They built data centers where there’s … lots of reliance on coal and oil and natural gas,” he said. “They’re not going to fold them up tomorrow. We believe things like carbon credits are helpful and they’re good, they draw attention, but they don’t really solve anything. Carbon offsets like planting trees, you know it’s good, but it doesn’t really change the amount of carbon being produced.”
One of Asia’s first specialist sustainability recruitment firms has opened for business in Singapore as demand for jobs in the environmental, social and governance (ESG) space grows in the wake of the Covid-19 pandemic.
Acre, which was founded in London by British zoology graduate Andy Cartland in 2003, will use Singapore as its Asia Pacific base as it looks to service clients around the region.
Cartland said the time was right to launch in Asia, as the region is experiencing rapid growth in demand for sustainability talent and skills.
Acre posts candidates working in sustainability, impact investing, health and safety, and energy and clean technology, and will be compete with other firms that offer ESG recruitment services, such as NextWave, Formative Search, and Odgers Berndtson.
“Asia is arguably behind Europe and the United States when it comes to sustainability. But the region is moving at light speed to catch up. We want to be part of this transition,” Cartland told Eco-Business.
He noted that the business took a 20 percent revenue hit in 2020 as a result of the pandemic, but 2021 saw the business rebound and revenue and headcount grow by 100 percent, which has enabled the company to expand to Asia.
“We are on track for similar growth this year as well,” he said.
Singapore will be Acre’s third overseas launch, with it having established a European operation in Amsterdam and a North American hub in New York in recent years.
Acre’s Singapore launch will enable the company to service existing multinational clients with operations in the region, and also local companies in the global supply chain.
The company’s past work in Asia includes recruiting a leadership team for the Bangladesh Accord, a coalition of global brands, retailers and trade unions set up in 2013 to improve health and safety in Bangladesh’s garment industry.
Among the candidates Acre has placed recently include the global environment, health and safety director at Amazon, and the executive director of the International Cocoa Initiative (ICI), a Swiss non-profit working to tackle child labour in the cocoa sector.
Cartland, who will move from London to Singapore in August to oversee the launch, has appointed an executive director for the Singapore office, who has yet to resign from his current job and will relocate from Hong Kong.
Acre’s Asia launch comes a month after a report by business social network LinkedIn showed 30 percent growth in hiring for green jobs between 2016 and 2021, with a spike in sustainability recruitment between 2020 and 2021.
The report also highlighted a shortage of talent for ESG roles in the region.
Cartland said that while there is a large talent pool of sustainability professionals in London, candidates in Asia, where the sustainability sector is less developed, are harder to find.
“Asia faces a different candidate sourcing challenge, and we will need to help clients navigate the [ESG] skills gap,” he said. “Our role is to find people where they’re tough to find.”
This will may involve thinking creatively about transitioning people out of non-sustainability roles, he said.
Acre is aiming to double its Asia operation by its second year, following the growth trajectories of its European and American businesses, Cartland said.
Addressing the ever-worsening climate crisis will require the largest sustained movement of capital in history. At least $100 trillion must be invested over the next 20-30 years to shift to a low-carbon economy, and $3-4 trillion of additional annual investment is needed to achieve the Sustainable Development Goals by 2030 and stabilise the world’s oceans.
Mobilising these huge sums and investing them efficiently is well within the capacity of the global economy and existing financial markets, but it will require fundamental changes to how these markets work. In particular, traditional financial institutions will need help in sourcing the right projects, simplifying the design and negotiation of transactions, and raising the capital to fund them.
Many sustainability ideas are small-scale, which partly reflects the nature of innovation, whereby ideas are developed, tested, and, if successful, eventually copied. But the disconnect between those developing sustainability projects and the world of traditional finance means that scaling such initiatives is not straightforward.
At the risk of oversimplifying, sustainability advocates may be suspicious of “Big Finance” and its history of funding unsustainable industries. Investors, on the other hand, may be wary of idealistic approaches that ignore bottom-line realities, and might not be interested in small-scale transactions.
Given this disconnect, how do we scale up sustainable projects from small investments to the $100 million-plus range that begins to attract Big Finance and thus the trillions of dollars needed to make a global difference?
The disconnect between those developing sustainability projects and the world of traditional finance means that scaling such initiatives is not straightforward.
Three steps, in particular, are necessary. First, securitisation techniques should be employed to aggregate many smaller projects into one that has enough critical mass to be relevant. Securitisation got a bad name in 2007-08 for its role in fueling the subprime mortgage crisis that brought the developed world to the brink of financial ruin.
But when properly managed, joint financing of many projects reduces risk, because the likelihood that all will have similar financial and operational issues simultaneously is low. For the resulting whole to interest investors, however, the numerous smaller projects need to have common characteristics so that they can be aggregated. This cannot be done after the fact.
For example, we need to develop common terms and conditions for pools of similar assets, as is already happening in the US residential solar market. Then, we need to explain the fundamentals of securitisation to more potential grassroots innovators through regional conferences that bring together financiers and sustainable-project developers.
Second, we must reduce the complexity of key transaction terms and make it easier to design and negotiate the specifics of instruments used to invest in sustainable projects. In established financial markets, replicating significant parts of previous successful deals is much easier than starting from scratch for each transaction. This approach works because many of the terms and conditions for subsequent deals have already been accepted by key financial players.
Making successful innovations more visible to investors is therefore crucial. To that end, we should establish a high-profile, open-source clearinghouse of previous sustainable projects, including those that have been successfully funded and those that failed. This would be similar to many existing financial-sector databases but freely available, with reputable third-party oversight to ensure accuracy.
Third, the range of funding sources for sustainable projects needs to be expanded and made more transparent. Because sustainability investments may offer lower returns according to historic financial-market metrics, traditional asset-allocation practices, against the backdrop of “efficient markets,” would imply reduced attractiveness.
But historic benchmarks do not sufficiently factor in the exploding field of impact investing, which embraces different return and time thresholds and now accounts for about $2.5 trillion of assets. Securitising tranches of different kinds of impact investing could prove to be a game changer for sustainability financing.
It would thus make sense to create an open-source database of investor appetite – similar to the project database mentioned above – that is searchable by innovators and designers of new sustainable projects. This would make it easier to identify investors – equity, credit, or some hybrid – who might commit funding. The database could be housed in an organization such as the International Finance Corporation, the United Nations, or the Global Impact Investing Network.
There are encouraging precedents. The green bond market started just over a decade ago, and total issuance already could reach $1 trillion this year. And a critical mass of the financial world attended the UN Climate Change Conference (COP26) in Glasgow last November. Under the leadership of UN Special Envoy Mark Carney, the Glasgow Financial Alliance for Net Zero (GFANZ) has made $130 trillion in climate-finance commitments.
In 1983, Muhammad Yunus founded Grameen Bank in order to provide banking services, and especially loans, to individuals (primarily women) previously considered to be “un-bankable.” By the time Yunus won the Nobel Peace Prize in 2006, “micro-lending” had become a global phenomenon, with traditional financial institutions involved in securitizing these loans.
The financial revolution that Yunus started transformed retail lending, streamlined how such transactions are structured, and tapped a new source of scaled investment capital. To help address today’s existential sustainability challenges, capital markets and their major players need to be more innovative still and open the door to non-traditional, even disruptive, voices and ideas.
A systematic shift is needed across all sectors of the UK economy to support the government’s net zero commitment by 2050. Industries that produce significant volumes of carbon emissions have much to do to play their part. These include the manufacturing and construction sectors that together account for 16 per cent of total UK emissions.
Stakeholder requirements, regulation and incentives are driving decarbonisation efforts. However, UK manufacturers have the opportunity to go beyond expectations on improving the environmental and social impact of their products and services. Ultimately, they need to create value and competitive advantage by putting sustainability at the centre of business strategy and pursuing meaningful decarbonisation objectives. Such an approach will help businesses reach two main objectives: meeting regulatory requirements on managing their own carbon footprint during operations and through their supply chains (scope 1 and 2 emissions) and reducing the impact of their products and offerings on the environment when in use (scope 3 emissions). Additionally, companies may also find that putting sustainability at the heart of their business strategy will open up opportunities for developing new products and entering new markets.
Minimising the environmental impact of offerings can be a complex strategic decision that will require closer collaboration with a company’s entire stakeholder community – including suppliers and customers – and forging new alliances with other companies, centres of innovation and educational institutions.
Energy transition and digital transformation are rapidly changing what work we do, how we do it and where we do it. However, growing competition for both sustainability and digital competencies [from other sectors], an ageing workforce, fewer new recruits and a lack of diversity all point to increasing skills challenges in the future.
After considering the net-zero related opportunities and challenges, this article explores how companies can improve their workforce approach and better align their skills agendas to maximise opportunities in energy transition.
UK net zero obligations, opportunities and challenges
Environmental, social and governance (ESG) scrutiny of businesses is increasing rapidly as investors and UK policy makers put more pressure on companies to disclose and reduce the environmental impact of their operations. For example, the scope of Streamlined Energy and Carbon Reporting (SECR) legislation was extended on 1 April 2019 to large UK incorporated companies (including private companies) that meet certain qualifying criteria.1 The scheme requires businesses to report on their energy consumption, scope 1 and 2 greenhouse gas emissions and explain their actions to improve energy efficiency.2
Further, the government aims to expand the scope of the Task Force on Climate-related Financial Disclosures (TFCD) in the UK. In November 2020, the UK government announced mandatory climate risk reporting aligned with TCFD guidelines for premium listed companies, for accounting periods beginning on or after 1 January 2021. It also laid out a roadmap to bring all listed entities, large private companies and limited liability partnerships in the UK under the scope of TFCD by 2025, most by 2023. This means that every year an increasing number of UK manufacturers will have to report on their governance and strategies for managing climate-related risks and opportunities and assess the financial impact of such risks on their business based on a number of scenarios.
In addition to tightening the rules around climate-related financial disclosures, two recent policy papers set out measures to help the UK meet its net zero target and the role that the manufacturing sector is expected to play in the process.
The UK government’s Ten Point Plan for a Green Industrial Revolution outlines the technology areas that will benefit from greater government support as well as policy proposals and funding packages to scale them up. These technologies include advancing offshore wind, low carbon hydrogen production, zero emission vehicles and their associated infrastructure, greener buildings as well as carbon capture, usage and storage (CCUS). The Plan aims to mobilise £12 billion government investment and potentially three times as much private money, while also creating and supporting up to 250,000 green jobs.
The Industrial Decarbonisation Strategy sets ambitious carbon emission reduction targets for industry to support the UK’s net zero effort. The Strategy expects industrial emissions to be reduced by two-thirds by 2035 and by 90 per cent by 2050, with 3 megatonnes of CO2 (Mt Co2) captured through CCUS and around 20 terawatt-hour (TWh) of energy used in the form of low carbon fuels by 2030. This is a tall order for the sector that was responsible for 72 Mt Co2e emissions in 2018. However, the government is confident that “ the UK can have a thriving industrial sector aligned with the net zero target, without pushing emissions and business abroad”.
The new financial reporting requirements and the two policy papers create a level of urgency that requires manufacturers to take greater responsibility for the environmental impact of their activities. While the pressure falls more immediately on listed companies and large private businesses, the inference is clear for all UK companies, regardless of their size.
According to a 2020 survey by the Institution of Engineering and Technology (IET), 53 per cent of manufacturing and 61 per cent of construction businesses in the UK have sustainability agendas. The top three actions companies took to deliver these agendas related to using new, greener technologies, adapting existing technologies to be more green and encouraging telecommuting/remote working.
However, the real challenge and opportunity will be for both UK and global businesses to combine carbon focus with efforts to improve their productivity and international competitiveness. This cannot be done by treating sustainability as just one of many company initiatives. Sustainability has to be a strategic driver. This may drive a company to reconfigure its entire manufacturing lifecycle. This is a complex decision that could involve a company’s entire supply chain and require forging new partnerships. Areas that need to be considered include:
product design – reducing cost and waste during production, improving energy efficiency of the product and rapidly incorporating the use of new materials in the design process. It can also make a product part of the circular economy, by making it easier to repair, reuse or recycle.
raw material selection – using ethical, sustainable and alternative materials for production.
production – improving operational efficiency and reducing waste during production, implementing smart production technologies and using renewable energy sources.
shipping – reducing the carbon footprint of transporting raw materials, components and delivering final products. This involves setting carbon targets for transport providers and working closely with them.
aftermarket – shifting towards the circular economy model by providing spare parts, repair, recycle and disposal services, and optimising the efficiency of products in the field.
The benefits of sustainable manufacturing go beyond meeting regulatory compliance and energy cost reduction. They can include better risk management, improved overall operational efficiency, reduced waste, a positive impact on the company’s brand and reputation as well as relationships with local communities. While cost efficiency is a key performance indicator for nearly every business, companies realise that green credentials can help build trust with customers and open new markets. It also helps that customer perceptions of value are changing: 51 per cent of respondents of a recent survey think that the environmental credentials of a product or service are now just as important as the price they pay for it.
No manufacturer was left untouched by COVID-19. Business models, operations and attitudes to technology and the workforce all had to change as the pandemic rapidly unfolded. As leaders reflect on lessons from the pandemic, many realise that the speed of decision-making, agility to change operating models and a more resilient supply chain will be crucial for a long-term, green recovery.
As complex international supply chains were disrupted during national lockdowns, companies needed to consider multiple sourcing and, in some cases, relocating parts of the manufacturing lifecycle.
Digital adoption and the potential for increasing carbon costs may provide further incentives to establish regional, distributed manufacturing hubs across the UK. The term ‘green-shoring’ could be used to describe this potential trend.3 These hubs could be driven by businesses that engage in the circular economy and focus strongly on customers. For example, networks of small additive manufacturing facilities could serve specific customer needs faster and potentially cheaper if they are located close to their clients – thus reducing carbon emissions, time and cost spent on transport. Further opportunities may also arise in the future in combining low carbon energy sources and circular economy concepts in ‘reindustrialising’ certain parts of the country very much in line with the government’s levelling up agenda.
The pandemic gave leaders an opportunity to rethink strategies. As companies adapt and learn to live with the virus, we may see a growing number of manufacturers choosing to re-engineer their product portfolios towards the new energy technologies highlighted in the two policy papers. Undoubtedly, there will be opportunities to build infrastructure, manufacture equipment and components, and supply services for these green technologies. Initially, these will be focusing on the large industrial clusters to provide volume. While the pipeline of activities and a low carbon supply chain are slowly building, most of the projects that will make a material contribution to the net zero objective need to mature to provide opportunities on scale for UK businesses. However, companies need to get ready for when the floodgates open – as they may do when strategies and financial support mechanisms for various green technologies are established. Therefore, the question arises: what can manufacturers do now to create a competitive advantage for the green industrial revolution?
Manufacturing and construction workforce opportunities and challenges
The key opportunity for companies is to put sustainability at the heart of their business strategy and attract, develop and retain a motivated workforce to execute their plans.
However, building a workforce quickly that is capable of delivering a strategy with sustainability at its core will be a challenge. Only slightly more than half of manufacturing and construction businesses have sustainability agendas in the UK and less than one in ten have all the skills they need to deliver these programmes.
There are also some long-standing workforce issues the industry needs to address alongside sustainability. According to the Employer Skills Survey 2019, 36 per cent of vacancies in manufacturing and construction were hard to fill because applicants lacked the appropriate skills, qualifications or experience – compared to the national average of 24 per cent.4 In construction alone, an additional 350,000 full-time equivalent workers will be needed by 2028, mainly to upgrade existing buildings to reduce their energy consumption. With 11 per cent of the sector’s workforce coming from the EU, the UK’s departure has exacerbated skills shortages. The ageing workforce and lack of diversity are also issues. While women make up 48 per cent of the overall UK workforce, they only accounted for 28 per cent of manufacturing and 14 per cent of constructions occupations between January and March 2021.
Attracting future talent will also be difficult. While remote working provides more opportunities to recruit globally, Engineering UK estimates that there is an annual shortfall of between 37,000 and 59,000 engineering graduates and technicians to meet the yearly demand for 124,000 engineering roles across the UK economy. But it is not only about the numbers: the majority of graduates and apprentices finish their programmes with little training in the digital skills they will need for a future in manufacturing.
Indeed, the government set up the Green Jobs Taskforce following the publication of the Ten Point Plan for a Green Industrial Revolution policy paper to address the skills challenge. Its recently published report explains how the UK skills sector needs to adapt to support net zero.
Delivering the sustainability agenda will also require new skills that businesses have not traditionally targeted. These include the ability to quantify and analyse a company’s emissions data, set targets, articulate abatement pathways, forecast costs and timings as well as liaise closely with stakeholders around targets, actions and progress. Companies will also need new skills in emerging green technologies that will help them move from using hydrocarbons as a fuel source to hydrogen and batteries. Many of these skills are not industry-specific, so competition for them will certainly increase across the economy. To stay ahead of the competition, leading companies are appointing chief sustainability officers, starting to build sustainability teams and/or working with external advisers.
Digital technology will be key to optimise and make company operations, wider supply chains as well as products and offerings more sustainable. As smart factory principles and exponential technologies – such as robotics, cognitive automation, artificial intelligence, data analytics and the Internet of Things – advance, they will require digital skills and create roles and career pathways that do not exist today. Given that many manufacturing businesses are not yet investing at scale in net zero opportunities until more projects materialise, how do companies know what skills, knowledge and capabilities they need to recruit for in the future?
What should manufacturing companies do?
1. Put sustainability at the heart of business strategy
To meet decarbonisation targets for their operations, supply chain and product portfolio, manufacturing and construction companies should consider including sustainability in their business purpose, set clear decarbonisation targets and build their company strategy around it.
There is also a need for strong leadership that can articulate the benefits of sustainability to the business. This is crucial as decarbonisation targets and plans are likely to be set out by central sustainability officers but executing them and finding new opportunities will require the company’s entire workforce.
Each and every employee across the business will need to be empowered to play their part and bring fresh ideas to help the company exceed its targets. Having individual responsibility and ability to act will be important to reach net zero targets. Working for a business with strong sustainability credentials and a culture of innovation will give the workforce the opportunity to see the positive impact they are making.
2. Focus on digital and transferable skills and capabilities that allow learning rather than focusing on industry knowledge and experience
Leaders have the opportunity to reconsider the short- and long-term workforce needs of their organisation and find the right blend of specific skills and knowledge, soft skills and capabilities, and digital/human interface.
Electrical, mechanical and civil engineering skills will continue to play key roles in designing and making products and offerings for energy transition. However, materials, technologies and operational setups will change more rapidly and frequently in a sustainable, digital world. This means that in addition to core engineering skills, the workforce needs to demonstrate agility and the ability to learn quickly. The ability to work alongside and effectively incorporate artificial intelligence, machine learning, augmented reality tools and robotics into day-to-day activities will also become critical capabilities. Indeed, the Deloitte Human Capital Trends report highlights that using digital technology to increase the capability of teams to learn, create and perform in new ways leads to better outcomes. Organisations will also need effective cross-functional skills, including collaboration and social intelligence, as well as more technical skills such as cybersecurity, regulatory or commercial strategy.
These highly transferable skills will become more important than industry knowledge or experience. Continuing to strengthen these along with adopting a mindset focused on problem-solving and soft skills should make the company more adaptable and flexible to access further skills when necessary.
Companies need to build a net zero workforce that has both the skills and capabilities as shown in Figure 1.
Figure 1. Net zero workforce – skills and capabilities
Source: Deloitte analysis
3. Build the net zero workforce
Building the net zero workforce should start by redefining work in three different, yet intrinsically connected dimensions: the work itself, the workforce and the workplace. The table below provides questions manufacturing companies may want to explore.
Re-architect work
Robotics, cognitive technologies and Al help people focus on more strategic and value-adding activities.
Are you restructuring work to make your workforce’s activities more efficient? What should this job do, what should it stop doing and what can be automated?
In addition to automation, how are you using technology to enhance your workforce’s skills and capabilities?
How can you turn work from task completion to problem solving and managing relationships?
Which roles can be performed sustainably on a remote or hybrid basis?
Unleash the net zero workforce
Access to broader talent ecosystems help shift focus from structure to capabilities and potential.
How do you motivate and reward workforce to align with your decarbonisation goals?
Do your hiring strategies help you compete for non energy industry specific skills?
How can you build internal talent marketplaces that identify technical skills, capabilities and interests as well as proficiency levels?
How can you curate personalised experiences to maximise your workforce’s potential?
Adapt the workplace
When focusing on the workforce, organisations first need to understand what the desired work outcomes are. Next, they will need to follow a set of steps to anticipate both the technical skills and soft skills the workforce will need in the future. Once these are identified, companies will need to assess where potential gaps could arise and develop a strategy and roadmap to meet future workforce requirements. Key considerations are shown in the table below.
Anticipate skills and capabilities
Based on your mid-and long-term energy transition ambitions consider:
what skills and capabilities your organisation will need in the future and at what proficiency levels
whether leadership has the skills to manage new technology and energy transition
what proportion of skills should be core and what can/should you borrow from other sectors
what skills can you enhance by technology and what can you automate
Assess the current skills and capabilities gap
To identify skills gaps, create a live inventory of the skills and capabilities of your workforce and that of your wider ecosystem, covering:
your workforce, project partners, suppliers, contractors, managed services, crowd sourcing platforms and collaborative partners, including skills academies and universities
passions and special interests
requests for work scheduling patterns and other personal requirements or circumstances
Develop a skills and capabilities strategy and roadmap
Develop a dynamic talent strategy to enhance workforce capabilities and address skills gaps. Consider:
which skills you will acquire and which ones will you develop
how you will access your broader talent system to complement your existing skill set
to what extent you will enable remote working with appropriate policy and compliance infrastructure
creating a leadership development and succession plan aligned to energy transition objectives
how you will use technology to enhance your workforce’s capabilities
dynamic learning and development programmes to support learning in the flow of work; leadership development programme and succession management; refreshed workforce mobility and talent acquisition approaches; a reward system aligned with energy transition/net zero objectives and based on value to the business; workforce composition and contingent workforce management; technology initiatives.
Organisations should also consider the following questions:
What additional support mechanisms are needed to keep the existing workforce focused on delivering the strategy?
How can staff be encouraged to explore new technologies and work with new talent towards sustainable goals?
How to create incentive mechanisms specific to certain Millennials and Gen Z who may view long-term incentives less attractive and change employment more frequently? This could include net zero-related incentives or exploring opportunities company-wide or in its extended networks.
How to develop a workforce that not only has the core technical and soft skills and capabilities for the near term, but can also access less specialised skills to scale up quickly if necessary?
4. Collaborate, collaborate, collaborate
In a world focused on reducing environmental impact of climate change and navigating rapid change, manufacturers can no longer act alone. There is an increasing need to collaborate with suppliers, energy providers, neighbours and, potentially, competitors and customers themselves to make the manufacturing lifecycle greener and help support customers decarbonise better. As the Green Jobs Taskforce recommendations suggest: business, the government and the education sector working closely together would ensure that the green jobs of the future provide high quality careers that are accessible for people from all backgrounds, in every region of the country.
In conclusion
Manufacturing and construction companies that realign their purpose and strategy around ESG goals early may not only able to meet regulatory and stakeholder requirements more easily but could also be better positioned to seize opportunities in energy transition. Re-energising their workforce approach and creating an environment for attracting and fostering the right balance of human and digital skills and capabilities will be the key to achieving sustainability goals.
Therefore, companies should:
Put sustainability at the heart of business strategy
Focus on digital and transferable skills and capabilities that allow learning rather than industry knowledge and experience
Build the net zero workforce
Collaborate, collaborate, collaborate
These actions should build a highly motivated workforce that is ready to deliver the net-zero goals in support of a cleaner, brighter and more sustainable future for the benefit of both business and the wider society.
