Future-Proofing Innovation

The first of three topics on the agenda for discussion was sustainable sourcing and end-to-end value chain transparency. What’s key, said Jackie Pynadath, Director Sustainability & Innovation at Google Cloud EMEA, is the ability to access and aggregate data at scale, because it’s the foundation of traceability in the supply chain. She explained this was why Google was making its Google Earth engine capabilities available for commercial consumption, which has, for example, enabled organisations like Unilever to trace the sources of the palm oil they use in order to mitigate the threat of deforestation.

Chris Webster, SVP IT Strategy & Architecture at Ahold Delhaize, advocated the use of blockchain in traceability. However, he added, in some cases the challenges are considerable. For instance, soybeans are used as cattle feed in parts of South America – but soybean farmers are often in collectives, which makes it difficult to trace the beans back to individual locations, or to identify which fertilizers, pesticides, or natural manure were used in growing them. Addressing these challenges is an industry-wide responsibility, he said.

In agreement was Fanny Weinbreck, Global R&D Director at Royal Agrifirm Group. “Gathering all this data and finding ways to measure it – that’s really the way forward. But we’re not there yet.”

Necessity is the mother of invention, said Laurens Sloot, founder and director, EFMI Business School, and professor by special appointment, Groningen University. When change is both inevitable and essential, organisations will be more likely to innovate and also to improve their business models. It’s also incumbent on the industry, he said, to make track-and-trace systems affordable all the way to suppliers at the furthest reaches of the supply chain.

“Gathering all this data and finding ways to measure it – that’s really the way forward. But we’re not there yet.”

Fanny Weinbreck
Global R&D Director, Royal Agrifirm Group

If transformation is necessary, Kees Jacobs asked, how should consumer, retail, and distribution companies go about it?

Lisa Verbeek, Senior Consultant Sustainable Business & Technology, Supply Chain and Retail at Capgemini, pointed out that for many consumers, sustainability isn’t just an environmental issue. While the food system is responsible for one-third of global greenhouse gases, she said, there are also social concerns: people want to know that farmers are being paid a decent price, and that labor conditions are fair, too. It’s about everything, said Chris Webster – the upstream supply chain, ethical sourcing, ethical labor, and more, including (as Jackie Pynadath added), demographic information relating to at-risk communities. “It’s about all these upstream attributes,” Chris Webster said. “It’s a really complex data problem.”

To navigate these issues, he continued, it would be useful to simplify the many, many sets of standards that are currently in circulation. “I think it should be made generic,” he said. “It’s defining a set of standards to which the whole industry could sign up.”

Technology can help address these challenges, said Ron Tolido, Executive VP, Chief Technology Officer & Master Architect at Capgemini. For example, artificial intelligence (AI), intelligent automation, and the use of sensors at the edge can gather data, reduce complexity, and bring people together, so that processes, supply chains, and communities can be transformed.

“We need to define a set of standards to which the whole industry could sign up.”

Chris Webster
SVP IT Strategy & Architecture, Ahold Delhaize

The second key topic of the discussion was the issue of food waste. Introducing it, Kees Jacobs said the subject elicited three big emotions in consumers. “One,” he said, “relates to themselves, which is guilt. They feel guilty if they waste food. But there are two other emotions. One is anger and the second is disappointment, and those two relate specifically to the roles that companies could be playing for them in their view.”

Jesse ‘t Lam, Co-founder & Partner at Brave New Food, said he’d seen hundreds of pitches in recent years that aimed to address food waste, which is a good indicator of how top-of-mind the topic is. Lisa Verbeek agreed: start-ups were taking societal problems and building businesses around potential solutions.
 
However, it isn’t just an area of focus for small-scale entrepreneurs. Fanny Weinbreck mentioned what she termed circularity, and at scale. For example, waste from the food industry can be repurposed as animal feed or as fertilizer. “We can be much, much sharper in how we make use of the resources we have,” she said. “It requires a holistic approach.” Chris Webster said this was an approach Ahold Delhaize was taking – and he also told the group about combining electronic shelf-edge labels with AI so that perishable food items could be dynamically marked down in price as they neared their sell-by dates.

Needless to say, thinking ahead helps too. Jackie Pynadath said Google had worked with a grocery business on demand forecasting to reduce bakery waste – and she also mentioned Karma, a Swedish initiative working with Google to enable restaurateurs and café-owners to sell surplus food to consumers. This not only reduces waste but, as Kees Jacobs pointed out, enables businesses to improve their forecasting.

Waste isn’t just a food problem. Ron Tolido pointed out that parallels could be drawn with data waste. “Where does it come from?” he asked. “Where do we store it? Should we store it in several places, or could we maybe share it instead of replicating it? Who is responsible for it? And how long do we keep it before it perishes? It’s an interesting analogy that I find instructive. It’s something IT people can learn a lot from as well,” he said.
 

The third and final topic concerned how the industry could engage with consumers in living healthier and more sustainable lives.
 
Laurens Sloot opened this part of the discussion by highlighting the growth of the global population. He said that new production methods and changes in protein sources would be needed, and that the need to reduce food waste would become more urgent. Consumers would need to be encouraged to reduce red meat in their diets, and to move towards white meat, fish, and plant-based food sources. These are not only healthier, but more sustainable in terms of their environmental impact.
 
The panel agreed that the public would need to get used to another change, too –true pricing. Right now, said Fanny Weinbreck, farmers are willing to adopt innovative solutions, but they can’t be expected to carry the costs. Consumers, she said, need to be brought closer to the other end of the value chain. They need to see that sustainability of supply is something in which everyone has a stake: farmers, farm workers, wholesalers, retailers, customers – everyone.
 
Chris Webster said that in Europe and the US, points systems in loyalty schemes are already being used to incentivize people to shop for healthier, more sustainable food options. “We can nudge people along the way,” he said – but there were still challenges.

For instance, he said, businesses have to be careful with eco-labelling. The challenges implicit in traceability that were discussed earlier can make robust labelling very hard to achieve, and if consumers decided they couldn’t depend on what they were being told, the goodwill that organisations lost would be extremely hard to regain.

“The more we can give sufficient information to help people make better-informed choices – that is honestly the best thing we can do.”

Jackie Pynadath
Director Sustainability & Innovation, Google Cloud EMEA

Also, sustainability is rarely black and white. For instance, tomatoes grown on another continent may have a high airmiles score – but homegrown alternatives may have been subject to the intensive use of pesticides. “If somebody in the industry came up with a way of giving a relative score,” Chris Webster said, “we might be willing to adopt it, but I don’t think it’s for us to define that.”
 
Our panel agreed that technology had a role to play in engaging with consumer behaviour. People can’t be browbeaten into doing the right thing, but as Jackie Pynadath said, “The more we can give sufficient information to help people make better-informed choices – that is honestly the best thing we can do.”

What about future technologies? Ron Tolido said it was hard to predict the effect they may have on consumer mindsets. How, for instance, would people react to being guided towards healthier lifestyles in the metaverse? Would they accept it as being in their own interests, or would they regard it as rather “Big Brother”? And how would they feel about gene-edited food? Would they be convinced, or would they have misgivings?

Addressing changing consumer perspectives is vital. Ralf Blessman discussed the need for automotive enterprises to bring together as many elements of their organisation as possible – technology, processes, and more – to support their drivers and help them get into a more efficient, sustainable mode. When people feel supported, and feel that they themselves are now making a great environmental contribution, a virtuous circle can be created. Improvements can be made incrementally, even where drivers aren’t yet behind the wheel of electric vehicles.

What’s more, rewards systems can be used: drivers can accumulate company credits against future purchases, which not only reinforces sustainable behaviour but generates brand loyalty.

Sustainability isn’t just a customer-facing commitment either, Mathias Kaldenhoff said, nor even the result of a broader commitment to societal responsibility. It’s also a key factor in the ability to attract and retain employees.

“We are helping our customers to understand and react to the future where the only shareholder of all our industry is planet earth.”

Mathias Kaldenhoff
Partner Sustainability & Innovation Management, Office of the Chief Technology Officer (CTO) – SAP Germany

Justin Gemeri agreed. He said that in founding ekipa, the goal had been to tackle sustainability issues – and that to do that, it’s vital to engage younger people. “This generation brings so much potential,” he said. “They bring so many new ideas, so many new perspectives to the table that can help to overcome those upcoming challenges.” Yes, said Juergen Sturm. “If you want to have passionate people, you should have exciting targets where they can see the value and the purpose. This really creates a lot of energy.”

Justin Gemeri pursued the point. He said that people live in different circumstances in different parts of the world, and that this has a bearing on their sustainable development priorities. However, he continued, “what unites young people in the digital generation is that they take sustainability seriously, and they don’t accept greenwashing. They expect action – and when they graduate and look for work, that’s where their focus is.”

Daniel Garschagen invited other event participants to provide an assessment of the current sustainability picture in the automotive industry.

Markus Winkler said that moves towards sustainability in the sector have accelerated since the emergence of the electric vehicle market. The impetus has grown to a level at which it’s now a key factor from one end of an enterprise to the other – from production and operations, out to the supply chain, and beyond.

Automotive businesses, Markus Winkler continued, need to ask themselves where enterprise-wide sustainability begins and ends. It isn’t always straightforward. For instance, he said, you can put a part which has a lower sustainability footprint into a vehicle, but you later find it will consume a lot of energy to recycle this part. You might also find that the recycling quota for the part is lower. It’s in areas like this that organisations need to arbitrate – and that’s where technology has such an important role to play, because how else can businesses keep track of all the variables?

ZF Group is a global technology company supplying systems to the automotive industry, and Juergen Sturm developed Markus Winkler’s argument. He said it was the goal of automotive systems developers such as ZF to use technology to drive electrification, decarbonisation, efficiency, safety, and more – and that to make all this happen, the interconnectedness of things was vital.

Like many businesses, Juergen Sturm said, ZF had set itself ambitious sustainability targets – and targets like these need to be a collective endeavor. “No company can achieve this alone,” he said. “We have to involve the large companies, the manufacturing companies, software companies, academia, startups, systems integrators – everyone. I think that’s exciting because science and technology is the answer. And we must really leverage it.”

As a leader in its market, SAP can provide a broad perspective on the state of sustainability in the automotive industry. The challenges that Mathias Kaldenhoff observed included the need for diligence in a digital supply chain, especially given its present-day complexity. It’s difficult to monitor and manage sustainability issues in globally intricate supply chains, and to do so at the pace that modern business now requires.

The challenges may be great, but so are the opportunities. Mathias Kaldenhoff gave an example.

He said automotive engineering businesses have always had to balance costs against performance, and that nowadays the third factor in the mix is sustainability. SAP, he said, is working with a customer to create an environment in which processes, materials, components, tools and more are balanced out against one another to achieve optimum carbon metrics on a case by case basis. For example, the partnership was exploring approaches to product design that made maintenance and repair easier and more sustainable.

Juergen Sturm applauded this principle. He said that sustainable goals didn’t just help automotive businesses to meet regulatory requirements and their own social responsibilities – they also delivered premium products that customers would be able to judge. For instance, a value chain that is digitally integrated and auditable from end to end would enable manufacturers to demonstrate how much of a new car in a showroom has been recycled, and what its carbon footprint is. “I firmly believe,” he said, “there is no conflict between sustainability and economy. On the contrary, one is fueling the other.” “Yes,” said Justin Gemiri. “The sustainability of a company will be a key to its economic success. Younger customers who will become the core target group in the next few years will not buy products from companies that do not act sustainably.”

Sustainability doesn’t just make business sense from a customer perspective. Juergen Sturm told the rest of the group about a project some years ago in which he renovated a data centre. He doubled its performance – but at the same time, the state-of-the-art efficiency measures he introduced resulted in a quarter-million-euro cost saving.

Our event facilitator, Daniel Garschagen, observed that to achieve sustainability goals, collaboration was necessary – not just along the value chain, but across society at large. Justin Gemeri agreed. He spoke of the insights and enthusiasm that start-ups can bring to problem-solving, but added that everyone had a role to play. “In the end,” he said, “it’s about co-creation. Start-ups bring huge potential, bring great new ideas, new perspectives, new technologies – but you also need the experience of established organisations, you need the leverage that big companies bring regarding access to customers, and also regarding R&D budgets, for example. Together, organisations large and small need to create an ecosystem, a framework, where they can co-create on one level – and that’s where innovation is happening right now.”

Our event participants agreed that while IT infrastructure is itself responsible for carbon emissions, the net proportion is small, and is countered by the significant opportunities it brings to achieve sustainability. Examples include better supply chains, more efficient production, and the reduction of the need to travel. Importantly, and as we have already seen, technology also enables organisations to measure their sustainability status – and if you don’t measure, you can’t improve.

Juergen Sturm spoke enthusiastically about a CIO community in which he and senior executives from Capgemini and other organisations are active. “We are bringing together small companies and large companies,” he said. “We want to exchange best practices and focus on implementation, because only implementation counts.” Ralf Blessman observed that Agile approaches to development marked a cultural change in collaboration that was initiated by CIOs, and that the new challenge for CIOs was now “to step up and create a massive impact on corporate sustainability.”

Mathias Kaldenhoff pointed out that only 5% to 7% of data produced today is useful. The rest of it, generated by sensors, other IoT devices and so on, is a distraction, and that we need technology to help us focus on what will be helpful in the pursuit of sustainable goals.

“Achieving sustainability goals is a team sport.”

Daniel Garschagen
AIE, Sustainability, and Innovation lead, Capgemini Deutschland

Daniel Garschagen asked everyone to wrap things up by summarising their own organisation’s sustainability efforts.

For ZF Group, Juergen Sturm said his company is striving for next-generation mobility that is clean, safe, comfortable, and affordable – and that it is using all its technology to make this happen as soon as possible. “I think we need everyone in our company and everyone in our partnerships to focus on this topic together,” he said.

For SAP, Mathias Kaldenhoff said, “We are doing everything to help our customers not to consume more than they plant. We’re also aiming to understand and to react to the future, where the only shareholder of every industry and enterprise is Planet Earth.”

For ekipa, Justin Gemeri said that technology and innovation are the key drivers for creating a more sustainable world, and that smaller companies like his own need to work alongside larger, well-established corporations and political institutions to overcome challenges and devise solutions.

For Capgemini, Markus Winkler said that in addition to meeting its own sustainability targets, the organisation was committed to save 10 million tons of carbon for its clients by 2030. Ralf Blessman added that it was a commitment that was shared across Capgemini’s three main business areas of consulting, IT and services, and engineering – and he pointed out how relevant the company’s tagline is to the topic under discussion:

“Get the future you want.”

This roundtable was recorded in Munich on September 22^nd, 2022.

For the environment in particular, which is our focus here, the difficulty has been that in business, the data hasn’t been dependable, and for two main reasons. One, some organisations have been reluctant to share details of their carbon footprint – although the advent of Web3 may enable value chain data to be aggregated and accessed without the need for individual parties to quantify and share their own numbers.

Two, there are so many variables. For instance, minerals are mined, moved, and embedded in increasingly large sub-assemblies, and then moved again, until manufacturing is complete – so at what point or points in the manufacturing and logistics cycles do we measure carbon footprint?

In short, we haven’t yet seen a standard approach to carbon footprint reporting, or indeed to any sort of environmental, social and governance (ESG) reporting. However, pressure is growing to convene the high-tech industry around such a standard, and much of it is coming from the financial markets to do deep audits and risk assessments in the carbon footprint.

“Data, big data, and these new emerging technologies such as AI and quantum computing are really exciting for me. They will help us to understand complete lifecycles.”
Mary de Wysock
VP Corporate Affairs – CSR Sustainability, Cisco

Building renewables into the energy supply and using AI to balance loads is enabling companies, citizens, and consumers to write out the impacts of climate change – and in the process, we’re beginning to create a smart energy grid that’s even more distributed, clean, and resilient. It’s resilient in the sense of sustainability, and also because its distributed redundancy enables it to withstand cyberattacks.

Solutions to sustainability depend to a large extent on the data that organisations gather – but as Sreejit Roy, Senior Partner – Hybrid Cloud Transformation, IBM, pointed out, (a) there is so much of it, (b) the insights to be gained from it vary greatly by sector, and (c) organisations need to optimise it and to have a strategy for its use.

They also need to use technology to reduce the carbon footprint of the network on which the data resides, and that, in turn, means the data needs to be sufficiently granular. Why? Because if the reports indicate general data centre energy usage but don’t break it down by virtual server, they’re not actionable, and they’re not ESG-compliant.

It’s a challenge that must be accepted – but it’s an attractive proposition too. As Michael Bates, Global Sales GM – Energy Sustainability, Intel, said, “We’re all moving to a low-carbon world, but there’s an opportunity to make a big revenue play here as well. Forbes says it’s the largest commercial opportunity in a lifetime.”

Michael believed that in the short term, the focus would be more on climate adaptation than climate mitigation, and that this pragmatic shift would probably be more beneficial. In the longer term, he looked forward to what he termed a software-defined smart grid, where the highest and best-use energy supply is chosen based on market needs, regardless of where it resides on the grid, which doesn’t exist today. Based on some of the uses of the data being collected today, he saw this as the direction of travel.

John C. Havens, Sustainability Practice Lead at the IEEE Standards Association, spoke starkly about the scale and imminence of the climate change challenge. “There are no reports that I see,” he said, “that say we’re going to stay under a net temperature rise of 1.5 degrees.” That may sound like a gloomy prognostication, but John said he saw it as a “wonderful opportunity,” because it provides an imperative to innovate in a way that goes beyond net zero to “net positive” – to give back more than we take, and to establish what he called “long-term planetary flourishing,” which goes beyond traditional metrics such as GDP.

Sandy Pentland and Mary de Wysocki, VP Corporate Affairs – CSR Sustainability, Cisco, each agreed that GDP as it was originally conceived didn’t factor in issues such as environmental metrics or human wellbeing or community, and that this needed to change. Sandy said we needed to imagine “a world that counts. A world where people don’t do things that have negative impacts without having them counted and available to look at.”

Michael Bates said that recalibrating in this way didn’t preclude the possibility of growth. It needn’t be measured like GDP, but in the transfer of wealth from a carbon-based energy system to a new clean, resilient energy system. Sandy Pentland concurred, and said that a new paradigm could raise standards of living, enabling people to lead healthy, productive lives, but without needing to waste natural resources.

“What can we do,” Mary de Wysocki, VP Corporate Affairs – CSR Sustainability, Cisco, asked, “to signal, to nurture, to start creating the market demand for a sustainable, green, inclusive opportunity, really moving to the values-based economy we’re discussing here?”

In reply, Sol Salinas, Capgemini’s Global Executive Vice President North America Sustainability Lead and facilitator for this event, said that Capgemini was building consensus to make the principle of net positive a reality. The aim was to create a measurable and reparative business model across all use cases, and across all industries. Digital transformation will be critical in successfully achieving this consensus and establishing the business model.

“Unless and until we are thinking about sustainability in everything we do – until that mindset changes – any amount of technology is not going to be effective.”
Sreejit Roy
Senior Partner – Hybrid Cloud Transformation, IBM

One element of this model, said James Robey, could be the notion of a value-added carbon tax that is part of every data transaction. Another element, he added, could be a better way of conceptualising carbon. Just as people understand that big swings in the Dow Jones or FTSE indices are good or bad, so a carbon measure of this kind could make the topic more real and immediate, so it becomes a kind of touchpoint in everybody’s lives.

The panel agreed that Web3 had a key role to play in sustainability efforts. Sandy Pentland said Web3 allowed organisations to keep their data locally and control it better, and that this made it easier to quantify the carbon figures implicit in the movement of materials, sub-assemblies, and products. He pointed out that this local quantification would make it easier to calculate the value-added carbon tax suggested by James Robey. “What’s interesting to me,” he added, “is that already 60% of all container shipping in the world runs on what might be called a Web3 system put together by IBM and Maersk. It makes it easier for organisations to make themselves publicly accountable.”

Sreejit Roy confirmed that IBM was putting a lot of work into Web3. He said there were three critical success factors. The first two were the establishment of the complex infrastructure that Web3 needs, and the implementation of cross-industry consensus protocols. The third was the need for the culture to change – but the good news, he said, is that the next generation is more knowledgeable about sustainability than their predecessors, and they will take care of this cultural shift.

Mary de Wysocki took up this point. She said that current and emerging generations of technology engineers need to help organisations bring differentiated thinking to their innovation – for instance, by applying data centre and smart building knowledge to ground-breaking nature-based developments.

“Innovation needs to come with societal KPIs. We need to measure and be accountable for long-term environmental flourishing and human wellbeing. It’s not going to be easy, but it’s essential.”
John C. Havens
Sustainability Practice Lead, IEEE Standards Association